Having considered the value of apprenticeships in our last blog during National Apprenticeships Week, there has since been a lot in the media about the challenges faced by students and younger workers (up to the age of 21). Sadly, it doesn’t look like a great landscape and suggests that we may see a rise in those not in employment, education or training (NEETs). We have sympathy not just for these young workers, but also for employers, who will feel the knock-on effects.
Martin Lewis is on a mission on behalf of university students with student finance and therefore long-term loans to ensure those loans are fair and delivered as contractually signed up to.
Reading about the issues (to see where our own son’s student loan sits), it makes for a confusing and actually, a quite scary read, and suggests that all cohorts/plans have their own problems.
The more current issue for the cohort called ‘Plan 2’ is the government’s plan to freeze the repayment thresholds from next year, which according to Martin Lewis is unfair, a stealth tax and a breach of contract for those that signed up to student finance between 2012 and 2023.
Thank you, Martin Lewis for taking this on. Unfortunately, it makes me uneasy that perhaps we didn’t do enough research for our son’s university journey and we should have been more informed, and in turn made him more informed about his decision making. Overall, the situation makes me feel really sad that the decision on whether to continue education is ultimately a financial one.
It is estimated that student finance loans are becoming more and more unrepayable in the lifetime of the loans and students are being required to pay more and more money in interest and tax with continuously changing goal posts. It seems such a pressure to place 18-19 year olds under for wanting to continue their education, and it certainly doesn’t seem fair.
From personal experience, we have seen our son become more and more concerned as he progresses through his degree about the reality and magnitude of his £45,000 – £47,000 student finance debt and the potential lifelong impact of the repayments, forty years no less, to the extent where he and others on his course are looking at alternative ways to pay it off early, to remove the burden/black cloud that they perceive will hang over them until they near retirement.
Yet in contrast, there are also many students that seem to be comfortable with the loans and content to stay under the salary threshold with the intention to not pay it back and have it wiped out after 40 years. It feels disproportionate and inequitable that some will get a free university education, by staying under the earnings limit (which negates the reason of going) whilst others will worry about the heavy financial burden and consciously try to pay it off early.
It certainly makes university less appealing and makes me think there has to be some kind of shake up of this system as a whole (including fees, tutoring time, maintenance loans, repayments terms).
My personal view is that many students go along with the crowd to attend university because that’s what most students do, without really understanding the implications. It doesn’t feel ethical or moral to me to sign young adults up to 40 years of debt – which also moves them further and further away from the ability to get on the property ladder.
Post-graduation, the search for permanent jobs is tough, and there is a lot of competition, with many graduates needing to opt for unpaid internships to get work experience to build a CV or get a foot in the door somewhere.
The silver lining for graduates currently is that if their age is in their favour and they are a younger graduate there may be jobs on offer at the current 18-21 pay threshold, making them a little cheaper to employ than those over 21. But, that is proposed to change with the youth minimum wage set to rise as a Labour manifesto pledge.
One of the Labour election manifesto pledges was to remove the pay discretionary age bands to increase the pay rates for 18 to 20-year-olds to match the pay rates with those for people over the age of 21. Something very much welcomed by the unions who believe younger workers should get paid the same for the same job as an older worker.
This is a principle which on the face of it seems fair and logical, something we like in HR. The theory has historically been that younger workers have less experience and need more training. In our HR experience, that doesn’t stack up and we have seen workers above the age of 21 with no experience in a role/sector needing just as much training.
However, many sectors will really struggle when this pledge comes in to play, particularly retail and hospitality, where the younger employee is relied upon flexibly to cover variable rotas that fit around studies.
It is already being said by organisations that rely upon a younger workforce that they can’t afford the hike in pay rates and will either have to let people go to cover the cost, or will overlook younger workers for those aged 21 and over because there is no pay differential and because they will get more experience for the money.
The government has been making moves to bridge the gap between minimum pay for younger and older workers, and in April 2026, the hourly rate for 18 to 20-year-olds will rise by 85p to £10.85. Under-18s and apprentices will rise by 45p to £8 an hour, which already follows a rise in 2024 that saw a 16.3% increase.
Whilst the minimum wage rate for workers over 21 years of age has been increasing, it has been at a much slower rate. From April 2026, the NMW for 21 and over will be £12.71, which will mean there is a gap between the rates of £1.86 per hour, and it is this gap the Labour manifesto pledge is looking to bridge. It was anticipated this gap will be closed by the next election in 2029.
Pressure from businesses is leading the government to potentially consider extending the timeline, or reconsider its plans – however, it is unlikely to be pulled.
This brings us full circle back to the value of apprenticeships for both students and employers. For students, the idea of an employer funding their further education whilst paying them a salary, albeit a lower salary, seems like a no brainer for them.
For employers, the apprentices currently are employed at a lower wage rate but will likely stay with you for longer as they see out their studies and any study fees tie-in period. An added benefit is that they will become well-trained and good at their jobs, and will probably be grateful for the opportunity. With good development and succession plans in place, they may well stay with you for a long time.
Our ask would be to make sure you have good recruitment and selection processes in place and pick people for roles that are the best fit for your organisation, have the right skills and show the potential to learn, whatever their age.
I would also ask that there is consideration given to graduates when they put in their applications, that they need the job and already have approx. £45,000 worth of debt behind them, having committed to extending their skills and education.
We will wait to see how the government responds to pressure from the businesses in sectors reliant on younger workers, but our hope would be that with a planned gradual increase, organisations can plan ahead and adapt, to continue to employee the workforce that keep them running.
The negative landscape won’t do anything for morale and the mental wellbeing of those contemplating their future career direction and if we want to avoid an increase in a generation of NEETs, something has to give.
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