Graduates who took out a student loan from 2012 onwards will now be able to earn more money before it paying back.

The new threshold replaces the previous figure of £21,000.

Previously, university students had to earn £21,000 a year before making any repayment. Now the threshold has risen to £25,000 for those who received a loan post-2012.

In a statement, Universities Minister Sam Gyimah MP said: “The increase in the student repayment threshold marks a key milestone and is another example of the steps the government is taking to support those in higher education.

“Not only will it benefit hundreds of thousands of graduates in the next financial year alone, but millions in the years to come.”

Elsewhere, in a statement, the National Union of Students’ Vice President for Higher Education, Amatey Doku, said the change will be a ‘welcome relief for many of the lowest-earning students’.

“In recent years the expected repayment for the lowest-earning graduates has increased by 30%, thanks to the freezing of the cap at £21,000 instead of rising slightly each year.

“This will not change the fact that our maintenance model is fundamentally regressive: students from the lowest income families accrue £57,000 of debt, compared to £42,000 for their more privileged peers.

“However in making this change, the Government has at least acknowledged that there are serious flaws in how we fund Higher Education in this country.

“I hope that this will preclude a more in-depth consideration as part of the upcoming review into post-18 funding, lest this becomes patching up the holes on a sinking ship,” he said.

The latest changes also affect students who took out a loan before 1 September 2012, with the threshold increasing from £17,755 to £18,330 a year.