Student loans could be taught in GCSE Maths as Ucas Chief calls for major change
Ucas calls for student loans to be taught in GCSE maths. CREDIT: Shutterstock
Student loan finance could be added to the GCSE maths curriculum in England, according to Dr Jo Saxton, chief executive of the Universities and Colleges Admissions Service (Ucas), amid growing debate over how young people understand university debt and repayments.
Saxton said students often understand the basic concept of borrowing for university but can struggle to work out how repayments and interest affect them over time. She argued that student loans could provide a practical example for teaching percentages, compound interest and other financial calculations already covered in maths lessons.
The proposal comes as the UK’s Plan 2 student loan system faces renewed criticism, with concerns surrounding repayment thresholds, interest charges and graduates who continue making payments while seeing their outstanding balances increase.
Why Ucas wants student loans taught in schools
Saxton told The Times that student loan finance should be used as a real-world application of concepts pupils already learn in GCSE maths.
She said students need more than a general understanding of how student loans operate. They should also be able to calculate what repayments could mean for them based on their income and understand how interest affects the outstanding balance.
The proposal is particularly relevant given the number of young people who go on to higher education. Saxton noted that just under half of young people are proceeding to university, making student finance a subject that many students are likely to encounter.
Teaching student loans through mathematics could give pupils an opportunity to apply classroom concepts to a major financial decision they may face after leaving school.
Plan 2 student loans face renewed scrutiny
The debate has intensified around Plan 2 student loans, which apply to students in England who took out loans between September 2012 and July 2023.
Under the system described in the report, interest is linked to the Retail Prices Index (RPI), with an additional amount of up to 3 per cent depending on a graduate’s income. Repayments begin once eligible graduates earn above the applicable repayment threshold.
The current threshold cited in the report is £29,385. Graduates above that level repay 9 per cent of their earnings above the threshold.
The combination of interest and repayment rules means some borrowers can see their outstanding student loan balance rise even while they are making regular repayments.
Government faces pressure over student loan repayment threshold
The Labour government is also facing pressure over its decision to freeze the Plan 2 repayment threshold.
At the previous Budget, then-chancellor Rachel Reeves announced that the £29,385 threshold would be frozen for three years from 2027. Critics have argued that freezing the threshold could leave graduates paying more than they would if it increased in line with inflation.
The threshold was originally intended to rise with inflation each year when the Plan 2 system was introduced, but it has been frozen on several occasions since 2016.
The issue has become a significant cost-of-living concern for graduates, particularly as repayments are linked to earnings rather than the total amount owed.
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Education secretary says student loan system needs review
Education Secretary Lucy Powell has also acknowledged concerns about the student loan system.
Last month, Powell described the system as needing to be examined and said the government had committed to a review. She highlighted concerns about graduates making repayments over a long period without necessarily clearing the original capital of their loans.
Powell said the issue was a priority and framed student finance as part of the wider cost-of-living pressures facing young people.
Her comments have added to calls for policymakers to consider whether the current system provides students and graduates with a fair and understandable approach to higher education funding.
More university students are planning to work while studying
The debate over student finance comes alongside another trend highlighted by Saxton: 90 per cent of incoming university students intend to work alongside their studies.
The figure, according to the Ucas chief executive, has increased significantly in recent years.
Saxton suggested that the availability of part-time employment can influence where students choose to study. Some students may prefer universities close enough to home to allow them to continue working at jobs they secured during sixth form.
For students and families already considering the financial cost of university, decisions about accommodation, travel and employment can become closely connected to the overall cost of higher education.
What GCSE students could learn about student finance
If the proposal were adopted, student loans could offer a practical way of teaching mathematical concepts such as percentages, interest and compound calculations.
Rather than studying these concepts only through abstract exercises, pupils could examine hypothetical student loan scenarios and calculate how repayments change as earnings increase.
Such lessons could also help students distinguish between the amount borrowed, the amount repaid and the outstanding balance, areas that can make student finance difficult to understand.
The proposal does not mean that a change to the GCSE maths curriculum has been announced. The source material presents it as a recommendation from the Ucas chief executive.
What happens next for UK student finance?
The debate is likely to continue as the government reviews concerns surrounding the student loan system and the impact of repayment thresholds on graduates.
For prospective university students, understanding how student loans work, when repayments begin and how earnings affect repayments remains important when considering higher education.
The proposal from Ucas places that responsibility partly within schools, suggesting that financial education around student loans could begin before students make their university choices.
FAQ: Student Finance and UK Student Loans
What is student finance?
Student finance refers to financial support available to eligible students to help meet the costs associated with higher education. The source material focuses particularly on student loans and how graduates repay them after leaving university.
What are Plan 2 student loans?
Plan 2 student loans are loans taken out by eligible students in England between 1 September 2012 and 31 July 2023. The system has specific rules governing interest and repayments.
When do Plan 2 student loan repayments start?
According to the source, repayments start when graduates earn £29,385. The report also notes that this threshold is due to be frozen at that level for three years from 2027.
How much do Plan 2 graduates repay?
Graduates repay 9 per cent of their earnings above the repayment threshold, according to the information provided in the source.
Why are UK student loan balances increasing?
Some Plan 2 borrowers can see their outstanding balances increase despite making repayments because interest is added to the loan. The source says interest is based on RPI inflation plus up to 3 per cent depending on income.
Why does Ucas want student loans taught in GCSE maths?
Ucas chief executive Dr Jo Saxton believes students need to understand not only the concept of student loans but also how to calculate repayments. She suggested using student loans as a practical GCSE maths example involving percentages and compound interest.
Will student loans actually be added to the GCSE maths curriculum?
The source does not report that this change has been approved. It reports a proposal from Ucas chief executive Dr Jo Saxton for student loan finance to feature in GCSE maths.
Why is the UK student loan system being reviewed?
Education Secretary Lucy Powell has said the student loan system needs looking at and that the government has committed to a review. Concerns include repayment costs and graduates making payments without necessarily clearing the capital of their loans.
What is the current student loan repayment threshold?
The threshold cited in the report is £29,385. The source says the government plans to freeze this threshold for three years from 2027.
Why has the student loan threshold freeze caused controversy?
Critics argue that keeping the repayment threshold at £29,385 instead of increasing it with inflation could leave graduates paying more than they otherwise would as wages and living costs change.
How does student loan interest work under Plan 2?
For Plan 2 loans covered by the report, interest is charged at RPI inflation plus up to 3 per cent, with the additional amount dependent on income.
Are university students increasingly working while studying?
According to Ucas chief executive Dr Jo Saxton, 90 per cent of incoming university students intend to work alongside their studies. She said employment considerations can influence where students choose to study.
Why are students choosing to live at home while attending university?
The source suggests that some students want to remain close to part-time jobs they already have. Living at home can make it easier to continue working while studying.
Is student debt the same as ordinary commercial debt?
The source does not make that comparison. It focuses on the specific repayment and interest arrangements attached to UK student loans and the policy debate surrounding them.
What should students know before taking a university loan?
Students should understand how repayments are calculated, when repayments begin, how interest works and how the repayment threshold affects their earnings. The Ucas proposal argues that these calculations should be introduced earlier through education.
Why is student finance becoming a bigger issue for young people?
The report links student finance concerns to the broader cost of living, graduate repayments and decisions about whether to live at home or work while studying. These factors can affect how students plan for university.