Students ‘unlikely to repay loans’

There is little difference in the amount of money many students will pay back whether they take a course that costs £6,000, or £9,000 a year, according to Martin Lewis of MoneySavingExpert.com.

Even those that start work on salaries of £30,000 are unlikely to pay off their loans in full after 30 years, when the debt is written off, he said.

More than a third of English universities are due to charge fees of £9,000 as standard from 2012, while almost three fifths will charge the maximum for at least one of their undergraduate courses.

Mr Lewis, who is leading an independent student finance taskforce said that in many cases, fee levels will be “irrelevant” in terms of repayments.

“For many students, even those on higher earnings, they will not repay at £6,000 never mind £9,000,” he said.

Warning that there is still much confusion over the new system, Mr Lewis said: “There are a couple of things people don’t get. The first is, at a basic level, whether to go for £6,000 or £9,000. You will repay the same each month, as the repayments depend on what you earn.

“You only repay over £21,000 and repay nine per cent of everything over that £21,000 and that will rise with average earnings. The amount of fees you have is irrelevant for monthly repayments.”

Calculations show that students who start work after graduation on a salary of £40,000 will pay back their loans after 24 years if their annual tuition fees were £6,000,

But if their fees were £9,000 per year, they will not pay back the money after 30 years.

And students who start work on £30,000 will never repay their debt, regardless of how much their fees were.