(2) if he will estimate the cost of raising the student loan repayment income threshold to £25,000 and introducing thresholds and rates of student loan repayments of (a) five per cent. on incomes of £25,000 to £29,999 and (b) 7.5 per cent. on incomes over £30,000; and if he will make a statement.
Introducing repayment thresholds of £20,000 and £30,000 with corresponding repayment rates of 5 per cent. and 7.5 per cent. would have an estimated one-off resource cost of £2 billion (for existing loans) and an ongoing resource cost of £700 million per year (for new loans).
Introducing repayment thresholds of £25,000 and £30,000 with corresponding repayment rates of 5 per cent. and 7.5 per cent. would have an estimated one-off resource cost of £3.2 billion (for existing loans) and an ongoing resource cost of £1.1 billion per year (for new loans).
The income threshold is one of the main features of the income contingent loan scheme. This protects borrowers when they need it as they only pay their loan back once they earn over the threshold. Borrowers currently repay nothing until they earn over £15,000. This strikes the right balance, making payments affordable to the individual and student loans affordable to the public purse. We are committed to maintaining the repayment threshold at £15,000 until 2010 when we will review it.