(Original published as part of “University is no longer a privilege, but the minimum qualification!“)

(Disclaimer: The information below may not be accurate, but is the best I could do.)

Tuition fees for UK students studying in the UK can cost anything up to £9,250 a year.⁷ This does not include paying for accommodation, living experiences and textbooks.⁷ It is estimated by Statista that students graduating in England in 2021 will have on averaged more than £45,000 worth of debt.²

Even if you only paid the tuition fees for a three-year degree course, you could be in debt by £27,750.

Some of these fees can be covered by loans from Student Finance England.⁸

1) Repaying student loans (Student Finance England)

If you are an English student starting university in the UK in 2021, you will be on repayment plan 2.⁴ You will pay 9% of your income, when you earn over £27,295 a year, £2,274 a month, or £524 a week.⁵ This loan is more akin to a tax than a traditional debt. The debt will be written off after 30 years from the April you were first due to repay.⁶

Therefore, with some simple math you can work out roughly what repayments you are likely to make: (Assuming the amount paid was never enough to pay back the loan.)

Yearly earnings:	You would be over the repayment fresh hold by:	You would pay back per year:	Over 30 years you would pay back:
£25,000	£0	£0	£0
£30,000	£2,705	£243.45	£7,303.50 *
£35,000	£7,705	£693.45	£20,803.50
£40,000	£12,705	£1,143.45	£34,303.50
£45,000	£17,705	£1,593.45	£47,803.50
£50,000	£22,705	£2,043.45	£61,303.50

For larger figures, simply add:

£5,000+	£5,000+	£450+	£13,500
£10,000+	£10,000+	£900+	£17,000

2) Interest

Just to stand still you would have to earn enough to repay the interest on the loan.

Currently the interest on repayment plan 2 is calculated by combining the Retail Price Index and up to 3% interest. From the 1^st September 2012 to the 30^th September 2021, the interest applied for each year ranged from a low of 3.9% to a high of 6.6%.⁹

Assuming you only owned £27,295 in debt, you would have to make to stand still:

If you take the interest to be:	You would have to repay per year to stand still:	You would therefore have to earn to stand still:
3% (no Retail Price Index added)	£818.85	£36,393.1/3
3.9%	£1,064.505	£39,122.5/6 **
6.6%	£1,801.47	£47,311.1/3

Whereas if you take the Statista estimated of £45,000 worth of debt you would have to pay back:²

If you take the interest to be:	You would have to repay per year to stand still:	You would therefore have to earn to stand still:
3%	£1,350	£42,295
3.9%	£1,755	£46,795
6.6%	£2,970	£60,295

3) How much would you have to earn over 30 years to repay the loan?

(These calculations assume the same yearly earrings over the 30-year period.)

If your debt is £27,295:

If you take the interest to be:	You would have to earn per year over the next 30 years to pay off your student debt is:
3%	£41,953.23/54
3.9%	£43,318.19/108 ***
6.6%	£47412.23/54

If your debt is £45,000:²

If you take the interest to be:	You would have to earn per year over the next 30 years to pay off your student debt is:
3%	£51,461.2/3
3.9%	£53,711.2/3
6.6%	£60,446.2/3

So can graduates earn enough to repay their student loans?

The simple answer is for most students is no.

The majority of students will consider themselves luckily if they earn anywhere near enough to pay back their loans. Since according to the UK government’s own figures for 2019, the median salary for graduates was only a round £35,000.¹⁰ This would leave the median student somewhere between £8,318 and £25,446 short per year of repaying their student loans.

This before you take into effect that this figure is an average over entire lifetime and that graduates from the 1980s should earn more. According to government’s Graduate outcomes for 2018-9, Median graduate earnings was only £24,500 three years after graduating rising to £31,100 after 10 years.¹¹ It pretty clear that the majority of graduates will fail to pay off their student loans.

I think the government will come to regret this deal when student debt is written off. The authors of this agreement are probably hoping to be long dead by the time this come to light.

By Arran Wilkins © 2021 (text only)

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Sources and notes

* Equation: £30,000 (earning) – £27,295 (repayment fresh hold) = £2,705 (taxable amount) divided by 100 times by 9= £243.45 (amount repaid) times by 30 (years) = £7,303.50 (repayment over 30 years)

** Equation: £27,295 (debt) divided by a 100 times by 3.9 (interest) = £1,064.505 (repayment) divided by 9 times by 100= £11,827.5/6 (amount need) + £27,295 (repayment fresh hold) = £39,122.5/6 (earning)

*** Equation: £27,295 (debt) divided by 30 (years) = £909.5/6 (yearly repayments) divided by 9 time 100 = £10,109.7/27 + £27,295 (repayment fresh hold) + £5,913.11/12 (£11,827.5/6 interest (see interest answer) divided by 2 (interest reduction over time)) = £43,318.19/108 (earnings to repay student loan per year)

(2) Clark, D. statista, Higher education in the UK – statistics & facts. Available at: https://www.statista.com/topics/6938/higher-education-in-the-uk/#dossierKeyfigures [Accessed on 14^th November 2021].

(4) GOV.UK, Repaying your student loan. Which repayment plan you’re on. Available at: https://www.gov.uk/repaying-your-student-loan/which-repayment-plan-you-are-on [Accessed on 15^th November 2021].

(5) GOV.UK, Repaying your student loan. When you start repaying. Available at: https://www.gov.uk/repaying-your-student-loan/when-you-start-repaying [Accessed on 15^th November 2021].

GOV.UK, Repaying your student loan. How much you repay. Available at: https://www.gov.uk/repaying-your-student-loan/what-you-pay [Accessed on 15^th November 2021].

(6) GOV.UK, Repaying your student loan. When your student loan gets written off or cancelled. Available at: https://www.gov.uk/repaying-your-student-loan/when-your-student-loan-gets-written-off-or-cancelled [Accessed on 15^th November 2021].

(7) UCAS, UNDERGRADUATE TUITION FEES AND STUDENT LOANS. Available at: https://www.ucas.com/finance/undergraduate-tuition-fees-and-student-loans#how-to-apply-for-a-student-loan [Accessed on 15^th to 16^th November 2021].

(8) GOV.UK, Student finance. New full-time students. Available at: https://www.gov.uk/student-finance/new-fulltime-students [Accessed on 15^th November 2021].

GOV.UK, Student finance. Eligibility. Available at: https://www.gov.uk/student-finance/who-qualifies [Accessed on 15^th November 2021].

(9) GOV.UK, How interest is calculated – Plan 2. Available at: https://www.gov.uk/guidance/how-interest-is-calculated-plan-2 [Accessed on 17^th November 2021].

(10) GOV.UK, Reporting Year 2020: Graduate labour market statistics. (Explore education statistics, 2021) Available at: https://explore-education-statistics.service.gov.uk/find-statistics/graduate-labour-markets [Accessed on 14^th January 2022].

(11) GOV.UK, Tax Year 2018-19: Graduate outcomes (LEO). (Explore education statistics, 2021) Available at:

https://explore-education-statistics.service.gov.uk/find-statistics/graduate-outcomes-leo/2018-19#releaseHeadlines-tables [Accessed on 14^th January 2022].

(Image) IdaT. Pixabay. Pixabay License. Available at: https://pixabay.com/photos/library-books-bookshelves-bookcases-5612441/ [Accessed on 15^th November 2021].