Student finance: The debt debate

University tuition fees are on the rise – but what impact will this have on new students?

The new fees structure for students at state-funded universities has been debated ad infinitum since it was announced back in October 2010 - and you would be forgiven for thinking that we should have grasped the concept by now – but it's a complicated system, so there's still a great deal of general confusion remaining.

So what will this years' cohort and those who start higher education in future actually pay back? When will they pay it? And, perhaps most crucially, is the commonly held fear that those from less advantaged backgrounds could be priced out of education founded on fact?

The truth is that while the majority of universities will be able to charge up to £9,000 a year for courses starting from September, these fees are not paid up front – which means your parents don't need to blow their savings just to get you to freshers' week. In fact, university fees aren't paid up front at all: they are covered by the Government, and then repaid by graduates.

A student starting university in September 2012 will start to settle the debt after they have graduated and found employment. At that point, they will pay back 9 per cent of their salary over £21,000. Compare that to a graduate who started university in 2011, before the fees were raised, and you may be surprised. While earlier graduates will also repay their fees at 9 per cent of their salary, they will start when they earn just £15,000 – which means a graduate earning £22,000 who started a course in 2011 will make monthly repayments of £52.50, while one who starts this year will pay £7.50 a month. What's more, under the new system, a graduate who never earns more than £21,000 will never pay back a penny.

Another point worth noting is that, in terms of how much you repay, it makes absolutely no difference whether your course charges £6,000 a year or £9,000 a year – you will pay the same (9 per cent of your salary over £21k). The difference is the length of time it will take to clear the debt.

That leads us to the final and crucial point. While it is true that the majority of tomorrow's graduates will be better off each month than yesterday's, their overall debt will be greater, and repayments will made for a far longer period of time. There is a cut-off point, however. Any outstanding debt still remaining 30 years after you graduate will be wiped. So that's something to look forward to.

Suggested Topics
Have you tried new the Independent Digital Edition apps?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs Student

Recruitment Genius: Graduate Software Developer

£18000 - £28000 per annum: Recruitment Genius: A Graduate Software Developer i...

AER Teachers: Graduate Primary TA - West London - Autumn

£65 - £75 per day + competitive rates: AER Teachers: The school is seeking gra...

AER Teachers: Graduate Secondary TA - West London

£65 - £75 per day + competitive rates: AER Teachers: The school is seeking gra...

Ashdown Group: Graduate Developer - Surrey - £25,000

£20000 - £25000 per annum + Benefits: Ashdown Group: Graduate Developer - Croy...

SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
Markus Persson: If being that rich is so bad, why not just give it all away?

That's a bit rich

The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

Coleman on course to end half a century of hurt for Wales

Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference