|Practice area:||Economics of Education | Education and Labour Markets | Higher education|
|Published:||13 December, 2017|
|Keywords:||2017 analysis of economic developments economics of education education England EU impact assessment labour market economics 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%.