Women on maternity leave who are paying off their student loans are hitting out at the so-called “motherhood penalty”, which means they often carry on accruing interest at high rates when their income dips after giving birth.
Campaigners have criticised the system and are calling for student loan interest accrual to be frozen for parents on maternity leave.
Frances Norris, 33, who has two children, Sophia, four and 20-month-old Vincent and is currently pregnant with her third child, who is due at the start of May, told The i Paper she was shocked when she realised how her student loan interest was stacking up despite her taking time out for maternity leave and only working part-time after having children.
The primary school teacher, who is married to Jack and lives in Berkshire, said: “I have been massively penalised for having kids and it is frightening to see how much the interest on my student loan has gone up – even though I’ve barely earned enough to make any repayments on my student loan since starting a family.
“Since December 2021, after having my daughter, I have only made £241 in student loan payments over more than four years as I have been earning under the repayment threshold. The odd bit of repayment has only been from when I did extra days or supply cover on top of the three days a week I was working.
“However, in that same period of four years, the interest on my student loan has shot up by £12,687. It is ludicrous.”
With Plan 2 student loans, taken out by those who went to university in England and Wales between 2012 and 2022, the repayment threshold is £28,470 per year, and borrowers repay 9 per cent of their income above this threshold.
Interest is charged on a sliding scale from retail prices index (RPI) when someone earns £28,470 or less to RPI plus an additional 3 per cent when they earn over £51,245.
Statutory Maternity Pay (SMP) is paid for up to 39 weeks, and you get 90 per cent of your average weekly earnings for the first 6 weeks and the lower of £187.18 or 90 per cent of your average weekly earnings, whichever is lower, for the next 33 weeks.
Interest is applied daily, but calculated based on the amount someone earns across a full tax year, so women can end up paying above inflation interest even when they are not earning very much and not making large repayments.
Since having children, the interest on Frances’s student loan has risen by £12,687 – despite her making virtually no repayments during that time due to earning under the thresholdFrances explained that she started university in 2012 and did a foundation course in sports coaching in Gloucester, followed by a two-year top-up BSc in sports coaching and physical education.
Her university tuition fees were £7,500 for the first year and £9,000 a year for years two and three – and then she had all her maintenance loans on top.
After graduating from university, Frances did teacher training and then became a primary school teacher. She worked full-time as a teacher from December 2017. She went on maternity leave in December 2021 after having her daughter, Sophia, and since then, she has been below the repayment threshold, apart from the odd tiny payment when working extra hours.
“I took the full year off on maternity leave from December to December, and after that, I went back three days a week,” she said. “While on maternity leave, I made one payment towards my student loan in January of £51, because of the way the pay works. Then I used shared parental leave with my husband over the summer and I paid £40 towards my student loan that month. The rest of the repayments have been the odd bit here and there, where I have helped out and done extra days. The lowest payment is £9.
“I worked part-time until I had my son and then I took another year off on maternity leave.”Frances is now working as a supply teacher two or three days a week, while her husband works four days a week, so they can juggle childcare and not pay any more than the funded hours.
She will be going on maternity leave in April with her current pregnancy and knows she is unlikely to earn enough to pay student loan repayments until her youngest child is around five and has started school.
Despite having made only £241 in student loan repayments in the four years since having children, Frances has racked up an additional £12,687 in interest in that time. Her current student loan debt exceeds £78,000.
The loan is scheduled to be wiped out 30 years after she graduated, and she will almost certainly not clear it before then, yet she says she still feels like she has “this massive debt hanging over me.”
Frances currently owes £78,000 on her student loan“I definitely think they should halt the interest after you have had a baby and are under the repayment threshold,” she said.
Rebecca Horne, head of campaigns and communications at maternity campaign group Pregnant Then Screwed, said: “Interest on student loans should be frozen for every parent on maternity leave. Anything less is indefensible.”
A Government spokesperson said: “We inherited the student loans system, including Plan 2, which was devised by the previous Government.
“The student finance system protects lower-earning graduates, with repayments determined by incomes and outstanding loans and Interest being cancelled at the end of repayment terms.
“Since we were elected, we have been committed to supporting the aspiration of anyone who can and wants to attend higher education, including by reintroducing targeted maintenance grants to support the Prime Minister’s target of two-thirds of young people taking a gold standard apprenticeship, higher training or heading to university by the age of 25.
“This is all alongside our ongoing support for working people starting off in life, as we build 1.5 million new homes, expanding government-funded childcare, introducing free breakfast clubs and freezing rail fares.”
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