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Graduates are being urged to write to their MPs to stop the Government from making a U-turn on a 2012 student loan promise which could see young people having to pay back more than they can afford to.
Consumer champion and financial expert, Martin Lewis, has taken to his MoneySavingExpert.com blog highlighting the steps graduates should take to stop the move from coming into force once a government consultation closes on 14 October.
Currently, loans are designed to be repaid once students leave university, which sees them pay back nine per cent of everything earned above £21,000 a year. When the 2012 system was launched, the Government said that, from April 2017, this figure would be increased each year in line with average earnings.
Now, however, the Government wants to freeze it at £21,000 instead, meaning graduates would have to pay more each month than originally promised – and publicised – when they took the loan out.
Overall, graduates currently earning £25,000 – with the threshold at £23,000 – they would repay £180 a year. If the threshold is frozen at £21,000, though, they would have to pay back £360 a year.
Lewis says in his blog: “This type of change is a disgrace and goes against all the rules of good governance in all areas, which frown on retrospective changes. No commercial company would be allowed to change its terms after the event like this – it’d be slapped by the regulator.”
Describing the potential move as ‘an outrage’, he adds: “I have pledged to fight this, partly, too, as I communicated this to people in good faith in my role as head of the Independent Taskforce on Student Finance Information.
“As part of this, alongside MoneySavingExpert.com, I’m submitting a detailed response to the Government’s consultation.”
In the response, Lewis describes how the student loan system currently gets a bad press, and that many people don’t like it and that it’s badly explained. He adds: “But at least it does what it says it does on the tin. Whether people like the system or not, because it operates within its agreed rules, it is fair. This change takes it outside of its own rules, and so is fundamentally unfair.”
In its consultation document, the Government says it is committed to ensuring higher education in England is affordable for students and the taxpayer.
With the number of students from disadvantaged backgrounds entering higher education having risen to the highest level ever, the paper says making higher education courses available to all who are able, and wish to, study continues to be a priority.
It adds: “To ensure that the costs of the student loan book remain transparent and affordable in the long term, our preferred option within this consultation is to keep the loan repayment threshold at £21,000 for loans issued to entrants after September 2012.”
Lewis, however, is urging all – whether directly affected or not – to put pressure on the Government by writing to their MP, also making sure to spread the word on social media.
Those who wish to can find their MP’s details by entering their postcode at Parliament.uk and, if there’s an email address available, Lewis has put together a rough template of what can be said in the message:
As your constituent, I’m writing to ask you to urgently tell the Government to abandon its dangerous plans to retrospectively change the student loan system, and to join the campaign against this proposal.
The Government wants to freeze the repayment threshold at £21,000 – even though students were told they would be uprated with average earnings from April 2017. This means students who started university since 2012 will pay more back than they’d legitimately planned on. Effectively, their loans will have their T&Cs written after they’ve taken them out.
This is outrageous, it is unfair, and it should not be allowed to happen. Not only will it be against natural justice for all who have these loans, it will kill faith in the system for a whole generation of new students. How can you make a decision on whether university is worth it, if a future government will pull the rug from under your feet?
As my MP, I am calling on you to join the campaign to #StopStudentLoanUTurn. The Government must change its mind.
Yours sincerely, ENTER YOUR NAME HERE
ENTER YOUR ADDRESS HERE, SO YOUR MP KNOWS YOU’RE THEIR CONSTITUENT
Those who receive a reply are being asked to get in touch with the MoneySavingExpert.com team by emailing studentfinance@moneysavingexpert.com
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