Several universities in England have only been using below-average salaries in examples of student loan repayments on their websites, the BBC has found. Treasury Committee chair Dame Meg Hillier, who led a recent inquiry into student loans, said some information about repayments was "misleading", including one instance where they were compared to the "cost of a daily coffee". She also said the Department for Education (DfE) must include higher-salary examples on its own website, too.
The DfE said it would review the information it provides, while universities said their websites referred to government information and would be reviewed where necessary. Student loan repayments are tied to earnings, so the more you earn, the more you repay every month - and graduates generally go on to earn more than non-graduates. Current and prospective students in England take out Plan 5 loans to pay for their tuition fees and living costs.
They repay 9% of anything they earn over £25,000 for 40 years, or until the loan is paid off. The BBC looked at publicly available information on more than 110 university websites in England and found cases of inaccurate information about the salary at which they start repaying and the length of time they repay for. It also found that 12 universities only gave students worked examples of repayments based on earnings that are less than the UK average, which is £39,039.
How student loans work for tuition fees and living costs Three friends on their student debt: One paid off, one chipping away and one creeping up Student loan terms to be made clearer in England The University of Gloucestershire website, for example, specified a £26,000 salary would mean repaying £7.47 per month, while Northumbria University and the University of Huddersfield gave examples of £75 monthly repayments based on a £35,000 salary. Northumbria University's website said those graduates would be "repaying an amount less than the cost of a daily coffee" - a comparison that has been removed since the university was contacted by the BBC. The DfE website also only gives examples of monthly repayments for people earning up to £38,400 on other student loan plans, but does not include any real-world repayment examples for Plan 5 students.
Repayments are 9% of earnings over £25,000, so someone earning £30,000 will repay £37.50 per month, but someone earning £100,000 will repay £562.50 per month. Megan Russon, 21, is a recently graduated tax accountant from Cannock with a starting salary of around £29,000, meaning she will repay about £30 a month. However, she expects to earn around £50,000 when she becomes chartered in three years' time, and will be repaying about £187 per month.
Megan says universities gave examples of repayments based on earnings of between £25,000 and £45,000 at open days and said graduates "wouldn't even notice the repayments because they should be minimal". "At the time, I wasn't sure what salary I was even going to be on when I graduated," she said. "When I was at university, I started realising the salaries that I was going to be on after I graduated, then I started realising actually this is going to be impacting me quite a lot." The BBC's analysis found most university websites did not give worked examples, and most also referred to DfE, Student Loans Company or Student Finance England information whether they did or not.
Extract — continue reading at the source.
