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Good news for those who took undergraduate student loans to study in UK after 2012: the UK Minister for Higher Education Sam Gyimah announced that the undergraduate student loan repayment threshold has been raised to GBP 25 000, as promised by Theresa May in October last year.
Starting from the 6 April 2018, all those who have taken out a post-2012 undergraduate student loan to study in England or Wales (also referred to as those who are on “Plan 2”) have the possibility to save up to GBP 360 per year. Whereas until 6 April new-employees had to start repaying the loan as soon as they would earn GBP 21 000 per year (and amounting to 9% of their income), now they do not have to worry about it until they will earn GBP 25 000 (the percentage of 9% remains unchanged). According to the UK Department for Education, this year alone 600 000 students will benefit from this change.
On the other hand, those who took out loans before 1 September 2012, as well as those who took out loans in Scotland and Northern Ireland after 2012 (also referred to as those who are on “Plan 1”), will continue – as before – to see the threshold moving every year in line with inflation (currently GBP 17 775).
For those graduates who moved overseas, the thresholds differ reflecting the conditions in the relevant country (using information from externally-published World Bank data). In case of absence of relevant economic information, the lowest threshold applies (GBP 3 680/year). As a general rule, the lower the costs of living, the lower the threshold.
As for postgraduate loans, for the moment the situation remains unchanged: 6% of everything above GBP 21 000.