The current package of student support is the most comprehensive ever provided. From 2008/09 onwards, we will help more students with non-repayable finance. Two-thirds of full-time students will receive a full or partial grant, and non-means-tested loans will be available to all.
Student loans are repayable only after leaving higher education and repayments only commence when income exceeds the earnings threshold1. All borrowers, regardless of their age or background, benefit from a zero real rate of interest and the option to defer repayments if they are in financial difficulties. Those who are due to start repaying their loans from 2012 will be able to take a repayment holiday for up to five years. For those who never earn enough to afford to repay, outstanding loan balances will eventually be written off.
Not all young graduate debt is student loan debt. Some young graduates borrow elsewhere at commercial interest rates. Current provisions should minimise the need for those who hold student loans to top up these loans by borrowing elsewhere.
1 For pre-1998 loans, the threshold is 85 per cent. of national average earnings (currently approximately £25,000). For post-1998 income-contingent loans, borrowers repay 9 per cent. of income exceeding £15,000.