Student loan changes: how to support your child Upcoming changes to student loan repayments could make it even more important to have a solid financial plan in place for funding your child or grandchild’s university education. The proposals, which are due to come into effect from September 2023, could add to the financial pressures that many of today’s young people already face. Here, we explain the impact of the changes, and how you can make a difference to your child’s future financial security. Student loan changes explained Currently, graduates in England begin paying back their student loans once they earn more than £27,295 a year. Any outstanding debt is written off 30 years after they start repayments. For those starting courses from September 2023, the salary threshold at which they start repaying loans will fall to £25,000 and the repayment term will be extended to 40 years1. The interest rate on loans will reduce by up to three percentage points.
The plans mean that the proportion of graduates who are expected to repay their loans in full will rise from around a quarter to 70%, according to the Institute for Fiscal Studies2. Its analysis suggests graduates with “below average but not the lowest” earnings (third and fourth decile of earnings) stand to lose the most, at around £28,000. This is because in many cases they won’t pay off their student loans, but will make repayments for ten years longer and on a larger chunk of their earnings than under the current system. Meanwhile,
