For those commencing courses after the introduction of variable fees in the 2006-07 academic year we expect average student debt of around £15,000. Debts arising from student loans are very different from those from commercial loan products.
Repayments are linked to income and only calculated on earnings over £15,000; and only then at a rate of just 9 per cent. on earnings above that threshold. This means a borrower earning below this threshold does not have to make repayments. For example, someone earning the average graduate starting salary of £18,000 will repay £5.19 per week regardless of the amount borrowed. The Government subsidise the rate of interest on these loans to ensure that borrowers only repay in real terms what they borrowed, however long it takes them.
The Government are providing more in upfront loan and grant support than ever before, particularly for low income students. Full-time eligible students are now entitled to non-repayable maintenance grants of up to £2,700, with HE institutions also providing bursaries of typically £1,000, which can be used to reduce debt.