This Government is ensuring Higher Education is open to more people than ever before, and application rates from disadvantaged young people seeking to go university are currently at record levels. But Higher Education and Further Education must remain affordable to the taxpayer. Our approach is based on the fundamental principle that a borrower’s contribution to the cost of their education should be linked to their ability to pay. Graduates generally benefit from higher earnings than those who do not go to university, and we must maintain a fair balance between taxpayers and graduates in the costs of Higher Education.

Graduates don’t have to repay their loans until they are earning above the annual threshold of £21,000. This threshold remains higher in real terms than that applicable to student loans taken out before 2012. Repayments are then made at a rate of 9% above this threshold. If a borrower earns less than the threshold then no repayments need to be made. Outstanding loans are written off 30 years after graduation.

The Government consulted on the threshold freeze in July 2015. All responses to the consultation were considered carefully in the wider context of the detailed analysis of impacts, including on the public finances, and the Equality Analysis. The consultation document and the Government response are available at https://www.gov.uk/government/consultations/freezing-the-student-loan-repayment-threshold.

The decision to freeze the student loan repayment threshold for post-2012 (“Plan 2”) borrowers until April 2021, was then announced in the November 2015 Spending Review. The Spending Review and Autumn Statement 2015 documents are available at https://www.gov.uk/government/publications/spending-review-and-autumn-statement-2015-documents.

Department for Business, Innovation and Skills