The Chancellor Rachel Reeves has delivered the Government’s budget, outlining tax and spending plans for the coming year.
Headline changes include freezing income tax thresholds and the introduction of a “mansion tax,” but certain measures will affect students.
Here are five things the Government announced that might impact you:
- The Minimum Wage Going Up
Those earning the minimum wage will receive above-inflation pay rises from April 2026.
The National Minimum Wage for 18-20 year olds, currently set at £10, will increase by 8.5 per cent to £10.85 per hour. And for those aged 21 and over, employers will be obliged to pay at least £12.71 per hour, £0.50 above current rates.
With two-thirds of students working part time to cover living costs, these changes will have a significant impact.
- Student Loan Repayment Threshold Being Frozen
However, over the long term some future-graduates can expect to be keeping less of their income because of changes to student loans.
Rather than rising with inflation, the threshold at which Plan 2 student loans require repayment will be frozen at £29,385 for three years from 2027.
This means that English students (including those attending Scottish universities) who started their studies before July 2023 and borrowed from the government will be more likely to repay a higher proportion of their debt.
While not technically a tax-rise, this will reduce the long-term value of graduates’ paypackets.
- An International Student Tax
The Government also confirmed their plans to introduce a levy on international students attending English universities.
The rate will be set at £925 per student per year and first collected from universities in 2028. While not directly affecting Scottish institutions there are fears that similar measures could be introduced north of the border.
UCU General Secretary Jo Grady says the tax “scapegoats migrants” and “will do more harm than good.”
- Maintenance Grants for English Students
Revenue collected for the international levy will be reinvested into education and fund maintenance grants for eligible English students.
These means-tested maintenance grants will be offered to students studying certain courses starting from the academic year 2028/29.
The Government says the grants will help “to ensure that cost is not a barrier to accessing higher education.”
- Nothing on Graduate Jobs
While the Government emphasised their commitment to apprenticeships and getting 18-21 year olds into work, there were no measures announced to improve the graduate job market.
Finding employment as a graduate is becoming progressively more challenging, with rising unemployment across the economy adding further pressure to the job market.
At present, only 56 per cent of those who graduated in 2023 are in full time employment.
Image by Kirsty O’Connor is licensed under the United Kingdom Open Government Licence v3.0.