According to The Telegraph, the United Kingdom is considering raising the £21,000 graduate salary cap that forces student loan borrowers to begin repayment.
Once a graduate begins earning more than £21,000 in the UK, they are responsible for making timely payments on their student loan debt.
Politicians are contemplating a raise in the salary cap in order to make the student loan system in the country more fair and easy for student debtors to repay their loans.
One option being considered by English lawmakers is to increase the £21,000 salary cap by linking it to inflation or average earnings. If a student meets the inflation or income-adjusted threshold, then they will be required to begin repayment.
Another potential remedy is to lower the current interest rate on student loans, which is 6.1 percent. That suggestion comes on the heels of a recently released report that showed the average UK student will soon owe more than £50,000 in student loan debt, in large part due to the high interest rate.
It appears that the student loan debt situation in the UK is coming to a head, and the country is scrambling for potential solutions. Earlier, Jeremy Corbyn, Leader of the Labour Party and the Opposition, proposed canceling all historic student debt in the UK.
In response, Angela Rayner, the Labour Party’s education spokeswoman, said that Corbyn’s plan would cost the country more than £100 billion. Rayner went on to say that until accurate projections are made on that plan they would not move forward with the idea.
LendEDU has covered the student loan debt problem in the UK extensively. A couple of weeks ago, the Student Loans Company admitted that nearly 80,000 former foreign student borrowers have left the UK without paying back a total of £1.3 billion in student debt.
Additionally, student loan debt in the entire UK totaled over £100 billion for the first time in the country’s history not too long ago. Many experts project that total education debt will rise to £1 trillion by the year 2035.
Author: Andrew Rombach
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