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The less you earn, the higher the interest

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Since the general election in June the consultancy company London Economics (londoneconomics.co.uk) has done the first in depth study showing an analysis of the student loan system over an entire working life by occupation and gender.

Its report, commissioned by the University and College Union, focuses on what happens to those students who do get employment after graduating, and it makes for sobering reading.

Many graduates will spend their 30s and 40s dealing with effective tax rates of above 50 per cent. On average male engineering graduates, for example, will face a marginal tax rate of 51 per cent from the age of 33 until they are 47. That means on earnings greater than £45,000, they will see 51p per pound deducted from salary in tax, NI contributions and loan repayments.

This detailed report also shows the unsurprising fact that those on lower incomes incur more interest charges and end up paying more for their student loan over their working life.

For example in cash terms, full-time school teachers will pay a total of £121,000 over their working life and full-time nurses £133,000 – more than IT professionals (£106,000), lawyers (£85,000) or finance professionals (£86,000).


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