With the NMW due to increase by 6.7% in April 2025, it is inevitable that more and more graduates in non-graduate jobs will become liable to student loan repayments, even those in the lowest paying jobs.
Student loan repayments, which are in effect a graduate tax, mean that those students earning in excess of the threshold will have an effective marginal tax rate of 37% on their earnings above the threshold. That is an income tax of 20%, employee NIC of 8% and the 9% student loan charge.
On top of this, graduates may have the additional cost of rent, transport, food, utilities and other financial pressures. The combination of a high effective tax burden and overall cost pressures means that many university leavers will also struggle to move out of their home areas to find the best opportunities.
Official statistics suggest that over one third of UK graduates struggle to find a 'graduate level' job on leaving university. Some find that there is a lack of entry-level roles in their chosen field.
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