MARTIN Lewis has warned that slashing tuition fees and increasing the loan length would see students paying MORE in the long-run.
Prime Minister Theresa May wants the £3,000 maintenance loans to be scrapped in favour of grants for poorer teens and calls for the £9,250 tuition fees to be slashed to £7,500.
1 Martin Lewis warns that the proposed changes mean that students will end up repaying moreCredit: Rex Features
Both of the proposals have been put forward in the Augar Review but the MoneySavingExpert warns that the changes will actually see lower-income graduates paying back more.
Martin explained to The Sun: “The only people who will pay less if you cut tuition fees and shift to a grant are the highest earners.
“Lower and middle earning graduates won’t gain anything practically because they would never have been able to pay them back on current system but they will gain psychologically.”
The report also proposes to lower the repayments threshold from £21,000 – this is how much you earn before you start paying it back the loan.
When are student loans written off?WHAT year your repayments will stop depends on when you started studying, but it’ll happen regardless of how much you have left to pay.Started higher education 1990 – 1997 (under 40s): 25 years after your first payment or when you reach 50
Started higher education 1990 -1997 (over 40s): When you reach 60
Started higher education 1998 – 2005: When you reach 65
Started higher education 2006 – 2011: 25 years from the first April after graduation
Started higher education after 2012: In England and Wales, 30 years from first April after graduation
It’s 35 years for Scottish students and 25 for Northern Irish.
The money guru, who is campaigning to make student loans more transparent, explains that as a result the amount graduates payback will increase by around £180 a year.
In the current system debts are written off after 30 years but the report is calling for this to be extended to 40 years before they’re automatically cleared.
This means that lower earning graduates who may have struggled to pay off the loan in full on the old system will now have to continue payments for another decade.
Martin added: “What that means is you have a system where people will repay more each year and they will have to pay for longer.
“In the long-term, individuals will pay more for the education and the cost to the state will be less.
“It depends on where you stand as to whether you see it as a good thing or not – whether you think people should be taking more responsibility for their education or whether you think the state should foot the bill.
“Some people will see this as scarier than the current system and others will see it as a no win, no fee situation if they think they’ll never be a high earner.”
Mrs May commissioned the Augar Review in February 2018 and it makes 53 recommendations including restoring means-tested maintenance grants and changing the name to “contributions” rather than loans.
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The changes are in an attempt to make university more accessible to teens from low-income backgrounds.
Martin has previously branded the student loan statements “dangerous” and push you into making bad financial decisions.
He even encouraged students to rip up the “worryingly misleading” statements.
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