Martin Lewis has issued a warning to university students as new changes mean they could end up paying double for their education.
University fees have been on the rise for quite some time, with the cost of tuition for the majority of students in the UK sitting at a whopping £9,250 annually.
However, Money Saving Expert Martin Lewis has advised there’s another change on the way that could see people paying double – something that all boils down to when you have to start repaying.
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He explained in a tweet: “A reminder for anyone STARTING university in Eng from Sept onward, big changes mean most will pay far more for their education - sometimes double.
“It's because you start repaying on a lower salary, and you repay for 10yrs longer."
Lewis also shared a graphic summary to illustrate the point, showing that a starter in England last year would start repaying once they’re on a salary of £27,295, and that they would repay over a maximum of 30 years.
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Those who start this year, on the other hand, will be expected to start paying once they hit £25,000, and repay for 40 years.
When someone asked if this changed his calculation on whether or not parents should pay off fees, assuming they could afford it, Lewis replied: “It actually means there's less of a risk waiting to see as the interest is set at RPI - but it will mean more should.”
Lewis has previously warned that the cost of uni isn’t actually about that initial price tag, more so about how the loans are repaid.
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“The price tag of university is mostly irrelevant,” he said last November on the Money Saving Expert website.
“What matters in practical terms is how much you have to repay – and that's a completely separate number from the total amount of tuition fees, maintenance loan and interest.
“What you repay solely depends on what you earn after university. In effect, this is (financially at least) a 'no win, no fee' education. Those who earn a lot after graduating or leaving university will repay a lot. Those who don't gain too much financially from going to university will repay little or nothing.”
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He also said it was important to consider the ‘hidden expectation’ of parents contributing financially to their children’s living costs at university, saying many aren’t aware that they are assumed to help out.
“For that reason, parents should start saving early to ensure they can manage the extra costs,” Lewis added.
Topics: UK News, Money, Students, Martin Lewis
Jess Hardiman