Francesca Peters did not consider earning a master’s degree to be optional. With over £60,000 already hanging over her head, she completed her undergraduate degree in biochemistry in 2020. The only path to her desired career path required an additional year of study and another loan. The amount had increased to £77,000 by the time she left with her postgraduate degree. “It just feels like a life tax,” she remarks. “Because I’m never going to pay it off.”
In an increasing number of discussions concerning postgraduate borrowing in England and Wales, that sentence is the silent thread. While undergraduate loans have received the majority of public outrage over student debt, postgraduate loans have received far less attention despite having terms that are generally harsher.
In the last fiscal year, the total amount of student debt in England increased by 10.5% to approximately £294.6 billion, with interest alone accounting for over £12 billion of that increase. Although postgraduate borrowing makes up a smaller portion of that total—roughly £8 billion—it has a structural cost. Even though wages and inflation have changed since 2016, repayments begin when earnings surpass £21,000 annually. When you contrast that with the £29,385 threshold for undergraduate plan 2 loans, it’s easy to understand why activists claim the disparity is unfair.
Oliver Gardner, the founder of Rethink Repayment, doesn’t hold back when discussing it. “The terms for the postgraduate loan are some of the most egregious out there,” he claims, citing the combination of a low earnings threshold and an interest rate that tracks RPI plus 3%, which is currently 6.2% but will be capped at 6% starting in September. The math quickly becomes unsettling for graduates who are still paying off their undergraduate debt: 6% of their postgraduate loan plus 9% of their undergraduate loan equals 15% of their income above the lower threshold, which is subtracted before their paycheck even feels real.
Almost instantly, Mariella James felt that squeeze. In an attempt to protect herself from a precarious graduate employment market, she enrolled in the University of Bath’s master’s program in sustainability and management, and it was successful. Months before completing her course, she was hired for a social media position at a sustainable coffee company. Relief, however, never quite materialized. Her monthly salary is reduced by approximately £60 for the master’s loan, an additional £15 for undergraduate debt, and her total balance has risen to £60,500. She acknowledges, “I choose not to look,” and it’s difficult not to see something more significant in that modest, purposeful avoidance.
Loans that increase in value even as you repay them are especially cruel. Since graduating, Peters has repaid slightly more than £3,000, but her balance has hardly changed because interest has added almost the same amount back. “They’ve designed the system so that, basically, you’re trapped,” she explains. Although it’s a compelling claim, there isn’t much disagreement over the supporting data.
James and Peters have no regrets about continuing their education. Both obtained employment as a result of having the credentials necessary for their desired careers. Instead, they are advocating for reform, such as a repayment threshold that changes in line with inflation, interest caps that are closer to rather than higher than inflation, and, in James’s opinion, lower fees to prevent students from choosing to pursue a master’s degree based solely on their ability to avoid borrowing.
The Department for Education claims that postgraduate earners typically earn more than those without degrees, citing recent changes, such as the new interest cap, as proof of fairness. On average, that might be the case. However, averages don’t appear on a payslip, and graduates who see interest exceed their repayments year after year may feel that the system is more of an obstacle to overcome than an investment in their future.
