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Student finance debunked – tuition fee rises – is it worth it? | UK base rate cut (mortgage & savings)

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November 07, 2024

TLDR: Martin Lewis discusses increase in tuition fees and advice for affected students, provides insight on regretful impulsive purchases (Tell Us segment), and addresses a special Mastermind about floral shirts for Adrian.

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In this insightful episode of the Martin Lewis Podcast, Martin Lewis, alongside Adrian Childs, tackles the crucial topic of rising tuition fees in England, alongside recent changes in interest rates affecting mortgages and savings. Let’s break down the key points discussed in this episode, providing valuable takeaways for students, parents, and anyone interested in the intricacies of student finance.

Understanding the Tuition Fee Increase

Key Changes

  • Tuition Fees Rising: From the next academic year, tuition fees for English students will rise to £9,535, a £285 increase which is the first rise in eight years.
  • Maintenance Loans Increase: Students will also see a corresponding rise in maintenance loans, which are tied to inflation rates.
    • For students starting in 2025, the full annual loan is £8,877 if living at home, £10,544 if living away, and £13,762 if in London.

Impact on Students and Parents

  • Loan Repayment Structure: Current students repay 9% of earnings above £25,000. If you earn less, you don't repay, making it more like a graduate tax.
  • Parental Contribution: The system assumes parents will contribute more if they have higher incomes, effectively affecting the living loans offered.
  • What You Borrow vs. What You Pay: Amount borrowed is often irrelevant to actual repayments, which depend on income after graduation.

Considerations on Graduates' Repayments

  • Most graduates will pay back their loans over 40 years or until the loan is cleared, meaning many will effectively pay throughout their working lives.
  • Higher Earners Affected More: The tuition fee hike will impact mid to high earners more significantly than lower income earners, who will continue to pay the same due to the fixed repayment threshold.

The Truth About Student Loans

Student Loan System Explained

  • Understanding Loans vs. Debts: The podcast emphasizes that student loans function differently from traditional debts; repayments are income-contingent and adjusted based on what graduates earn.
  • Government Funding Shift: Changes made in 2023 shifted more cost responsibility from the state to the individual, reducing the state's contribution.

Why Grant and Loan Structures Matter

  • Variable Support: The amount students receive in loans is based on income, which means families with higher earnings will help less, significantly affecting lower-earning households.
  • Long-Term Repayment Implications: With these shifts, many graduates will never seemingly repay their debt, especially given potential future economic fluctuations.

Interest Rate Changes and Their Effects on Finances

Recent Bank of England Decisions

  • Base Rate Cut: The Bank of England has recently lowered the base rate by 0.25%, impacting mortgage rates and savings across the board.
    • Mortgage Holders: Tracker or variable rate mortgages will see slight reductions in monthly repayments.
    • Savings Accounts: Expect rates in variable and easy access accounts to drop, limited savings options will also respond to these changes.

Mortgage Insights

  • Impact on Fixed Rate Mortgages: Those on fixed rates won’t see immediate changes, but they may benefit from better rates once their terms end.
  • Advice on Chunking Loans: It’s crucial for borrowers to not rush decisions and to evaluate potential savings before committing to a new mortgage plan.

Conclusion: Should You Still Pursue Higher Education?

Final Thoughts from Martin Lewis

  • Carefully Weighing Options: Students considering university should evaluate whether the debt is worth the prospective earnings and career opportunities.
  • Real Costs vs. Perceived Burdens: Understanding the true nature of student loans, their repayment structures, and potential career benefits is essential for making informed decisions about pursuing higher education.
  • Unique Position of Debt: Unlike conventional debts, the repayment system provides a cushion against financial hardships, curbing concern about public perception of 'debt' in traditional terms.

Call to Action for Listeners

As the podcast wraps up, Martin invites listeners to consider their own financial situations and the value of education while navigating through the nuances of student finance in today’s economy.


This episode is a must-listen for anyone involved in student finance discussions. It highlights the complexities of the funding system and presents clear advice and insights on navigating these changes effectively.

Whether you're a prospective student, a parent trying to prepare for your child's education, or simply interested in personal finance, understanding these dynamics can help ensure more informed, confident decisions.

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