The value of outstanding student loans at the end of March 2021 reached £161 billion and it is forecast to rise to half a trillion pounds by 2043.
Student finance will be put on a more sustainable footing by ensuring more students are paying back their loan in full. Additionally, the length of time that students have to pay their loans back until they can be written off has been extended from 30 to 40 years.
To make the system fairer for students, the student loan interest rate will be set at RPI+0% for new borrowers starting courses from 2023-24. This will mean that graduates will no longer repay more than they borrowed.
The government has also announced the tuition fee cap will be frozen at £9,250 for a further two years - up to and including academic year 2024 to 25.
To make the system fairer for taxpayers, the repayment threshold – the point at which graduates start repaying their student loan - for new borrowers starting courses from September 2023 will be set at £25,000 until 2026-27.