UK Universities Accused of Misleading Students Over Loan Repayments by Using Below-Average Salaries

Several universities in England have been criticised for providing student loan repayment examples based on salaries below the national average, according to a BBC investigation.

The broadcaster examined publicly available information on more than 110 university websites and found that 12 institutions only provided worked examples using earnings below the UK’s average salary of £39,039.

The investigation also identified incorrect information about repayment thresholds and the length of time graduates must repay their loans.

Dame Meg Hillier, chair of the Treasury Committee, which recently conducted an inquiry into student loans, described some of the information as misleading. She also criticised comparisons between repayments and the cost of everyday purchases, including a daily coffee.

Graduates Face Higher Monthly Repayments as Salaries Increase

Under England’s current Plan 5 system, students borrow money to cover tuition fees and living expenses. Graduates repay 9% of their earnings above £25,000 for up to 40 years or until the outstanding loan has been cleared.

The amount deducted each month increases as a graduate’s salary rises.

For example, someone earning £30,000 pays £37.50 monthly, while a graduate earning £100,000 pays £562.50.

However, the BBC found that several universities used lower earnings when explaining how repayments work.

The University of Gloucestershire gave an example of a graduate earning £26,000 who would repay approximately £7.47 per month. Northumbria University and the University of Huddersfield used a £35,000 salary to demonstrate monthly repayments of £75.

Northumbria’s website described the amount as less than the cost of a daily coffee. The university removed that comparison after the BBC contacted it.

Twelve Universities Used Below-Average Salary Examples

The BBC identified 12 universities whose worked repayment examples were based on salaries below the national average:

• University of Gloucestershire: approximately £7.50 per month.
• University of Birmingham: £22 per month.
• London South Bank University: £22.50 per month.
• Manchester Metropolitan University: £33 per month.
• Birmingham City University: £37.50 per month.
• Open University: £37.50 per month.
• University of Sheffield: £37.50 per month.
• University of Wolverhampton: £37.50 per month.
• University of Portsmouth: £45 per month.
• Birkbeck, University of London: £54 per month.
• Northumbria University: £75 per month.
• University of Huddersfield: £75 per month.

More than a dozen other universities provided examples based on salaries above the national average.

Most of the websites examined did not include worked repayment examples, while many directed students to information published by the Department for Education (DfE), the Student Loans Company or Student Finance England.

Graduate Says Future Salary Increases Will Raise Her Repayments

Megan Russon, a 21-year-old tax accountant from Cannock, recently graduated with a starting salary of approximately £29,000. She expects to repay around £30 monthly under the current system.

However, she anticipates earning about £50,000 after qualifying as a chartered accountant in three years. At that salary, her monthly repayments would rise to approximately £187.

Russon said universities had used salaries ranging from £25,000 to £45,000 when discussing repayments during open days. She recalled being told that graduates would barely notice the deductions because they would be relatively small.

She said she had not fully understood how her repayments could change as her earnings increased until she began considering the salaries available after graduation.

Investigation Also Uncovers Incorrect Loan Information

The BBC identified further errors on university websites concerning the terms of student loans.

The University of Exeter incorrectly stated when Plan 5 loans would be written off, giving a date ten years earlier than the actual repayment period.

Royal Holloway and Edge Hill University published incorrect repayment thresholds, while Harper Adams University incorrectly stated that students from England were still on Plan 2 loans.

All four institutions updated their websites after being contacted by the BBC.

Dame Meg said she was shocked by the findings and intended to raise the matter with relevant MPs, encouraging them to contact universities in their constituencies.

She said the Department for Education should lead by providing examples that show how repayments change for higher earners, while universities also have a responsibility to give prospective students accurate information.

Treasury Committee Previously Criticised Student Loan Information

Dame Meg previously chaired a parliamentary inquiry into student loans, which criticised the way Plan 2 loans were presented to borrowers.

Plan 2 loans were issued to students in England between 2012 and 2023 and continue to be used in Wales.

The committee found that borrowers had not been adequately informed about how salary increases could affect their monthly repayments. It also criticised comparisons between student loan deductions and £30-a-month mobile phone contracts.

Following the inquiry, the Department for Education promised to improve the information available to prospective borrowers, including explaining the effects of salary progression on repayments.

Lewis Wilson of the National Union of Students described the BBC’s findings as shocking. He said students should be able to trust information provided by their universities and argued that similar presentation of another financial product could amount to mis-selling.

Department for Education Promises Review of Guidance

The Department for Education said its guidance explains how repayments are calculated under the different student loan plans.

It said prospective university students must have access to clear and accurate information and confirmed that it would review its own material in response to the Treasury Committee’s recommendations.

The department also said it was working with universities to ensure their published information remained accurate and up to date.

The University of Gloucestershire, the University of Birmingham and Harper Adams confirmed that they had updated their websites. Birkbeck said it was reviewing its information.

The University of Sheffield described its repayment example as illustrative, while Manchester Metropolitan University and the University of Wolverhampton said their examples were intended to explain the system and would be reviewed.

London South Bank University said it regularly checked its website content to ensure it remained useful and accurate.

The Open University said its examples reflected income levels likely to match the circumstances of many of its students, while acknowledging that some graduates went on to earn significantly more.

The University of Portsmouth said its example came from Student Finance England and would be updated to reflect the latest average salary.

Northumbria University said its £35,000 example was broadly in line with average earnings among full-time workers in the North East of England. It also acknowledged that higher earners would make larger monthly repayments and said it would review its wording.

Birmingham City University declined to comment, while the BBC said it had requested a response from the University of Huddersfield.