James Coney and Liz Phillips
Daily Mail
Graduates on modest incomes face an effective tax rate of 45 per cent and crippling debts for most of their working lives, a Money Mail investigation has discovered.
Radical reforms to the level of tuition fees and the way loans are repaid will leave many in debt until their mid-50s – by which time they’ll be wrestling with putting their own children through university.
Tuition fees are set to rise to as much as £9,000 a year while living costs can be up to £8,210 a year, according to the NatWest Student Living Survey.
That’s £17,210 a year or £51,630 over three years. The maximum government loan is likely to be £43,500.
Debts to the government will be reclaimed by deducting 9 per cent from any salary above a £21,000 threshold, but interest will be added to the debt. This will range from the retail prices index (RPI) to RPI plus 3 percentage points, with higher earners paying the most.
For those on modest and middle incomes, the amount of interest is likely to be greater than the amount they repay, meaning the debt will balloon through their life until, after 30 years, it is written off by the government.
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