Women, ethnic minorities and disabled students will be hardest hit by George Osborne's change to loan repayments
Graduates earning between £20,000 - £35,000 will be see their repayments rise by an extra £6,000 on average
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Your support makes all the difference.Women, ethnic minorities and students with disabilities will be hit the hardest by the Government's controversial decision to freeze the £21,000 student loan repayment threshold for the next five years.
The move, which was quietly announced on Wednesday at the same time as a host of other spending decisions were unveiled in George Osborne's Autumn Statement, means students will have to start paying back their tuition fee loans sooner.
Students were already hit by the Coalition Government's decision to treble tuition fees from 2012 and will now see 9 per cent of all earnings above £21,000 go towards paying back their loan until 2021.
On average, those on middle-incomes of between £21,000 - £35,000 will pay an average of £6,000 extra in repayment costs according to the Government's own assessment.
This income group is the most affected by the move and has a disproportionally high number of females, ethnic minorities, disabled people and mature students.
Previously the Government had promised students that the £21,000 threshold would increase along with inflation, but with average yearly wage rises at 4 per cent, the freezing of the threshold will drag thousands more graduates into repaying their loans sooner than they expected.
Government calculations predict that graduates who earn an average of more than £35,000 over the lifetime of their career will repay their tuition fee loan in full.
All loans are written off after 30 years.
The decision to freeze the £21,000 repayment threshold until 2021 will raise £680m in savings for the Treasury.
But the Government could face legal challenges over the decision, after Labour told The Independent that changing the conditions of student loans after they had started studying was the "equivalent to mis-selling".
The Department for Business said the change had been made because graduate earnings had not risen as much as expected.
A spokesman said: “When the £21,000 threshold was set in 2010, assumptions had to be made about earnings growth between 2010 and 2016.
“While the economic recovery is underway, it is not yet fully reflected in earnings, so the threshold is higher in real terms than originally intended.
“Making this change helps contribute to the current government’s debt reduction targets.”
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