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Graduates to gain loan 'repayment holiday'

Published: Monday, 23 July 2007   Category: Life after graduation

Future graduates may gain up to £850 under a proposed student loan 'repayment holiday' period, according to the Institution of Fiscal Studies (IFS).

The IFS analysed the proposals made by John Denham, the new secretary of state for innovation, universities and skills, which would allow graduates to defer repayment for up to five years.

While the graduate is in the 'repayment holiday' period the taxpayer will continue to contribute to its costs.

Lorraine Dearden of the IFS said: "The proposed repayment holiday will benefit almost all graduates who take it – high earners and low earners alike."

She added: "It would be a much better use of taxpayer money to target those who most need this type of help directly, regardless of whether or not they are graduates."

According to the IFS the proposed increase in financial support for students will only realistically apply to families with an income above £17,500.

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