According to new analysis by the Institute for Financial Studies, students aiming for high-income postgraduate employment will save £20,000 in debt repayment if they delay university entry, while middle earners pay an extra £30,000 over a lifetime, according to new analysis by the Institute for Fiscal Studies.

The IFS . analysis highlights government student loan changes in the UK, which come into effect next year, have leaned heavily towards repaying well-paid graduates.

Students taking courses such as medicine, economics and law, which can lead to lucrative careers, will benefit by taking out a new loan from September 2023, as interest rates are charged lower.

In contrast, students who anticipate taking a lower-paying job should enroll in college courses this year to take advantage of debt forgiveness that occurs after 30 years instead of 40 years, and starting income higher than before debt repayment, according to government changes.

IFS notes: “For students graduating in 2022, this means that incentives related to taking a year off will depend heavily on the student’s expected future earnings. them,” the IFS noted.

Ben Waltmann, a senior research economist at IFS, said: “Student loan reform will reduce the cost of loans for taxpayers and top earners, in as borrowers with lower incomes will have to pay more.

“Certainly not sure by how much, but our best estimate is that lower median earners from the 2023 immigrant pool onward face the highest additional costs at around £30,000 over their lifetime.

“The final impact of the reform is extremely certain and will depend on economic developments and government policy for decades to come.”

Under the IFS model, lower-middle-income graduates will earn £33,000 – £36,000 by the age of 30. Those with higher incomes will be in the top 30%, with earnings of £50,000 or more by age 30.

The IFS said the government changes – announced by Prime Minister Rishi Sunak in the spring statement – removed progressive elements of the system introduced in 2012, describing the policy as “moving away from a system that redistributes much from the high end to the low end- graduate income”.

Larissa Kennedy, president of the National Union of Students, describes the changes as “calculated cruelty” at a time when the cost of living is soaring.

“Ministers are carrying young people with debt unimaginable for the next 40 years of their lives. Kennedy said.

Under the existing system, high-income graduate loans have an interest rate set by the retail price index (RPI) plus 3%. However, the changes mean that only the RPI rate will be used to set interest rates.

“Under the new system, most will only pay back what they borrowed – neither more nor less. This led us to move from something very much like a graduation tax to something where the term ‘student loan system’ is much more appropriate,” said IFS.

For most graduates, the loan system dating back to 2012 includes paying back 9% of their income above the 30-year repayment threshold, regardless of their total debt. Under the changes, with a repayment term of 40 years, IFS expects more than 70% of graduates to repay their loans in full.

IFS also draws attention to a little-noticed change that shifts the way the starting point for refunds is calculated.

Graduates are currently repaying their income above £27,295, with the threshold being raised each year in line with average earnings growth. Following the government changes, the threshold will increase more slowly, based on the RPI rate – which IFS says graduates with average incomes alone will expect to pay more than £10,000 in higher returns throughout their life.

“It is disturbing that such a significant change is not mentioned at all in the press materials announcing the reforms,” the IFS said.

The changes also make “the funding system for higher education in the UK superior to international ones”, the economists say, using lower public spending than most developed countries. other developments to support higher education.

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