This statistics publication provides forecasts for higher education and further education student loans in England. These include forecasts of student loan borrower entrant numbers, student loan outlay and student loan repayments.
The forecasts are based on models developed by the Department for Education (DfE), details of quality and methodology are provided in the methodology document accompanying this publication.
Student loan forecasts for England
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Updated to include the long term student projections and median averages in table 11 and table 13.
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Introduction
This statistics publication provides forecasts for higher education and further education student loans in England. These include forecasts of student numbers, student loan outlay and student loan repayments. Only income-contingent student loans issued to English domiciled students studying in the UK, or EU domiciled students studying in England, are included. The forecasts are based on models developed by the Department for Education (DfE), details of quality and methodology are provided in the methodology document accompanying this publication.
This is the seventh in an annual series of statistics publications on student loan forecasts. It covers forecasts produced during the 2022-23 financial year, primarily covering the period 2022-23 to 2027-28. Repayment terms reforms (announced in February 2022), have been applied from 2022-23 onwards, this should be considered if comparing to 2021-22 and earlier years figures found in the previous publication.
We welcome feedback on this publication and the forecasts presented within it at he.modelling@education.gov.uk.
Headline facts and figures - 2022-23
On average, full-time undergraduate higher education borrowers are expected to take out loans for three years and, for those starting in academic year 2022/23, borrow on average £42,100 over the course of their studies. While most borrowers will repay at least some of their loan, the income contingent nature of the loans means only 27% of full-time undergraduate higher education borrowers starting a course in 2022/23 are expected to repay their loan in full.
In total £20.1 billion was issued in financial year 2022-23, as published by the Student Loans Company. This was composed of: 94% Plan 2 full-time higher education loans, 4% Master’s loans, 2% Plan 2 part-time higher education loans, 1% Advanced Learner Loans, <1% Doctoral Loans.
Total student loan outlay is forecast to increase by 20% between financial year 2022-23 and 2027-28 to £24.0 billion in nominal terms. This is mainly driven by increases in full-time undergraduate higher education loan outlay, partly reflecting increases in average loan amounts (forecasted to rise by 10% between academic year 2022/23 and 2027/28) and forecasted increasing loan-borrowing entrants.
Total undergraduate loan-borrowing entrants are expected to grow by 7% over the forecast period, from 544,000 in academic year 2021/22 to 580,000 in 2027/28. This is largely driven by forecasted growth in the 18-year-old population from 2021/22.
As loan repayments depend on borrower’s income and borrowers are only liable to repay for a fixed number of years, Government does not expect all loans to be repaid in full and expects to subsidise a proportion of student loans.
Of the loans issued in financial year 2022-23, the government is forecast to subsidise:
- 28% of Plan 2 full-time higher education loans (44% in 2021-22)
- 21% of Plan 2 part-time higher education loans (33% in 2021-22)
- 46% of Advanced Learner Loans (55% in 2021-22)
- 0% of Master’s loans (0% in 2021-22)
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About this release
Undergraduate learners with higher education student loans: Average borrowing per student
The average forecast loan outlay per undergraduate borrower per year is displayed in Table 1.1 Higher education full-time undergraduate students are forecast to borrow on average £15,140 per academic year in 2022/23. Students may take out a tuition fee loan, a maintenance loan or both. On average £8,780 is borrowed in tuition fee loans and £7,410 in maintenance loans. In future years the amount borrowed for higher education undergraduate loans is expected to rise in line with OBR forecast RPIx figures for the first quarter of the calendar year after the start of the academic year, apart from borrowing for tuition fee loans up to 2024/25. Maximum tuition fees are frozen up to 2024/25, however providers who charge below maximum fees may increase their fees up to the maximum. This is expected to drive small increases in average tuition fee loan borrowing up to 2024/25.
By academic year 2027/28 higher education full time students’ average borrowing per year is expected to rise to £16,660 (up 10% on 2022/23), which is mainly driven by higher borrowing in maintenance loans (up 10% on 2022/23, to £8,150). Maximum tuition fee loans are expected to increase to £9,480 (up 8% on 2022/23). This is less than the increase in maintenance loans since maximum tuition fees are expected to remain frozen until 2024/25.
Higher education students studying part time are expected to borrow on average £4,380 in academic year 2022/23 and we expect this to rise by 15% to £5,060 in academic year 2027/28. The average part-time fee loan is forecasted to be £3,880 in academic year 2022/23, while average part-time maintenance loan is forecasted to be £5,000. Tuition fees for part-time study are generally lower than for full-time study, resulting in lower tuition fee loans. Unlike full-time undergraduate borrowers, the majority of part-time borrowers only take out tuition fee loans, this is why the average total part-time loan is only slightly higher than the average fee loan.
