Higher education finance reform: raising the repayment threshold to £25,000 and freezing the fee cap at £9,250

Document type
Briefing
Author(s)
Belfield, Chris; Britton, Jack; van der Erve, Laura
Publisher
Institute for Fiscal Studies
Date of publication
3 October 2017
Series
IFS Briefing Note; BN 217
Subject(s)
Education and Skills, Poverty Alleviation Welfare Benefits and Financial Inclusion, Employment
Collection
Social welfare
Material type
Reports

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In October 2017 the Prime Minister Theresa May announced that the income threshold above which graduates start making repayments on their student loans would be increased from £21,000 to £25,000. She also stated that the cap on tuition fees at English universities would be frozen at its current level of £9,250.

This briefing note investigates the implications of these reforms.

Key findings:

  • Increasing the repayment thresholds on student loans to £25,000 and removing the cash-terms freeze until 2021 is a significant giveaway to graduates.
  • Freezing the cap on tuition fees at £9,250 has little impact in the short-term, but has potentially significant implications if kept in place in the long-run.
  • These reforms will increase the long-run government contribution to the cost of providing higher education by around £2 billion per year.

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