Martin Lewis issues warning over 'misunderstanding' about student loans

Martin Lewis has issued a warning about believing a "misunderstanding" about student loans and finance. University tuition fees in England are to go up next autumn for the first time in eight years, the government is to announce.

If linked to inflation, it could take fees up by £250 a year to a record £9,500 in October 2025, providing some respite for universities that have been struggling with a deepening financial crisis. BBC and ITV star Mr Lewis warned: "This is oft said about student loans, yet I'm afraid it's in my view a misunderstanding. The system is designed that you contribute in proportion to your financial success after uni (how much is a Q?) Whether you pay in full though is purely arbitrary a function of the amount the govt wants to rake it - it cannot be used to judge value of a degree.

" Eg. We could increase the payback rate by cutting the interest rate to 0% (or less than 0%) rather than currently where it is set at the rate of inflation. Yet that means Treasury's income would be slashed. Or increase interest to, lets be extreme 100%, and almost no one would repay but Treasury would make far far more money as it would effectively be a graduate tax.

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"Similar could be done by changing repayment thresholds or repayment term. These are just revenue raise functions, not degree value functions." Mr Lewis' comment came after a social media user wrote: "How can we justify the huge increase in places when the salary advantage is not enough to pay the Treasury back?"

Mr Lewis, the founder of the Money Saving Expert website, sought to reassure students and their families about the impact of any rise in fees. In a thread on X, he said higher tuition fees would not change what most students paid each year. “The biggest practical problem for students isn’t tuition fees (even if raised) – it’s the fact maintenance loans aren’t big enough.

“English maintenance loans have not kept pace with inflation. I’d urge the government to couple the tuition fee loans with bigger living loans – if not it is a real risk to social mobility, with those from the poorest backgrounds likely to be worse affected.”