Cut student loan repayments to get youths out of chicken shops
Crippling student loan repayments have stolen billions from the economy sending struggling graduates to cheap food options and public transport, a consultancy firm has argued. Analysts at Baringa found that cutting the student loan repayment rate from nine per cent to five per cent would free up to £6bn in consumer spending each year for [...]
A consultancy firm, Baringa, has warned that crippling student loan repayments are draining billions from the UK economy, pushing graduates to seek cheaper alternatives like fast food and public transport. The report suggests that reducing the student loan repayment rate from nine per cent to five per cent could inject up to £6bn into consumer spending each year.
Currently, most UK graduates fall under Plan 2 loans, which require repayment from £29,385, while postgraduates face an additional six per cent repayment on £21,000. This threshold has led graduates to avoid sectors like hospitality, car, and home improvement, causing a loss of £676m in annual spending for the hospitality sector alone.
Baringa's partner, Paddy Winters, emphasized that consumer spending has far-reaching economic benefits, including job creation and business support. The report also highlights that the student loan burden has contributed to a surge in youth unemployment, climbing from 10.9 per cent to 16.2 per cent. The automotive industry could gain an extra £1bn from the proposed cut, as graduates might opt for cheaper second-hand vehicles instead of paying off loans.
Home improvement spending could rise by £218m per year, particularly for dual-income households without children (DINKS). Education secretary Lucy Powell acknowledged the need for reforming the loan system, with the threshold already lowered for the 2026/27 tax year.
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