Around 600,000 university leavers will benefit from the change, which means borrowers who have taken out loans since 2012 will not begin paying back their loans until they earn £25,000 a year – up from £21,000.
It will result in savings of up to £360 a year for anyone earning over £21,000, with those earning less than £25,000 paying nothing at all.
Graduates earning over the new £25,000 threshold are set to benefit too, with lower payments compared to before, for example:
- £25,000 per year repays £0 per month instead of £30
- £27,000 per year repays £15 per month instead of £45
- £30,000 per year repays £37 per month instead of £67
- £33,000 per year repays £60 per month instead of £90
- £35,000 per year repays £75 per month instead of £105
- £40,000 per year repays £112 per month instead of £142
The increased repayment threshold applies to any student who has taken out a post-2012 undergraduate student loan or Advanced Learner Loan.
Graduates living in the UK will not be required to take action in order to receive the saving. Repayments will be calculated automatically by employers (for those paid through PAYE) or as part of the Self-Assessment return to HMRC.
Full-time students are not required to begin repaying their loans until the April after graduation.
Martin Lewis has written an in-depth piece about the change in threshold on Money Saving Expert.com