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Leighton Andrews, Minister for Education and Skills

First published:
21 May 2012
Last updated:

This was published under the 2011 to 2016 administration of the Welsh Government


Today I have laid amending regulations which make provision for the repayment of student loans. This is the final major piece of legislation that implements the reforms to the higher education and student finance system that I announced in November 2010.

The new student loan repayment system is designed to be sustainable, affordable and progressive. Repayments will be income contingent, ensuring that repayments match ability to pay.  By raising the repayment threshold to £21,000 and introducing a progressive rate of interest, there will be a greater protection to the lowest-paid graduates.  After 30 years, outstanding balances will be written off.  

The changes to the repayment system to be implemented by these amending regulations will apply to new students who commence their studies in September 2012 or later. Certain students transferring courses or taking higher level courses starting after September 2012, but immediately after completing a previous Higher Education qualification, will remain under the existing arrangements.

The main changes are as follows:


  • Real and variable interest rates on student loans for students starting courses on or after 1 September 2012 are to be introduced.  New students starting a higher education course from September 2012 onwards will be charged interest at RPI (Retail Price Index) + 3% whilst studying. In most cases, this rate will apply until the borrower either leaves or completes his or her course.  At that point, the rate of interest charged will depend upon the borrower’s income.  Borrowers earning £21,000 or less will be charged a rate equivalent to Retail Price Index (RPI).  Interest will then be charged on a sliding scale up to £41,000 where the interest rate will be RPI + 3%.
  • The repayment threshold will be £21,000.  Setting the income threshold at £21,000 for new loans (below which repayments on new loans will not be required) will mean that low earning graduates are not required to make payments and those that earn above £21,000 will contribute less each month than borrowers would under the current system.  Those who go on to enjoy higher earnings will contribute more.  Borrowers will not be required to make any repayments before 6 April 2016 (although borrowers may choose to do so). After 6 April 2016, those earning above the income threshold and who are due to repay will repay 9% of their income above £21,000.  Full-time students will be due to repay from the 6th April after they complete or leave their course.  
  • Write-off of loan. The outstanding balance of a new loan will be cancelled 30 years after the Repayment Due Date.  The loan will also be cancelled if the borrower dies or the borrower receives a disability related benefit and, because of the disability, is permanently unfit for work.
  • Credit balance - Interest Rate. The regulations implement new interest rate provisions for both new and existing borrowers who have a student loan balance in credit due to over-repayment.  This change will apply from 6 April 2016, and will mean that the Student Loans Company will not, after a period of 60 days notice to the borrower, apply interest to credit balances.  


The Welsh Government takes seriously is responsibility to Welsh-domiciled students, wherever they choose to study and we will preserving the principle that the state should subsidise higher education and maintain opportunities for all.

In Wales we are leading the way in providing support to students to ensure funding isn't a barrier to education. We have put in place the most equitable student finance system we've ever had, and the Welsh Government will ensure that no full-time undergraduate student ordinarily resident in Wales will pay higher fees in real terms during the lifetime of this Government than if they had been students in 2010/11. This will apply no matter where the student chooses to study, in Wales or elsewhere in the UK.

In addition, every higher education institution in Wales will be better off under the new fee regime than they would have been under the old funding system. This has been achieved against a backdrop of funding cuts to Wales in the UK Government's last spending review.