Read: Student debt at record levels

With student loans expected to feature as a key issue in next year’s general election, figures from the Student Loans Company have revealed that outstanding student loans in England have surpassed £200bn for the first time. Individual debt has also risen again, with an average cost of just under £45,000.

The balance of government-backed loans reached £205bn in the current academic year, including £19bn of new loans to undergraduates. The figure has doubled in just six years. In 2013 government forecasts were for outstanding student loans to reach £200bn by 2042 but an increase in undergraduate numbers, and the fact that postgraduate students can also take out loans, means that the level has been reached 20 years earlier than predicted. More recent forecasts suggest that the figure will reach £460bn by the mid-2040s.

Loan repayments by graduates also rose to more than £4bn in 2022-23, much higher than in previous years. The SLC believed the rise could be a result of higher inflation positively affecting the salaries of those who had taken out loans.

Loans in England were still much higher than those in other UK countries. In Scotland, where tuition is free for residents, students have £15,400 in outstanding loans on average, students from Wales have £35,500 and those from Northern Ireland £24,500.

The record levels of student debt come at a time when the Government has revised the loans system so that lower and middle-earning graduates will have to repay a greater share of their loans. It will apply in full from the 2023 university entry cohort onwards, but the 2012 to 2022 entry cohorts will also see significant changes. From 2024-25, undergraduates will have to start repaying their loans when they earn £25,000, rather than the current threshold of £27,295, and will have to continue repaying for a maximum of 40 years rather than 30, when outstanding loans are written off. Interest rates will be lowered for new borrowers, benefiting high-earning graduates who are able to pay off their loans earlier.

These changes are expected to double the number of graduates who pay off their loans in full. However, the Institute for Fiscal Studies has said that they will more than treble the expected repayments for the lowest-earning 30% of graduates. Graduates with lower-middling earnings will be hit the most by the changes with a lifetime loss of around £30,000.The highest-earning graduates will repay around £20,000 less as a result of the lower interest rate.

Shadow Education Secretary, Bridget Phillipson, has acknowledged that higher loan repayments not only eat away at pay for young undergraduates at the start of their working lives but also put off older workers from accessing retraining or upskilling. Labour has committed to reversing the changes if it wins the next general election - and has said that it will reduce monthly repayments for every new graduate without adding to government borrowing or general taxation - but has so far not published more detailed plans.