Graduates in regular, ‘middle-income’ jobs will never earn enough money to pay off their student loans if UK rates remain the same, according to a new study.

In fact, post-2012 students need to earn a whopping annual salary of at least £51,000 a year – more than twice the national average wage – in order to begin paying off anything more than the interest on the average £40,000 student loan.

Currently, students are obliged to pay nine per cent on all earnings above the repayment threshold, which is currently set at £21,000. What's more, they're already charged double (6.6 per cent) the amount of interest on their loans in comparison to the OECD average.

The report, from the Intergenerational Federation, also compared English student fees and loans to those of other nations, finding that we have the ‘highest headline figures for tuition fees of any public university system in the world’. Even with living costs factored in, interest rates on English student loans are the third highest in the world. Only two other countries charge higher rates of interest: Mexico and the Czech Republic, but tuition fees in both are negligible.  

Angus Hanton, the co-founder of IF, believes that the government is ‘creating an indentured class of future graduates’, who have ‘little protection against further interest rate rises or a lowering of the repayment threshold’.

He added: “Urgent action must be taken to bring student loans within the protection of the Consumer Credit Act. Parliamentary oversight and approval must be guaranteed now that commercial rates of interest are being charged.”

Josh White, who wrote the report, says: “We call on those parents and grandparents, who got their university education for free, to stand united with young graduates demanding better protection. No one would sign an open-ended credit agreement for a luxury car without fixing the terms of repayment, yet this is what young people are being asked to do.”