Ministers accused of 'cap on aspiration' with changes to student loans due to be announced today

Ministers have been accused of putting “a cap on aspiration” with measures that will see graduates repaying their student loans earlier and for ten years longer.

The Department for Education say that changes to the loans system will “create a fairer system for both students and the taxpayer”, but critics are saying the move equates to “another stealth tax for new graduates”.

Under plans due to be announced by the Education Secretary today, students who start university from next September will start repaying their loan once they earn £25,000 post-graduation, more than £2,000 lower than the current threshold.

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From September 2023, the repayment term will also be extended from 30 years to 40 years, which the Government say will “ensure more students repay their loan in full, taking into

Nadhim Zahawi pictured in Downing Street in February 2022

account the fact that people are now working and earning for longer”.

However, it means many graduates may be paying off their borrowing as they head towards retirement.

Following reports yesterday that students will need to achieve certain grades in their English and Maths GCSEs in order to be eligible for a student loan, the Department for Education have also published a consultation considering “minimum requirements” and the possibility of student number controls on certain courses.

Reacting to the news, Alistair Jarvis, Chief Executive of Universities UK, said: “The country needs its universities and graduates to be at the forefront of post-Covid economic recovery,

supporting the NHS and creating good jobs in local communities.

“Now is not the time to shrink or underfund universities, nor place a cap on aspiration by restricting the number of places for people to study at university.”

Alongside the changes to loans, two consultations will also be published, including one which will consider the idea of minimum, eligibility requirements and the possibility of student number controls “so that low cost courses which lead to poor outcomes for students aren’t incentivised to grow uncontrollably,” the Department for Education said.

Mr Zahawi said: “Our country’s world leading universities and colleges are key to levelling up opportunity by opening up access to a range of lifelong flexible post-18 options to help people train, retrain and upskill.

“This package of reforms will ensure students are being offered a range of different pathways, whether that is higher or further education, that lead to opportunities with the best outcomes – and put an end once for all to high interest rates on their student loans.

“I am delighted to oversee such a substantial amount of investment – nearly £900m – reinforced by a revised, fairer, and more sustainable student finance system which will keep Higher Education accessible and accountable. These changes will create a fairer system for both students and the taxpayer.”

Shadow Education Secretary Bridget Phillipson accused the Government of “slamming the door on opportunity” and labelled the “rubbishing” of certain degrees as “insulting”.

Speaking ahead of today’s announcements, she said: “The Tories are delivering another stealth tax for new graduates starting out on their working lives which will hit those on low incomes hardest.

“Instead of fixing the broken system these changes simply store up problems for the future. Ministers are kicking the can down the road while seeking to limit young people’s aspirations to study at university. Instead of focusing on supporting more students to succeed at school or widening access to university, the Government is slamming the door on opportunity.

Parents and grandparents across this country are incredibly proud of their children who are working hard for degrees that the Government is now rubbishing. That is insulting.”