Students to borrow more and get less

  • Frozen student loan threshold means graduates will pay £306[1] more a year by 2021
  • Bigger loans from next year mean graduates will pay back for even longer
  • Rent rises in average halls mean that even with bigger loans, students will be poorer by 2019
  • Average rent has increased by £277 outside London and £174 in the Capital, outstripping the average rise in maintenance of £121


In today’s Autumn Statement, the Chancellor announced the decision to freeze the student loan repayment threshold. This is unfair, and represents a regrettable breach of trust that The Money Charity has highlighted before. It comes on top of the decision in the Summer Budget to scrap maintenance grants and replace them with bigger loans of up to £8,200 outside London.

These policies will force graduates to pay more for longer AND as our landmark report ‘Not free at the point of entry: the reality of paying upfront at university’ shows, rent rises mean that by 2019, they will be poorer as well.

For the extra £306 a year they have to pay as graduates, next year’s students will get an increase in maximum support of 10.3%, far larger than the 2.6% rise English students got in 2015/16. So even if this year’s rent rises of nearly 7% continue, next year’s students on the maximum support will have more disposable income than they have this year. This is welcome and a partial relief for students who need more support to get by.

However, if rents continue to rise as they did between 2014/15 and 2015/16, and growth in maximum support returns to 2.6% from 2017 onwards, students in the median rooms will have a lower disposable income by 2019.

Our report shows that today’s students are not getting support that covers the full cost of university, giving those whose parents can’t or won’t pay £000s each year an almost insurmountable financial challenge. Many students are forced to turn toward debt and other fixes that harm their studies and their financial capability over the long term. If bigger loans can’t deliver a sustainable rise in student income, this situation will not improve.

Student Loan

This shows that without either continuous rises in support levels to match soaring rents, even the improvement made with one year of double-digit loan increases will soon evaporate. Students will be given money with one hand of the system, only to see it taken away by another.

Michelle Highman, CEO of The Money Charity says:

We object to freezing the student loan repayment threshold because it is a breach of trust that will affect low and middle-income graduates the most. Together with scrapping grants, this policy means graduates will have to pay more for longer.

This would be one thing if it meant that loans covered the full cost of university up-front, but if rent rises are allowed to continue, they will get less to live on as students too.

Ultimately, whether it is by controlled costs or increasing support, students and families must have enough support and guidance to make the financial challenge of university a game that can be won. Without this, we will undermine studies and damage the long-term financial capability of students and graduates”


[1] A graduate earning £25,000 or more a year

[2] Median priced room, if the current rate of increase continues.