UK postgraduates are facing a perfect storm of financial woe as they struggle with debt burdens described by many as a 'life tax'. The average student debt for those pursuing master's degrees has soared, with some individuals accumulating totals that seem impossible to pay off under the current repayment system. Francesca Peters, 27, is one such example – having completed her undergraduate degree in biochemistry with £60,000 of debt, she went on to pursue a master's, pushing her total debt to £77,000.
Francesca describes this as a 'life tax' that she fears will never be fully paid off. Her experience is echoed by a growing number of individuals and campaign groups calling for reform to the student loan system, highlighting what they see as unfair terms – particularly for postgraduate loans. While much recent debate has focused on undergraduate loans taken out between 2012 and 2023, the specific challenges faced by postgraduates have often been overlooked.
Oliver Gardner, founder of campaign group Rethink Repayment, criticised the 'egregious' terms of postgraduate loans, pointing to their low repayment threshold and consistently high interest rates. Postgraduate loan repayments begin when earnings exceed £21,000 annually – significantly lower than the £29,385 threshold for Plan 2 undergraduate loans. Furthermore, postgraduate loan repayments are charged at 6% of earnings above the threshold, compared to 9% for Plan 2 loans, and accrue interest at the retail prices index (RPI) plus 3%, currently 6.2% but capped at 6% from September.
This disparity means that master's graduates can face the daunting prospect of making two separate loan repayments simultaneously, deducted from their salary each month. Mariella James, 22, pursued a master's in sustainability and management to enhance her employability, securing a social media manager role before completing her course. Despite her success, she now sees approximately £60 deducted monthly for her master's loan, in addition to £15 for her undergraduate debt, bringing her total owed to £60,500.
Official figures show that lending for postgraduate studies in England increased by 8.7% last year, reaching £800 million. Of the nearly £300 billion in outstanding student loan debt, approximately £8 billion is attributed to postgraduate degrees. Rethink Repayment advocates for reforms including aligning repayment thresholds with wages, capping interest at inflation, and reducing the Plan 2 repayment rate to 5%, arguing that loans should function as true loans, not a lifelong tax.
A key criticism highlighted by Gardner and Peters is that the postgraduate loan repayment threshold has remained static since 2016 – meaning £21,000 then is equivalent to £29,000 today when adjusted for inflation. This highlights the growing gap between student debt and earning potential, leaving many graduates struggling to make ends meet.