To ask His Majesty's Government what estimate they have made of how much the new Plan 5 loans for higher education starters will increase the average cost of higher education for graduates; and whether the new arrangements will result in graduates in England paying more and for longer than under the present system.
5 July 2023
The Plan 5 reforms will make the student loan system fairer for taxpayers and fairer for students, helping to keep the system sustainable in the long term.
The new loan plan asks graduates to repay for longer and from an income threshold of £25,000, but also increases certainty for borrowers by reducing interest rates to match inflation only. This change ensures that borrowers on the new Plan 5 terms will not repay, under those terms, more than they originally borrowed over the lifetime of their loans, when adjusted for inflation. Lower earners will still be protected. If a borrower’s income is below the repayment threshold of £25,000 per year, they won’t be required to make any repayments at all.
A comprehensive equality impact assessment of how the student loan reforms may affect graduates, including detail on changes to average lifetime repayments under Plan 5, was produced and published in February 2022. The assessment is attached.