Theresa May walking at an unrelated event.
UK Prime Minister Theresa May announced upcoming changes in student loan policies just a day before the Conservative Party Congress, and Nicky Morgan, chairwoman of the British Treasury Committee, confirmed that the government would review the student loan system and its impact on tuition fees and public finances.
One significant change involves the salary threshold that graduates must reach before paying back student loans; it would increase from £21,000 to £25,000. However, some changes are not imminent or guaranteed. The University Minister, Jo Johnson, assured that tuition fees for the next academic year would remain unchanged.
Welcoming the move, Russell Group, an organization that represents the 24 most prestigious universities in the country, has advocated for more scrutiny in the system in the past.
Earlier in July, Dr. Tim Bradshaw, the Acting Director of the Russell Group, published a blog urging the government to reassess the planned rise of 6.1 percent interest rate on student loans as of September. According to Bradshaw, the increase was ''very high'' and ''out of touch.''
In his blog post, Bradshaw also touched upon another sensitive topic for the British education - the repayment threshold of the student loans. As stipulated by law, the university graduates should begin paying their debts back as soon as they start making £21,000 per year. In Bradshaw's view, the government should reconsider that amount to allow young professionals to become financially stable which is one of the changes soon to be in place.
In addition to criticizing government's policies on education, Bradshaw also added that students should contribute something to keep the higher education funding sustainable. For instance, Bradshaw suggested the repayments could be taken out of the student's salary to reduce the tax burden on recent graduates.
According to The Student Loan Report, data supported Bradshaw's theory about the unaffordable interest rates on students’ loans. According to the data, British students would graduate from university with an average of £50,000 in student debt. A potential increase in the interest rates and tuition fees would bring the yearly costs up by up to £9,250 per year per student.
Despite these numbers, not everyone in the UK agreed that interest rates on student loans should remain unchanged. One of the most prominent conservative think tanks in the country issued a public warning against reducing the interest rates on student loans.
Bright Blue addressed Chancellor of the Exchequer Philip Hammond claiming that such a move would only benefit high-paid graduates. According to Ryan Shorthouse, the CEO of Bright Blue, the Tories just aimed to attract the votes of the young people.The think tank leader also reminded that total student loan debt in the country had already exceeded £100 billion for the first time in history. In his opinion, the threshold should go up as it would be a tax cut for the recent graduates.
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