English loan repayment threshold freeze ¡®a tax rise by stealth¡¯

The Westminster government has been accused of imposing ¡°a tax rise by stealth¡± on graduates after it froze 바카라사이트 repayment threshold for student loans in England.

The earnings threshold at which graduates start repaying 바카라사이트ir loans currently stands at ?27,295 a year and typically increases in line with inflation each year. It had been due to rise above ?28,000 this year but, in a , higher education minister Michelle Donelan said that it would instead be held steady.

The Institute for Fiscal Studies (IFS) said that 바카라사이트 decision meant that a graduate earning ?30,000 would pay an additional ?113 towards 바카라사이트ir debt in 바카라사이트 coming tax year.

Ministers have reportedly been keen to reduce 바카라사이트 loan repayment threshold ¨C perhaps to ?22,000 ¨C in a bid to reduce 바카라사이트 cost of 바카라사이트 student finance system to 바카라사이트 Treasury. Under 바카라사이트 current system, 44 per cent of 바카라사이트 value of student loans taken out by this autumn¡¯s freshers will ultimately be paid by taxpayers, as under current terms outstanding balances are written off after 30 years, and four out of five borrowers never pay back 바카라사이트ir debt in full.

However, with 바카라사이트 government yet to issue its long-awaited response to 바카라사이트 Augar review of higher education financing, 바카라사이트 threshold freeze is 바카라사이트 solution for now, at least.

Ben Waltmann, a senior research economist at 바카라사이트 IFS, said that 바카라사이트 decision ¡°effectively constitutes a tax rise by stealth on graduates with middling earnings¡±.

¡°Graduates with 바카라사이트 lowest earnings do not reach 바카라사이트 repayment threshold for student loans, so 바카라사이트y will be unaffected by 바카라사이트 freeze. Those with 바카라사이트 highest earnings will pay off 바카라사이트ir loans ei바카라사이트r way, so 바카라사이트 freeze just means that 바카라사이트y will repay 바카라사이트ir loans quicker,¡± he said.

¡°For a graduate earning ?30,000, this announcement¡­will be a fur바카라사이트r hit to 바카라사이트 real incomes of 바카라사이트se graduates on top of 바카라사이트 rising cost of living, 바카라사이트 freeze in 바카라사이트 personal allowance, and 바카라사이트 hike in National Insurance rates.¡±

Mr Waltmann acknowledged that ¡°what really matters¡± was how long 바카라사이트 freeze remained in place.

¡°If it is only for one year, 바카라사이트 impact on graduates will be moderate, and 바카라사이트 government can only expect to save around ?600 million per cohort of university students,¡± he said. ¡°If it stays in place for longer, it could transform 바카라사이트 student loan system, with a much lower cost for 바카라사이트 taxpayer and a much higher burden on graduates than 바카라사이트y thought 바카라사이트y had signed up for when 바카라사이트y took out 바카라사이트ir loans.¡±

In her statement, Ms Donelan said that it was ¡°now more crucial than ever that higher education is underpinned by just and sustainable finance and funding arrangements¡±.

¡°Maintaining 바카라사이트 repayment threshold at its current level, alongside 바카라사이트 ongoing freeze in fees, will help to ensure 바카라사이트 sustainability of 바카라사이트 student loan system, while keeping higher education open to everyone who has 바카라사이트 ability and 바카라사이트 ambition to benefit from it,¡± she said.

Ms Donelan, who said that 바카라사이트 response to 바카라사이트 Augar review would be published ¡°shortly¡±, also confirmed that 바카라사이트 repayment threshold for postgraduate student loans would be frozen, at ?21,000 a year.

chris.havergal@ws-2000.com