The proportion of plan 2 borrowers expected to have repaid their loans in full has not changed compared to 2019-20 cohort forecast published in the last student loans forecasts release in
The transfer proportion differs from the RAB charge in the way future repayments are discounted to present values. The discounting of future repayments used for calculating the transfer proportion is based on the individual borrower’s interest rates, which vary across different loan products. This is why the transfer proportion can be lower or higher than the RAB charge for different loan products. This reflects the different use of the transfer proportion and RAB charges. Further information is available in the ONS discussion on the alternative valuations of future repayments.
The remaining 75% will generally repay part of their loan balance, with some almost fully repaying. The higher education full-time RAB charge is therefore close to that of part-time higher education borrowers and Advanced Learner Loan borrowers, despite the lower proportion that finish repaying their loans.
Despite the 0% RAB charge, around 30% of master’s loan borrowers are expected not to fully repay their loan during their 30-year repayment term. In addition, these borrowers have interest rates fixed at RPI+3%. This may mean that the discounted repayments of some borrowers meet or exceed the total outlay provided, but do not fully pay off the interest accrued on the loan before the end of the repayment term.
Figure 8 shows the amount of student loan repayments forecast to be made each year from 2020-21 to 2025-26. They are expected to rise steadily over this period from ?2.8 billion in 2020-21 to ?4.8 billion in 2025-26. The rise is largely a result of increasing numbers of Plan 2 borrowers becoming liable to make repayments over this period, whereas the amount repaid by Plan 1 borrowers flattens out as the number of borrowers liable to make repayments reduces.
The SLC have published figures for repayments posted to customer accounts in 2020-21 in their release. These are not directly comparable to these forecasts, due to the point at which repayments via self assessment are reported. Repayments via self-assessment posted to student loan accounts in 2020-21, in SLCs publication, will mainly relate to earnings during 2019-20. Repayments in this publication are forecast against the year income was earned. As such repayments due on self-employed earnings in 2020-21 are included in total 2020-21 forecast repayments.
Tables 9a and 9b show the number of borrowers liable to make repayments and number of borrowers earning above repayment threshold from 2020-21 to 2025-26. It is expected that the number of student loan borrowers liable to make repayments will rise from 4.7 million in 2020-21 to around 7.3 million in 2025-26. An increase in the number of Plan 2 borrowers liable to make repayments drives the overall upward trend, while the number of Plan 1 borrowers e period.
Figure 7 shows the proportion of students starting courses in the academic year that are forecast to fully repay their loans
The number of borrowers earning above repayment threshold is expected to increase from 2.0m in 2020-21 to 3.0m in 2025-26. Out of all Plan 1 borrowers liable to make repayments 58% are expected to be above the repayment thresholds in 2020-21 and 57% in 2025-26, however the total number of Plan 1 borrowers liable to repay is expected to decrease by 18% over this period as loans are repaid. The proportion of Plan 2 full-time borrowers above the repayment threshold increases from 31% in 2020-21 to 36% in 2025-26, and the number of Plan 2 full-time borrowers liable to repay more than online payday NM doubles. Due to this changing composition of the loan borrowers liable to repay the total proportion of borrowers above the repayment threshold -26.
