Average borrowing per student
The average forecast loan outlay per undergraduate per year is displayed in Table 1.1. Full-time undergraduate students are forecast to borrow on average £15,080 per academic year in 2021/22. Students may take out a tuition fee loan, a maintenance loan or both. On average £8,850 is borrowed in tuition fee loans and £7,340 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 2026/27 full time students’ average borrowing per year is expected to rise to £16,660 (up 10% on 2021/22), which is mainly driven by higher borrowing in maintenance loans (up 12% on 2021/22, to £8,220). Maximum tuition fee loans are expected increase to £9,430 (up 7% on 2020/21). This is less than the increase in maintenance loans since maximum tuition fees are expected to remain frozen until 2024/25.
Students studying part time are expected to borrow on average £4,260 in academic year 2021/22 and we expect this to rise by 16% to £4,940 in academic year 2026/27. The average part-time fee loan is forecasted to be £3,830 in academic year 2021/22, while average part-time maintenance loan is forecasted to be £5,060. Tuition fees for part-time study are generally lower than for full-time study, resulting in lower tuition fee loans. Unlike full-time undergraduate students, the majority of part-time students 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 student 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. Full-time undergraduate students starting in 2021/22 are forecast to borrow on average £42,000 over the course of their studies, as displayed in Table 1.3. This rises to £46,830 for those starting in 2026/27 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 students expected to take a loan only in one year, with a further 26% taking out two or three years of loans. Part-time undergraduate students starting in 2021/22 will borrow £10,530 on average over the course of their studies. This rises to £11,920 for students starting in 2026/27. 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. Students starting in academic year 2021/22 and taking funding for 2 years of full-time study are expected to take out £31,180 on average while full-time students taking funding for 4 years are expected to borrow £60,550. Part-time students starting in academic year 2021/22 and taking funding for 2 years of study are expected to borrow £8,860 on average while those taking funding for 4 years are expected to borrow £17,150 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.
Average repayments per student
On average undergraduate higher education borrowers starting their studies in 2021/22 are forecast to enter repayment with an average debt of £45,800, equivalent to £37,100 in 21-22 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 70% of the loan outlay borrowed (in real terms), at a total of £23,000 in repayments in 21-22 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 (deciles) depending on their forecast lifetime income. We’ll refer to these groups as:
- Lowest lifetime earners (Decile 1): these individuals earn less than 90% of other loan borrowers over their lifetime
- Low lifetime earners (Deciles 2 to 4): among loan borrowers these individuals earn more than the lowest earners but less than the top 60% of lifetime earners
- Middle lifetime earners (Deciles 5 and 6): among loan borrowers these individuals earn more than the low earners, but less than the top 40% of lifetime earners
- Higher lifetime earners (Deciles 7 to 9): among loan borrowers these individuals earn more than all bar the top 10% of lifetime earners.
- Highest lifetime earners (Decile 10): these individuals have lifetime earnings in the top 10% of all loan borrowers.
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.
Among borrowers starting study in 2021/22, those forecast to have lower lifetime earnings repay considerably less than average (£3,100 in lifetime repayments, 10% of loan outlay borrowed, for those in the lowest 10% of lifetime earnings) while borrowers in higher lifetime earnings deciles repay substantially more than average (£48,700 in lifetime repayments in 21-22 prices for those in the highest 10% of lifetime earners).
The highest earners (deciles 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 AY21/22 may vary between RPI and RPI+3% over the loan term).
The proportion of loan outlay repaid in real terms, in Table 1.4, 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 a specific cohort of entrants, rather than subsidy on loans issued in one financial year (which will include multiple years of entrants). This difference is especially pronounced for the 21/22 cohort of entrants as reform of repayment terms (announced February 2022), which significantly reduces loan subsidy, are only recognised in estimated loan subsidy from FY22-23, part way through their course of study.
Borrowers starting their studies in 2023/24 will take out loans under different repayment terms (known as Plan 5) to those starting in 2021/22 (who repay under Plan 2). Plan 5 loans have a lower repayment threshold (£25,000 up to and including FY2026-27) than Plan 2 loans (£27,295 up to and including FY2024-25) and a longer repayment term (40 years) than Plan 2 loans (30 years) but a lower interest rate (RPI+0%) than Plan 2 loans (RPI+3% during study, variable between RPI+0% and RPI+3% after study).
On average undergraduate higher education borrowers starting their studies in 2023/24 are forecast to enter repayment with an average debt of £43,400, equivalent to £31,100 in 21-22 prices. This debt is composed of loan outlay borrowed and interest accumulated during study. Whilst the 23/24 starting cohort will on average borrow more than the 21/22 starting cohort, their debt on entering repayment is lower than the average debt of the 21/22 cohort due to the lower in-study interest rate on Plan 5 loans.
The median undergraduate loan borrower starting study in 2023/24 is expected to repay their loan debt in full over around 30 years, and on average 74% of loan outlay is expected to be repaid (in real terms). Average lifetime repayments for undergraduate loan borrowers starting in 2023/24 are £23,200 in 21-22 prices.
Borrowers in the 23/24 cohort (plan 5 loans) have similar patterns of lifetime repayments as the 21/22 cohort (plan 2 loans), in that average lifetime repayments increase with lifetime earnings decile. However, the lowest earners in the 23/24 cohort repay more over their lifetime than the lowest earners in the 21/22 cohort, due to lower repayment thresholds and longer loan terms. The highest earners in the 23/24 cohort repay less than the highest earners in the 21/22 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 21/22 cohort, the 23/24 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 AY23/24 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.