A Decade On, Plan 2 Graduates Are Still Paying Interest
Three friends who started at the same university in 2012, the year fees tripled to £9,000, each borrowed about £37,500. One has paid it off by borrowing from family, one is chipping away, and one on £72,000 a year has watched her balance sit near £47,000. Debts are written off after thirty years.
The arithmetic is the story. Charlotte, a physiotherapist earning about £50,000: “Since April this year, I’ve paid off in the region of £450 and I’ve accrued over £500 in interest.” Libby, a project manager on £72,000: “It feels like I will never pay it off, so it’s something that I’m kind of just sucking up until the loan is written off.” Lizzy cleared hers by borrowing from her family and reckons she saved about £20,000 — and names what that means: “Buying your way out of the system or not being in at all is in itself a luxury. It buys you freedom.” The Institute for Fiscal Studies found in February that a Plan 2 graduate needs to earn around £63,000 before a £50,000 balance begins to fall; average earnings are £39,039. The live policy question is the repayment threshold, which is set to be frozen for three years, meaning graduates start repaying sooner and pay more each month, and campaigners are watching the Budget on 28 October. Martin Lewis has warned most graduates should not be panicked into overpaying. A BBC investigation in March found the Department for Education had compared repayments to “£30-a-month phone contracts” in school presentations a decade ago.