Undergraduate students often take out loans for several years, usually related to the length of their course. The average full-time undergraduate borrower will take out 3 years of student loans, as shown in 'Table 14: Average length of funding per higher education undergraduate student’ which can be found in the ‘Explore data and files’ section of this release. Higher education full-time undergraduate students starting in academic year 2022/23 are forecast to borrow on average £42,100 over the course of their studies, as displayed in Table 1.3. This rises to £46,830 for those starting in 2027/28 due to the increases in maximum tuition fees from 2025/26 onwards and a rise in maintenance loan caps in line with forecast inflation.
Just over half of part-time undergraduate higher education borrowers are expected to take out a loan only in one year, with a further 27% taking out two or three years of loans. Part-time undergraduate students starting in academic year 2022/23 will borrow £11,120 on average over the course of their studies. This rises to £12,530 for students starting in 2027/28. The increase is driven by expected rise in tuition fee loans and, to a smaller degree, by the annual uprating of maintenance loans.
The amount borrowed varies depending on the number of years students take out funding for. Higher education students starting in academic year 2022/23 and taking funding for 2 years of full-time study are expected to take out £31,320 on average while full-time students taking funding for 4 years are expected to borrow £61,270. Part-time students starting in academic year 2022/23 and taking funding for 2 years of study are expected to borrow £9,450 on average while those taking funding for 4 years are expected to borrow £18,560 on average.
Students accrue interest on their loans whilst in study. For undergraduate students the interest rate during study usually varies depending on when they first started their studies. The final loan balance when students enter repayment will be higher than the total loan amount borrowed.
Undergraduate learners with higher education student loans: Average repayment per student
Statutory Repayment Due Date (SRDD)
The point a borrower becomes liable to begin repaying a loan, normally the start of the tax year (6 April) after graduating or otherwise leaving their course. After the SRDD borrowers are required to make repayments if their income is above the repayment threshold.
On average undergraduate higher education borrowers starting their studies in academic year 2022/23 are forecast to enter repayment with an average debt of £45,600, equivalent to £36,900 in financial year 2022-23 prices. This debt is composed of loan outlay borrowed and interest accumulated during study. The average undergraduate loan borrower is not expected to repay this loan in full and instead has some loan debt written off after 30 years. Over the course of their loan term they are expected to repay on average 72% of the loan outlay borrowed (in real terms), at a total of £24,700 in repayments in financial year 2022-23 prices.
As student loan repayments are income contingent the amount of loan debt repaid varies with earnings. How repayment varies can be explored through grouping student loan borrowers into ten equal sized groups depending on their forecast lifetime income known as Lifetime Earnings Deciles.
Among borrowers starting study in academic year 2022/23, those forecast to have lower lifetime earnings repay considerably less than average. For those individuals in Decile 1, who earn less than 90% of other loan borrowers over their lifetime, they are estimated to repay £2,200 in financial year 2022-23 prices, which is 7% of loan outlay borrowed. Higher lifetime earnings deciles repay substantially more than average. The highest 10% of lifetime earners, Decile 10, will have average lifetime repayments of £50,000 in financial year 2022-23 prices.
Those in top 30% of lifetime earners, Deciles 8, 9 and 10, are expected to repay their loans in full, in under 30 years, and to repay more than they borrowed, over 100% of their loan outlay in real terms. This is because they also repay accrued interest, which for undergraduate borrowers entering study in academic year 2022/23 may vary between RPI and RPI+3% over the loan term.
These deciles do not align with earnings deciles for the population in general. On average graduates have higher earnings than non-graduates, therefore the lowest 10% of lifetime earners amongst loan borrowers are likely to have higher average lifetime earnings than the lowest 10% of lifetime earners among the general population.
The proportion of loan outlay repaid in real terms, in Table 2.1 and Table 2.2, is not calculated in the same way as the loan subsidy by government in each financial year. Loan outlay repaid in real terms considers the total amount of borrowing undertaken by students starting their course in the same year. This differs to the section ‘Student loan costs to government: Cost to taxpayer’ which covers loan subsidy where loans are presented by financial year and instead include student borrowers across multiple years.
Borrowers starting their studies in academic year 2023/24 will take out loans under different repayment terms, known as Plan 5, to those starting in 2022/23 who repay under Plan 2. The different terms are:
- Plan 5 loans have a lower repayment threshold than Plan 2 loans, with the Plan 5 threshold set at £25,000 (up to and including financial year 2026-27), compared to £27,295 (up to and including financial year 2024-25)
- Plan 5 have longer repayment terms, 40 years compared to 30 years for Plan 2 loans
- Plan 5 have lower interest rate of RPI+0%, than Plan 2 loans which has interest rates of RPI+3% during study, variable between RPI+0% and RPI+3% after study.
Table 2.2 shows the estimated repayment behaviours of borrowers starting in academic year 2023/24 with Plan 5 loans, in comparison to Table 2.1 which covers borrowers taking up Plan 2 loans.
