Getting a university degree in England these days comes with a hefty price tag. The majority of students leave university which large five figure debt sums and for anyone who started between 2012 and 2023, things look even rougher.
Most recent grads walk away owing tens of thousands in student loans. Right now, once you start earning above £28,470, the government takes 9% of everything you make over that line, direct from your pack packet.
That's a 29% income tax rate effectively at that level. And if you do go into the upper band, you'd effectively be paying out at 49% until the loan is cleared.
The Brutal “Plan 2” Loans
About 5.8 million people are currently stuck with plan-2 loans. Interest on these loans is set at 3% above inflation (RPI). With inflation so high, the interest piles up fast. Unless you’re making at least £66,000 a year, your payments don’t even keep up with the interest, so your debt just keeps growing, even as you pay.
Basically, unless you’re earning a small fortune, your loan balance gets bigger, not smaller.
Final Thoghts...
With the way things are set up now, you have to wonder whether a degree really worth the price?
If the student loan system doesn’t get a serious overhaul, more and more graduates will feel like their education cost them way more than they bargained for.