Most people don't understand how student loans work. This must change | David Thompson

Poor communication around the complicated student loan repayment system is leaving graduates confused

Ask most people, whether they’re students, graduates or parents, how teaching at university is paid for and the response will be anything but clear.

Many will have heard that students graduate with “£50,000 of debt” and that their loans attract a high interest rate. You’d need to have really done your reading to know that student loans are subject to repayment thresholds, forgiveness periods and are “income-contingent”. A recent report suggested that just two-fifths of students think they properly understand how student finance works. The interest rate applied to your loan – RPI+0-3% – has no impact on the actual monthly payments you will make. Eighty-three percent of graduates will never repay their loans in full. This is an intentional feature of the system.

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David Thompson is a senior policy analyst at the Russell Group

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