University Tips Blog
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A headshot image of the author, Jon Cheek

by Jon Cheek


posted on 29 Sep '22

Student Finance for 2023 starters - three key facts for school and college colleagues

In February this year, it was announced that we’ll soon be seeing the biggest changes to student finance since the last round of major changes in 2012. That was big news then, but what is more important now, is that students intending to start university in 2023 are aware of the financial support they get at university – and the terms for paying this back. School and college colleagues play a crucial role in facilitating that. In this blog, I will provide some pointers.

Let's not forget - student fees and finance are the biggest barrier to university - pretty much everywhere you look. Including in our own National Review of University Guidance. That is a few years old now, but remains very relevant.

One thing I won’t do here, is compare between the 2022 and 2023 systems. I have previously done that If you wanted to take a look. Also, this does not apply for 2022 starters and those at university now. I would recommend you to consult Martin Lewis’s brilliant resources for that. This is guidance for school colleagues when supporting students considering university and starting in September 2023 onwards.

My three need to knows when supporting students

1/ Students only repay their student loan when they earn over the student finance threshold – that is £25,000 for 2023 starters

Students don’t generally pay universities or other higher education institutions directly – they can I suppose, but few do. They instead get a loan for their tuition fees, usually £9,250 a year, and a loan for living costs (how much they get for that will range as that is dependent on other factors – the main one being household income). Students can get a rough estimate though.

They will then only start repaying in the April after they leave university. But crucially they only need to repay if they earn over the student loan threshold which is currently £25,000. Earn less and they don’t pay anything back. The repayment threshold figure will be frozen until 2026 so don’t expect any increases to that for the foreseeable, unless things change as a result of the current uncertain financial climate.

Students then repay 9% of everything earned above that threshold (£25,000), so earn more and they repay more each month.

Let me give you a quick example:

  • Molly starts university in 2023
  • Finishes her course in 2026
  • Then in the April after her graduation she is earning £30,000.
  • Her monthly repayment will be around £37.50. It might actually be less if the threshold increases in the future, but I don't want to make things unnecessarily complicated.

Image of a money bank with a graduation cap

2/ Students won’t be paying this back forever, though it may feel like they are

The repayment term is 40 years. So, if they have not cleared the balance within that time, the remainder will be wiped. Of course if they are in the position where they (a) repay the balance within the 40 years or (b) decide to clear it within the 40 years, the repayments would of course stop earlier than that.

3/ The amount they borrow can be irrelevant

What a student repays each month depends solely on what they earn, ie for 2023 starters, 9% of anything over £25,000. So if their student loan balance is £10,000, £30,000 or even £60,000 +, the repayment amount will be exactly the same. The balance is only a factor when it comes to paying it all back (or not) over the 40 year repayment period.

Final note..

I wanted to keep things simple here, but a few other quick mentions. Interest is added to student loans, and the rate is capped at present to protect them from a rise in inflation. You may wish to explore this separately. Student loans don't go on a credit file, you may wish to explore that too and of course the system has changed - and can change, so my final advice I am afraid is to keep an eye on it! Find out more on the Student Loans Company website.

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