These projections depend on the underlying assumptions used in their forecasting and are inherently uncertain due to uncertainties associated with these assumptions and approximations. These projections are intended to give an indication of how the outstanding balance of student loans could grow if current policies and trends continue. This long-term projection is derived by extending the following assumptions from the short-term model (which provides forecasts up until 2025-26) over the next 50 years:

• Average student loan outlay per borrower increases each year in line with forecasts for RPIX from the Office for Budget Responsibility’s (OBR) Economic and fiscal outlook.
• Loan borrower entrant numbers vary in line with the Office for National Statistics (ONS) 2016-based principal population projections, weighted to the age profile of new entrants for each loan product.
• Future entrants have the same distribution of characteristics, loan amounts (uprated by RPIX) and earnings (uprated by OBR average earnings growth forecasts) as the 2025-26 entrants in the DfE student loan repayment and Advanced Learner Loans models.
• The maximum loan amounts, repayment thresholds and interest thresholds are uprated annually as appropriate. There are no other changes to student loan policies.

Under these assumptions the outstanding balance on student loans is anticipated to reach a peak of around ?544 billion in 2020-21 prices in the early 2050s, at around the time that the first few cohorts of Plan 2 loan borrowers reach the end of their 30 year repayment terms and have any remaining loan balance cancelled. Lees verder →