Are student loan repayments really ‘the cost of a pint of beer’?

"This is not credit card debt. You pay nothing until you're earning close to £30,000 a year and then you pay it straight to the Treasury—it comes out of your pay and basically it's the cost of a pint of beer.”

In an interview on Radio 4’s Today programme [2:22:10] earlier this week, Alan Johnson—a former Labour education secretary and now Chancellor of the University of Hull—claimed that graduates start repaying student loans when earning “close to £30,000” and repayments are “basically the cost of a pint of beer”.

This is broadly correct for some graduates from England—someone with a loan from Student Finance England who started university between September 2012 and July 2023 and earns £28,000 a year would repay roughly £5 a month, which is close to the cost of the average UK pint. (Education is devolved, and in this fact check we’ve focused on student loans for those from England.)

But other graduates start repaying at a lower income threshold and will be repaying much more each month by the time they earn £28,000 a year. And for those earning a median graduate salary, monthly repayments will be more still—and could likely cover the cost of a generous round.

Mr Johnson told us that “misapprehension” about the student loans system “can put youngsters off attending university” and that within the constraints of a short radio interview he was referring to the cost of repayments on a type of loan taken out by many students. 

He said the main point he was making in his interview was that the maintenance loan, which was introduced in 1990 before the current system of tuition fees, “is now rolled into the same system rather than having to be paid back in the first few years after graduation and on a non-income contingent basis as previously”.

How much do graduates repay?

What you repay on a student loan depends on a number of different factors, including when you went to university and how much you currently earn.

For those who applied for a student loan through Student Finance England, there are currently four different repayment plans. The plan you’re on depends on when you started your course, and what kind of degree you did (undergraduate, postgraduate, etc).

Each of these plans has a different repayment threshold—meaning you don’t start making repayments until you earn income of a certain amount. The starting thresholds of the different plans range from £21,000 a year to £27,295 a year.

With the exception of the postgraduate loan plan (6%), your monthly repayment is 9% of whatever you earn above the repayment threshold.

According to the Office for National Statistics’ Retail Price Index, the average cost of a pint of draught lager in the UK in August was £4.80 (though prices vary substantially depending on where in the country you are).

Government figures say that someone with a ‘Plan 2’ loan who started their course between September 2012 and July 2023, and who is now earning £28,000 per year, can expect to make monthly loan repayments of approximately £5—so roughly the cost of a pint, as Mr Johnson said.

But for those from England on other repayment plans, the repayment thresholds are lower and so monthly repayments for those earning close to £30,000 are significantly higher than the typical cost of a pint. For example, someone with a ‘Plan 1’ loan—ie, who started their course before September 2012—earning £28,000 a year would repay around £22 a month. 

Put another way, for someone making repayments of 9%, you’d only have to be making around £650 a year above the repayment threshold in order for your monthly repayment to exceed the cost of an average UK pint.

And while Mr Johnson’s comments were about those just above the repayment threshold, it’s worth noting that for most graduates the cost of repayments is much more. The median graduate salary in the UK last year was £40,000, and graduates in England with ‘Plan 2’ loans earning that could expect to repay around £95 a month.