On average undergraduate higher education borrowers starting their studies in academic year 2023/24 are forecast to enter repayment with an average debt of £42,900, equivalent to £33,800 in financial year 2022-23 prices. This debt is composed of loan outlay borrowed and interest accumulated during study. Whilst the 2023/24 starting cohort will on average borrow more than the 2022/23 starting cohort, their debt on entering repayment is lower than the average debt of the 2022/23 cohort due to the lower in-study interest rate on Plan 5 loans.
The median undergraduate loan borrower starting study in academic year 2023/24 is expected to repay their loan debt in full over around 31 years, and on average 71% of loan outlay is expected to be repaid (in real terms). Average lifetime repayments for undergraduate loan borrowers starting in 2023/24 are £24,300 in financial year 2022-23 prices.
Borrowers in the academic year 2023/24 cohort with Plan 5 loans have similar patterns of lifetime repayments as the 2022/23 cohort with Plan 2 loans, in that average lifetime repayments increase with lifetime earnings decile. However, the lowest earners in the 2023/24 cohort repay more over their lifetime than the lowest earners in the 2022/23 cohort, due to lower repayment thresholds and longer loan terms. The highest earners in the 2023/24 cohort repay less than the highest earners in the 2022/23 cohort, as they accrue less interest, due to lower interest rates and lower repayment thresholds, and are therefore expected to pay off their loans more quickly.
Unlike borrowers in the academic year 2022/23 cohort, the 2023/24 cohort are not expected to repay substantially more than they borrowed in real terms. This is because Plan 5 loans accrue interest at a rate linked to inflation. Currently the highest earners who repay their loan in full may pay marginally more than borrowed in real terms. This is because loan interest is assumed to be based on a lagged measure of inflation, which may be slightly out of sync with in-year inflation. Interest rates for academic year 2023/24 have not yet been announced, and depending on the interest rate set, these borrowers may see the opposite effect of never repaying more than they borrowed in real terms. Interest rate caps based on prevailing market loan rates may also depress interest rates further for these borrowers.
Student loan costs to government: Cashflows
The number of undergraduate loan-borrowing entrants are forecast to grow over the upcoming years. This is largely driven by projected growth in the 18-year-old population between the start and the end of the forecast, since the 18-year-old population accounts for approximately 50% of the students who enter university each year.
Total undergraduate loan-borrowing entrants are expected to grow by 7% over the forecast period, from 544,000 in academic year 2021/22 to 580,000 in academic year 2027/28. Post-graduate loan borrowing entrants are forecast to increase from 76,000 in academic year 2021/22 to 85,000 in academic year 2027/28, driven by a return to pre-pandemic growth.
The 2021/22 figures for forecasted student loan borrowers are published in ‘Table 2a: Forecasted number of students receiving loans, by loan product’ and can be found in the ’Explore data and files' section of the release.
Total student loan outlay is forecast to increase from £20.1 billion in financial year 2022-23 to £24.0 billion in 2027-28 in nominal terms.
No Plan 1 loan outlay is forecast as these loans are only available to students who started their courses prior to 2012.
The annual growth of entrant borrowers and the rise in average loan amounts due to annual loan uprating drive the increase of higher education full-time undergraduate outlay from £18.8 billion in financial year 2022-23 to £22.4 billion in 2027-28. Students entering study from academic year 2023/24 will repay the loans they borrow under Plan 5 repayment terms. In financial year 2023-24, 21% of higher education full-time undergraduate outlay is expected to be borrowed under Plan 5 repayment terms, rising to 99% of higher education full-time undergraduate outlay in 2027-28.
Plan 3 postgraduate master’s loan outlay is forecast to increase between financial years 2022-23 and 2027-28. This assumes that growth in master’s entrants will return to the pre-pandemic growth trend. The forecast from 2023-24 is noticeably higher than the actual outlay recorded in 2022-23, this is because the 2022-23 actual value is lower than forecasted and due to time-lagged data this hasn’t yet been considered in the forecast from 2023-24 onwards.
Additional information on historic student loan outlay is published in ‘Table 1: Historical student loan outlay and forecast student loan outlay, by loan product’ and can be found in the ’Explore data and files' section of the release.
Student loan costs to government: Cost to taxpayer
Resource Accounting and Budgeting (RAB)
As student loan repayments are income contingent Government expects to subsidise a proportion of student loans. The RAB (Resource, Accounting and Budgeting) charge is the estimated cost to Government of providing a subsidy for the student finance system. It is the proportion of loan outlay issued each year which is not expected to be repaid, when future repayments are valued in present terms using the HMT discount rate. For more information about the HMT discount rate, see the methodology document.
