Graduate salary cap may rise from £21,000

The £21,000 graduate salary cap which triggers student loan repayments could be raised after it emerged ministers are looking at making the system fairer.

Ministers are under pressure to lift the £21,000 threshold and link it to inflation or earnings after which payments are made to pay back student loans amid growing concern about graduate debt levels.

One option being considered is to increase the threshold either by inflation or by linking it to average earnings.

Another option is to cut the looming 6.1 per cent interest rate on student loans after a report found graduates were leaving university with debts of tens of thousands of pounds.

...

When student loan system was launched in 2012 it was agreed that former students would not start to repay fees until they earned more than £21,000 a year.

Ministers also pledged that from April 2017 the £21,000 figure would be increased annually in line with average earnings.

But George Osborne, the former Chancellor, decided in November 2015 that the cap would be frozen at £21,000 for five years until April 2021 sparking concern from student groups.
Conservative ministers have told The Telegraph that the threshold should be “at the very least” linked to inflation so that it increases over the years.

Could be raised? Well, that's uncommonly generous of them.

Their promises and pledges are meaningless, they've already broken faith with students, why should we believe them this time? If they were serious about making things fairer for students they would cut the grossly unfair interest rate, and change the law to make it illegal for future governments to retrospectively change the terms of student loans.

You're getting a loan which is written off, for which your personal assets are not collateral and university tuition fees are artificially capped and you are still not satisfied.

If only our generation knew struggle.

Considering a lot of student loan isn't paid back anyway, even less so the full amount, I wonder what the effects of this will be.

Could be raised? Well, that's uncommonly generous of them.

Their promises and pledges are meaningless, they've already broken faith with students, why should we believe them this time? If they were serious about making things fairer for students they would cut the grossly unfair interest rate, and change the law to make it illegal for future governments to retrospectively change the terms of student loans.

If the threshold rises with earnings then i don't see why any cuts are necessary. loan repayments won't fall they will just remain stable rather than increase. if earnings rise, tax revenues rise anyway. freezing the repayment threshold was just a money grab.

I don't know if I believe them bc

1. No named cabinet minister is named
2. They only say they will 'consider' it
3. They don't care about students/young people anyway

I just really hope it's true, but I guess I should know better than to put my faith in the government. And that interest rate is sick. How can they charge us 6.1%, that's even higher than market rates.

Generally, no name means it's not going to happen.

Are you studying in the UK then? I thought you were going to Yale/Columbia.

I decided on Cambridge and if I miss my offer Yale.

and change the law to make it illegal for future governments to retrospectively change the terms of student loans.

No government is bound by the laws of a previous.

True, but it would be harder (and much more public) to try and change the rules if they had to legislate.

Idealistic at best, unlikely to fail a vote with a majority government.

Despite what Jeremy may think, the older middle class and pensioners continue to vote in overwhelming numbers. I doubt they would be keen to see front line services cut in exchange for reduced student loan repayments. Note* Im not saying that the money goes to front line services anyway, but thats how a government would paint it if required.

Frankly the interest rate is irrelevant. Accept that attending university requires you to pay 9% extra tax for the rest of your working life and base your decision to attend or not on that.

the 9% repayment is also too high. It creates crazily high marginal tax rates. it's just like a really expensive graduate tax.

Idealistic at best, unlikely to fail a vote with a majority government.

Despite what Jeremy may think, the older middle class and pensioners continue to vote in overwhelming numbers. I doubt they would be keen to see front line services cut in exchange for reduced student loan repayments. Note* Im not saying that the money goes to front line services anyway, but thats how a government would paint it if required.

Frankly the interest rate is irrelevant. Accept that attending university requires you to pay 9% extra tax for the rest of your working life and base your decision to attend or not on that.

Why should students have to pay interest at all, let alone 6.1%?

Seems like a fair marginal tax rate given it sat between the 20 and 40% tax rate boundaries, where else would you put it?

And expensive is a matter of opinion. If you think university is going to result in a job paying more than 9% then it is a good investment.

Yeah if you're on 20% for the rest of you life. Its not going to take very long to hit £45k as a professional, esp. in London, and then be paying a marginal rate of 49%.