Student loans: Repayments for Welsh students to stay at 30 years

Students from Wales will have their loans written off after 30 years, instead of the 40 planned in England, Wales' education minister has said.

Jeremy Miles said the UK government plans for students across the border will leave middle and lower-earning graduates worse off.

He told a news conference that the current system will be retained.

The UK government said the new system ensures value for money for the taxpayer.

At the moment student loans are wiped-out after 30 years, if they have not been repaid in full before then.

From September, the repayment period will be extended by a decade for students from England.

It means students could be paying off their student debt into their 60s.

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The UK government also plans to reduce the level at which graduates from England start repaying their loan from £27,295 to £25,000, while also cutting the interest rate to match the retail price index [RPI].

It says extended the repayment period will reduce the bill for taxpayers.

Martin Lewis of Moneysavingexpert.com last year said that "only around a quarter of current leavers are predicted to earn enough to repay in full now".

"Extending this period means the majority of lower and mid-earners will keep paying for many more years, increasing their costs by £1,000s.

"Yet the highest earners who would clear within the current 30 years won't be impacted."

He said the changes effectively turn the loans for most into a life-long graduate tax.

Education Minister Jeremy Miles told a Welsh government news conference the new English system was "not a good deal".

"England's reforms benefit the highest earners and worsen the position for middle and lower earning graduates. Women are also disproportionately affected.

"We certainly shouldn't be asking teachers, nurses and social workers to pay more, while the very highest earners pay less."

He said the Welsh government will "retain the current system in Wales".

Asked about the impact on middle earners in 2022, then-Universities Minister Michelle Donelan told the BBC that the changes "will mean that any student graduating in the future won't pay any more in real terms than they've borrowed. Because that's fair."

'Fair and balanced'

A UK Department for Education spokesperson said: "University is an investment for both students and the taxpayer, and we need a fair and balanced student finance system that delivers the benefits of higher education whilst ensuring value for money for taxpayers and enabling borrowers to repay their loans in full.

"We have made changes to student finance to ensure that more graduates repay their loans, including cutting interest rates to RPI only for the 2023-24 academic year so that new borrowers will not repay more than they originally borrowed, when adjusted for inflation.

"Through these reforms more than half of new borrowers will repay their loans in full, compared to the current rate of 20%."

It is not clear how much extra the Welsh plan to keep the 30-year repayment window will cost.

A Welsh government spokesperson said the means-tested grant system for living costs in Wales "means that Welsh students have significantly less debt than students in England and the proportion of loans paid back is higher.

"This means that the Welsh government is able to remain on the more progressive system."