The government sold off some ?1.7 billion of its loan portfolio to a private holder in 2017 and a further ?1.9 billion in 2018. The sales were made for significantly less than the face value of the loans due to the likelihood that many would never have a peek at this link be repaid.
British citizens and residents of at least three years are eligible to apply for loans, as are refugees and children of Swiss nationals and Turkish employees.
English students apply through the SLC’s website, where they must submit proof of identity and household income. Irish, Scottish, and Welsh students apply through their country-specific programs.
Students attending school in London and not living at home can take out up to ?11,672 in maintenance loans, with lower amounts available to students outside of London and to students living at home.
Maintenance grants remain available to students who started their coursework before and to students in Northern Ireland, Scotland, and Wales.
The Current State of Debt
The average bachelor’s degree graduate in the UK holds around ?44,000 in debt upon leaving school per a 2014 report. A 2017 analysis by the Institute for Fiscal Studies added a further ?6,800 to that sum, yielding an average of ?50,800 (about $64,500). That is around double the amount held by the average American graduate. Lower-income graduates may hold as much as ?57,000 in debt.
Around ?16 billion is loaned to students every year. Outstanding loans stood at around ?121 billion by mid-2019. Over 8 million graduates hold debt with the SLC.
Universities have become increasingly reliant on these fees, with some 40% of their income resulting from tuition charges in 2017. However, most of these funds are unlikely to be repaid. A 2017 study projected that some 83% of students will not have paid off the balance of their loans before they are forgiven in 30 years. (The UK Office of National Statistics projected a somewhat lower figure of 45% in 2018.)
As such, the accounting practices applied to student loan debt by the government were changed in 2018. Previously, the interest on borrowed funds were treated as revenue. Following the revelations of this financial sleight of hand, around ?12 billion was reclassified as spending, rather than revenue. The UK government will likely have to borrow in order to make up the difference.
In 2018, the economic affairs committee of the House of Lords estimated that student loan debt would grow to over a trillion dollars, matching current U.S. debt, in the ensuing 25 years.
More students who take out loans drop out of school than those who don’t. And, as with U.S. graduates, loans have been found to be limiting factors in marriage, home ownership, and retirement saving.
Further, some 60,000 graduates, including British citizens and EU residents, have apparently abandoned their debt, leaving around a billion pounds unaccounted for.
Graduates on Plan 1 are English or Welsh students who started their undergraduate programs in or before and Scottish or Northern Irish students who began their programs in September 1998 or before.
These graduates pay 1.75% interest. Repayment starts when debt holders begin making ?18,935 (about $24,000) a year. The threshold will rise to ?19,390 in 2020. They pay 9% of everything over that threshold.
These graduates pay interest at the rate of inflation while they are studying and after graduation when they make ?25,725 or less (about $32,700). They pay 9% of everything over that threshold, which will rise to ?26,575 starting in 2020. When they make over that amount, they may pay up to 3% in interest in addition to inflation. Anyone making ?46,305 (?47,835 from 2020) or more pays 3% in addition to inflation.