Graduates will pay an extra £24,500 as a result of the Budget
The Budget will force graduates to make student loan repayments much earlier than previously promised. Most young graduates have seen their repayment thresholds frozen until 2030 which sharply increases the total amount they will have to pay.
The Intergenerational Foundation’s analysis has found that the average graduate will repay around £8,000 more as a direct result of these changes. Those who graduated this summer will pay an additional £10,000 across the term of their loan.
Lower-earning graduates will be disproportionately affected. As a result of the changes, the amount they repay across their lifetime will increase by 68%.
The additional burden of loan repayments comes on top of the added tax costs caused by freezing the income tax thresholds. This will drag more graduates into higher tax brackets despite their incomes not increasing in real terms. The combined effect of these freezes means that median earning graduates will be £22,900 worse off across their loan term. This includes making lower earners over £13,000 poorer.
Those saving for pensions will suffer even more. The Chancellor has imposed more tax on typical graduates with pension contributions costing an extra £1,600 across the term of the loan and higher earners will pay almost £4,000 more.
In total, the Budget changes mean that this summer’s graduates who choose more pension saving will be about £28,000 worse-off.
IF Senior Researcher Toby Whelton said:
“Changes to the repayment threshold are punitive and irrational. The original idea
of the student finance regime was that repayments would not affect lower earners. This principle will be entirely eroded as a result of the Budget freezes.
The government has picked on young graduates as the path of least political resistance. Young graduates already face a high tax burden, slumping graduate wages, and extortionate rents. Increasing this burden by a double, or even triple, tax rise will be to the detriment of their livelihoods, family formation, and the government’s electoral standing among the young.”
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Notes to Editors
Toby Whelton is available for interview. Please email [email protected].
Data sources:
- ONS Labour Force Survey (2010−2024)
- November 26th 2025 Budget Statement
- DfE Longitudinal Education Outcomes (2015−2025)
- OBR Economic and Fiscal Outlook (November 2025)
- OBR Long-term Economic Determinants (March 2025)
Analysis was done using IF’s cohort student finance calculator. Lower, median, and higher earners refer to lifetime earnings quartiles. All figures are in nominal terms.