New research has shown that while 73% of students will have some tuition fee debt written off, the majority will still be paying off their loans into their 50s.

The research conducted by the Institute for Fiscal Studies (IFS) found that the average student will leave university with about £44,000 of debt, around £20,000 more than the previous system, which saw students pay roughly £3,000 a year.

The study – entitled ‘Payback Time?’ – found that graduates will repay about £66,897, which is approximately £35,446 in today’s prices. It also found that the decision to use real, above-inflation interest rates will mean that 45% of graduates will pay back more than they borrowed in real terms.

However, graduates will have an average of £30,000 written off if they have not repaid their debt within 30 years of graduating, which is usually in their early 50s.

In 2012, university tuition fees were trebled to a maximum of £9,000 a year. Graduates begin to pay back loans when they earn at least £21,000 per annum at a rate of 9% on all income above this threshold. This is more than £6,000 higher than in the previous system where the threshold stood at £15,795. However, under the new scheme, graduates pay an above-inflation interest rate of up to 3%, which begins while still studying. In the previous system, there was no real rate of interest.

The commissioners of the research, The Sutton Trust, has said the current Student Finance regime will leave people vulnerable at times when family costs are high. The director of research, Connor Ryan, stated:

“The new system will benefit graduates who earn very little in their lifetime. But for many professionals, such as teachers, this will mean having to find up to £2,500 extra a year to service loans at a time when their children are still at school and family and mortgage costs are at their most pressing.”

The report discusses the ‘average’ teacher, who works every year after graduating, taking out an average-sized loan, and having average earnings for their profession. This teacher will repay around £42,000 by the time they reach their early 50s. Then they will have the remainder – about £25,000 – written off.  In the previous system, they would have fully repaid their £25,000 debt by the time they reached 40.

Liam Byrne, the Shadow Universities Minister, said:

“David Cameron’s student finance system has lost its last shred of credibility. Degree costs have trebled yet costs to the taxpayer have gone up, and now we learn our children and grandchildren will be paying off their student debt well into their 50s. The system has lost all fiscal credibility and is losing public confidence.”

However, a spokeswoman from the business department has defended the government’s decision:

“As a result of our reforms, a greater proportion of students from disadvantaged backgrounds are going to university than ever before.

Most students will not pay upfront to study; there are more loans, grants and bursaries for those from poorer families. We have protected those on lower incomes by increasing the repayment threshold to £21,000 and our universities are now well funded for the long-term.”

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