For example, the Plan 5 full time higher education RAB charge in financial year 2027-28 is forecast to be 23%, meaning that 23% of loan outlay issued for full-time higher education study under Plan 5 repayment terms in 2027-28 is not expected to be repaid.
Positive RAB charges reflect the fact that while most borrowers will repay at least some of their loan, not all borrowers are expected to repay in full. This is because initial loan balances are large, borrowers are only required to make repayments above a set threshold, and unpaid balances are cancelled after 30 years for Plan 2 and Plan 3 loans, and 40 years for Plan 5 loans.
The RAB charge for Plan 2 full-time higher education loans is 28%. Changes to Plan 2 repayment terms, announced in February 2022, maintained the Plan 2 repayment threshold at £27,295 up to financial year 2024-25, and changed the repayment threshold in financial year 2025-26 onwards to link to inflation rather than earnings growth.
From financial year 2023-24 some loans, for new loan borrowers, will be issued under Plan 5 repayment terms. Plan 5 RAB charges are generally lower than for Plan 2. This reflects that loans issued under Plan 5 have longer repayment terms and lower repayment thresholds, and therefore a lower proportion of the outlay issued is not expected to be repaid in present terms.
Part-time students generally take out smaller total loans than full-time students, so are more likely to repay a higher proportion of their loan. The forecast RAB charge in financial year 2027-28 for Plan 5 part-time students is 20%.
Since the last student loan forecasts release in July 2022, there have been revisions to the data, economic assumptions, policies and modelling methodology used within the student loan repayment and earnings models. These updates will all contribute to varying degrees to any changes over time in the forecast of figures such as RAB charge, stock charge and percentage of borrowers expected to fully repay their student loans. Current assumptions about the future student finance system are set out in the methodology document in the student loans earnings and repayments model chapter, while the assumptions about future tuition fee and maintenance loans are covered in the student loan outlay chapter.
Transfer Proportion
Transfer Proportion
Under the partitioned loan transfer approach, student loan outlay is partitioned into loaned and transferred funds. Conceptually the transfer proportion is the fraction of student loan outlay identified at loan inception as government expenditure, in recognition that this portion of the loan is unlikely to be repaid.
Another way of considering the cost of the student loan system is through the transfer proportion. Conceptually the transfer proportion is the fraction of student loan outlay identified at loan inception as government expenditure, in recognition that this portion of the loan is unlikely to be repaid. It is used within the Office for National Statistics (ONS) public sector finance statistics.
The transfer proportion differs from the RAB charge in the way future repayments are discounted to present values. The discounting of future repayments used for calculating the transfer proportion is based on the individual borrower’s interest rates, which vary across different loan products, rather than the HMT discount rate. This is why the transfer proportion can be lower or higher than the RAB charge for different loan products. This reflects the different use of the transfer proportion and RAB charges in government finances. Further information is available in the ONS discussion on the alternative valuations of future repayments.
Like the RAB charge, the transfer proportion is relatively stable across the forecast period. The forecast transfer proportion for Plan 5 full time loans in financial year 2027-28 is 27%, meaning that 27% of loan outlay issued under Plan 5 terms in 2027-28 is identified at loan inception as government expenditure.
Whilst most borrowers are expected to repay at least some of their loan, many are not expected to repay in full.
Borrowers starting their studies in academic year 2023/24 will take out loans under Plan 5 repayment terms, compared to those starting in 2022/23 who repay under Plan 2. Table 4.3 shows the proportion of students starting study in the 2022/23 and 2023/24 academic years that are forecast to fully repay their loans.
This is lowest for full-time higher education borrowers in the academic year 2022/23 starting cohort at 27% as they will have the highest loan balances and will repay under Plan 2 repayment terms. The remaining 73% will generally repay part of their loan balance, with some almost fully repaying. The proportion of Plan 2 borrowers in the 2022/23 starting cohort expected to have repaid their loans in full is lower across all loan types compared to the same loan types for Plan 5 borrowers in the 2023/24 starting cohort.
Despite the 0% RAB charge, around 27% of master’s loan borrowers are expected not to fully repay their loan during their 30-year repayment term. In addition, these borrowers have interest rates fixed at RPI+3%. This may mean that the discounted repayments of some borrowers meet or exceed the total outlay provided, but do not fully pay off the interest accrued on the loan before the end of the repayment term.
Long term student loan projections
Figure 5.1 shows the forecast outstanding student loan balance through to 2071-72. The outstanding balance on student loans is anticipated to reach a peak of around £458 billion in 2022-23 prices in the mid 2040s, at around the time that the first few cohorts of Plan 2 loan borrowers reach the end of their 30 year repayment terms and have any remaining loan balance cancelled. At this time, the nominal face value of the student loans would be approximately £842 billion. These projections are intended to give an indication of how the outstanding balance of student loans could grow if current policies and trends continue, but are inherently very uncertain given the length of time they project into the future.
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