Graduates who took out controversial “Plan 2” student loans need to earn £63,600 a year if they want to see their balance decrease, a new government analysis has found.
According to the Department for Education (DfE) forecast of graduates’ earnings and lifetime repayments, published on 27 August, a Plan 2 borrower earning below this amount will not make repayments higher than the level of interest being accrued.
The DfE data shows a Plan 2 borrower with an average loan balance of £52,100 who earns the UK’s average annual salary of £39,039 would see their loan balance actually increase by £1,692 a year.
The analysis predicts that just under a quarter (24 per cent) of those earning around the average salary 10 years after repayments kick in are predicted to pay off their Plan 2 loans in full.
Meanwhile, Plan 5 borrowers – those who began degrees after 1 August 2023 – would need to earn £43,625 in 2026-27 to see their average balance of £45,800 decrease.
