A “revolutionised” student loan system for master’s degrees has been reported in the chancellor’s Autumn Statement. 

George Osborne claims that this will deter bright students from poorer backgrounds to continue their studies and remove any hindrance in front of them.

Who is eligible for taking a loan?

  • Loans will be available from the 2016/2017 year;
  • Everyone under the age 60 or under is eligible for taking a loan;
  • Everyone studying at any university with degree powers in England, Scotland, Wales or Northern Ireland;
  • Students from the European Union, who have been residents in the EU for at least three years for a reason that is other than study;
  • Everyone who has lived in England for at least three years;
  • Everyone who has not studied a Masters or Ph.D. before.

How does the loan function?

The loan functions entirely in the same manner as the undergraduate loan system. Students will only repay the loan from April 2019, with the threshold for repayments that are not activating until the student is earning beyond £21,000 per annum. At this point, students pay back 6% of any amount over £21,000 (for example, if Student X is earning £25,000, they pay back 6% of £4,000 – around £240.00 per annum), and the repayments are tied to earnings, therefore it will increase or decrease in line with their salary. This figure of 6% is lower than the initial 9% proposal. Should their salary drop below £21,000 for any reason, repayments cease until their earnings go back over the threshold.

The interest on the loans stands at RPI +3%, which, according to Tom Pinder, Postgraduate Recruitment Officer in the University of Salford, is a “favourable” rate of interest, intended to “beat” the market cost for a debt of an equivalent amount.

Repayments are made concurrently with any remaining UG loan and are simply taken directly from the salary. The figure of £21,000 has also been frozen until 2021 and if the loan is not paid off after 30 years then it is written off entirely.

What are the advantages of taking the loan?

“At any level of university study the financial pressures can be great, and any funding that can help alleviate that subsequently gives students the freedom to focus more on their studies,” says Mr Pinder. 

He also discloses that those taking out the loan in September 2016 will not commence their repayments until April 2019, as opposed to the anticipated April 2018 (the sector standard for the commencement of loan repayments is usually the April of the next financial year). This means students have an 18-month cushion upon completing their studies before repayments can start to be made. Therefore, they can start to reap the rewards of their study at a higher rate for longer in this period.

The President of the Students’ Union in the University of Salford – Marina Hristova revealed that before the introduction of the PG loan system, many students have encountered different issues in order to pay their studies.

“Unfortunately, some students had to find awful ways to fund their studies. We have had few cases when students had to prostitute in order to pay for their Master’s degree.

“The Students’ Union has led this ‘battle’ for years, and finally, as this system has been introduced, students can focus entirely on their studies and their future career, without having any troubles and stress about financial issues.”

How will a Postgraduate degree enhance students’ future?

According to Mr Pinder, a postgraduate qualification gives students the competitive edge in an extremely crowded job market.

“In a lot of cases, it’s no longer enough to have a good degree to get a job, and increasingly employers are looking for ways to distinguish between candidates. A postgraduate degree gives students skills they simply could not learn at the undergraduate level, and the discipline to pursue work and organise themselves beyond what is required for a Bachelor’s degree.”

The Sutton Trust (an educational charity that aims to improve social mobility and address educational disadvantage) calculated that, on average, those with a postgraduate degree will earn £200,000 more over the life of their career when compared to those with only an undergraduate degree.

“It puts students in a fantastic position for their life beyond the university, providing those returning to study with enhanced or new skills, and developing the futures of the next generation of career academics.” Says Tom Pinder.

By Anna Ilieva

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