Rishi Sunak is scooping a staggering ￡5bn from a shake-up that will force many more students to pay back their loans, helping to fund his tax cuts.

       Last month’s overhaul of student finance – requiring graduates to start repayments with lower earnings and to pay off debts for 40 years, instead of 30 – was widely criticised as unfair.

       Proposals to bring back maintenance grants for low-earning families and to slash annual tuition fees from ￡9,250 to ￡7,500 were rejected.

       Poorer students will lose out, while top-earning graduates pay less, as the proportion repaying their loans in full soars from around 25 per cent to 70 per cent.

       Now the Treasury watchdog’s book reveals the changes will bring in ￡5bn a year – accounting for more than one quarter of Mr Sunak’s higher-than-expected receipts in his spring statement.

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       Of the overall ￡19bn gain, compared with last October’s Budget, ￡10bn is being spent on slashing taxes, in particular hiking the national insurance threshold, with the rest used to cut borrowing.

       The watchdog, the Office for Budget Responsibility, states: “The reforms amount to the equivalent of an income tax rise for most existing and new students over their working lives.”

       The real-terms cut in the repayments’ threshold, combined with 40-year repayments, are “equivalent to imposing a 9 percentage point marginal income tax rise”, it says.

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