In the UK more than 4,000,000 people have student loans, some of them dating back as far as 1990 when they were first introduced.
In theory, all of these people should be repaying nine per cent of everything earned over £16,365 until the debt has been settled. But for those earning under the threshold, there is a possibility that they may never have to repay their loan.
For everyone who graduated between 2006 and 2011, the loan will be wiped 25 years after the date they were first due to make a repayment. So if you haven’t earned enough to repay the full debt, the rest of it will be written off.
For those who left higher education after 2012, the loan will be wiped 30 years after graduation.
With some graduates facing years of unpaid and low paid internships to get into their chosen profession, followed by low paid roles in some of the most popular sectors, such as media and fashion, it’s not unfeasible that a percentage of those who took out the loans will fail to repay them.
And let’s not forget, it’s pretty tricky to land a graduate job at all in the current market.
Furthermore, with the rise of ‘grey gap years’ and career breaks to raise families becoming popular again, the number of those unlikely to repay their loans rises further still.
Has the Student Loans Company accounted for the probability of large numbers of graduates passing their 25-year anniversary without repaying their loans or is it a ticking time bomb? We’ll just have to wait and see.
To find out more about you student loan repayment obligations visit GOV.UK and for excellent guidance on the best financial decisions for you regarding your student loan check out Money Saving Expert’s advice on the subject.
If you are a student or a recent graduate we would love to hear your thoughts on this. Do you think you will be able to repay your loan before it expires? Join the conversation on our Facebook page or on Twitter, or by leaving a comment below.