Half of graduates could have their student loans written off because they will not earn enough to repay them, the Government admitted today.

Students who borrow money to complete their courses will not begin to pay back money until they earn £21,000.

Unpaid loans are written off after 30 years under the coalition's shake-up of university funding.

Universities Minister David Willetts said today: "We estimate that around half of all borrowers will have some part of their loan written off, as payments are contingent on their future income."

An Institute for Fiscal Studies report four months ago said half of graduates would still be repaying loans into their 50s.

But speaking at business, innovation and skills questions in the Commons, Mr Willetts added: "Our reforms are more progressive than the previous system because you only start to repay once you are earning over £21,000.

"The new system helps reduce the deficit, is affordable and sustainable for the Government, while offering protection for those who may not go on to high-paid employment."