Practice area: | Economics of Education | Education and Labour Markets | Higher education |
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Client: | N/A |
Published: | 13 December, 2017 |
Keywords: | impact assessment quantitative analysis |
London Economics’ modelling estimates that the recent decision of the government to raise the repayment threshold on student loan repayments to £25,000, alongside an increase in the interest rate thresholds will cost approximately £2.85 billion a cohort. Breaking down this estimate, the additional Exchequer expenditure includes £1.09 billion in costs associated with the lower level of maintenance loan repayment and £1.76 billion in additional costs associated with tuition fee loans. Compared to the previous student finance system, the increase (and un-freezing) of the loan repayment and interest rate thresholds results in an increase in the proportion of the value of the loans never repaid (the ‘RAB charge’) from 27.6% to 45.1%.