Graduates who took out student loans between 2012 and 2022 under the UK’s Plan 2 repayment scheme face rising debt balances unless they earn at least £63,000 annually, according to recent analysis by the Department for Education. Individuals with average debts around £52,100 who earn typical graduate salaries—estimated at £39,039—may see their loan balances increase by approximately £1,692 each year due to the structure of repayments and accrued interest.

The repayment terms link monthly payments to income, with graduates required to pay 9% of earnings above a £27,295 threshold. However, for those earning below the £63,000 mark, the interest charged on outstanding loan balances often exceeds the amount they repay, resulting in a net growth of debt over time. This dynamic means that many borrowers will find their loan balances remain steady or even grow rather than decline.

Projections suggest that only about 24% of graduates earning average wages will fully repay their Plan 2 loans within the 30-year repayment period, after which any remaining debt is written off. The 30-year limit marks the end of compulsory repayments regardless of the outstanding balance.

This data highlights growing concerns about the affordability and structure of student loan repayments for a significant portion of recent graduates. While higher earners will reduce their balances more quickly, many in typical income brackets could remain in debt or experience an increasing financial burden over the course of their repayment terms.