For the majority of students, taking out student loans to cover tuition and living costs is an entirely inevitable and unavoidable part of attending university.
However, the issue has recently been raised that women continue to pay interest on their student loan whilst on maternity leave. This lead to Women’s Rights Charity Fawcett labelling the Student Loan Company’s repayment process a ‘system designed by men for men’.
Those who take out student loans enter into a contract with the Student Loans Company, agreeing to begin paying back their loan once their post-graduation earnings reach over £25,000 (or £19,390 in Scotland) as well as any interest which has accrued on the loan over the years.
However, women on maternity leave in the UK who are still paying back their student loans continue to accumulate interest during the period in which they are on leave.
This is even if their maternity leave pay drops below the £25,000 (or £19,390) threshold.
On top of this, the gender pay gap, women in full time employment earn on average 83p per every £1 earned by men in the same role.
The gap means that the average woman makes smaller loan repayments each month than their male co-workers. The repayments, based on income, are usually subtracted from earnings at each pay period.
Therefore, over the course of time, the average woman would take longer to pay back her student loan and thereby pay more interest – resulting in greater student debt.
This means that, for women, student loans can often be a greater financial burden than for their male counterparts.
‘Where’s the fairness?’
A recent twitter thread has brought this situation to light. Sabrina Kadic-Mackenzie and her husband, Stuart, both studied journalism at Stirling University and both graduated in 2006.
In her tweet, Sabrina explained that her husband has almost repaid his entire student loan whilst she is ‘nowhere near’ paying off her loan – 14 years after they both graduated.
Her tweet explained that the interest which accumulated during her maternity leave ‘cancelled out’ a large proportion of loan repayments she had made before becoming a mother:
“We studied at the same time, same course, same uni. The difference is that I have a womb and took two periods of maternity leave after the birth of our children….
And so, two lots of maternity leave meant two periods of not paying anything to my loan. Fair you might say.
But, here’s the bit…the interest is allowed to build while a woman is on maternity leave, in my case cancelling out a big chunk of what I paid to my loan up to motherhood.
… I come back to my own situation. A man and a woman with identical degrees, for which I will pay significantly more. Where’s the fairness in that?”
Sabrina’s story attracted huge response from mothers in the similar situation.
One mother tweeted in response that she expects to never repay her loans in full. She explained in her reply that the interest accrued each year on her loan equals to a greater amount than the balance she has previously paid off.
The accumulated interest, she wrote, is as a result of working part-time and taking two sets of maternity leaves in her 20s. ‘I’ll be written off eventually’, the mother tweeted.
In England, those who took out a student loan in the academic year 2006-07 or after will have their loans written off in 25 years after the first repayment was due.
In Scotland, a student loan will be written off after 30 years.
Finding a Solution
In 2018, Unison, a public service union in the UK, proposed a motion during the 2019 National Women’s Conference that the UK government should take action to freeze interest on a woman’s student loan during maternity leave.
The motion, stated a concern that the current repayment system of the Student Loan Company ‘indirectly discriminates against young women’ and thereby proposed:
“the only fair way to deal with this (apart from the complete repeal of student loans) is to freeze the student loan and interest accrual for the young woman going on maternity leave, until such time as she returns to work and is again earning more than £25,000 per year.”
The matter was brought up for debate at the Scottish Parliament in August. The Scottish Government replied that there is no provision to freeze the student loan interest of those on maternity (or paternity) leave.
The WEP (Women’s Equality Party) has said that the continued accrual of interest on student loans whilst women take maternity leave is ‘an unjust situation where women are penalised for having children’.
“We cannot hope to change this whilst men are still more likely to be the higher earners in heterosexual couples and they only receive statutory paternity pay, leaving new parents without a choice.”