Graduates earning a middle income are likely to end up paying the most for their student loans, as UK graduates continue to buckle under mounting university debt. According to analysis from Rathbones, those starting their careers with salaries ranging from roughly £45,000 to £50,000 can end up repaying more than other graduates, as they remain in the system the longest and pay the most interest.
The Middle Earner Trap
Under current Plan 2 rules, where interest rates have been capped at six per cent for the next academic year, a graduate starting on about £47,000 with a £50,000 student loan could repay a staggering £136,000 over 30 years. This amounts to nearly triple the total initially borrowed. Earnings at this level are just high enough to avoid a meaningful write-off but not high enough to clear the loan quickly, leaving middle earners crippled under the weight of growing interest for their working careers.
While HENRYs (High Earners, Not Rich Yet) have found themselves plagued by the £100,000 tax trap, compared to middle earners they have been less badly affected by student loan woes, as their high incomes allow them to break out of the system more quickly. Ed Wood, financial planning director at Rathbones, said: “Many people assume the highest earners are worst hit by student loans, but the reality is more complex. Middle earners can end up paying the most simply because they’re trapped repaying for longer, allowing interest to build up year after year.”
Graduates starting on £40,000 fare little better. They repay just over £100,000 in total, more than double the original loan, yet still fail to clear the balance before it is written off, leaving them stuck repaying for the full 30-year term. Meanwhile, a graduate starting on £63,000 repays roughly £90,000 in total, as earnings are sufficient to cover interest from their first day at work, stopping debt from spiralling out of control, despite the maximum rate applying.
Those on the lower end of the scale, such as graduates on £30,000, repay around £50,000 over three decades. While the outstanding balance could exceed £110,000, much of it is eventually wiped, with repayments relatively modest. Wood said: “The headline debt figure can look frightening, especially for lower earners, but what really matters for most people is the monthly repayment, not the balance. In that sense, student loans behave far more like a graduate tax than a conventional debt. But as earnings rise over time, the maths shifts — and paying the loan off can start to make sense.”
Parental Woes
The growing conversation surrounding student debt has left parents and grandparents at a crossroads: assisting their children with higher education or placing money aside for them to instead deal with high house prices and the cost of living. Wood said: “From experience with clients, many parents and grandparents have high expectations for their children or grandchildren and assume they’ll go on to earn strong salaries. As a result, they often plan to pay university fees upfront to spare them the burden of student debt. For those who can afford it, this can be a sensible approach.”
Grandparents may also see a double benefit: helping with fees now while potentially reducing a future inheritance tax bill. However, there is no one-size-fits-all answer. The key is understanding how student loans actually work before making any irreversible decisions.
