MSE News: Guest comment: How banking bonuses have hit student loan repayments

A question about : MSE News: Guest comment: How banking bonuses have hit student loan repayments

Freelance higher education writer Andrew McGettigan explains how banking bonuses have affected the new deferment rate...

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Guest comment: How banking bonuses have hit student loan repayments

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• Fascinating.
  There is a whopping great discrepancy between the figures from the Annual Survey of Hours and Earnings and those on Average Weekly Earnings.
• Very interesting.
  Makes me glad I'm far enough below the threshold, though if I worked full time with child benefit taken in to account it would be too close for comfort.
  Also don't trust Erudio to make deferring easy for those that have previously had to pay.
• Clearly the concept of the student loans model is broken if the government has to sell parts of its loan book off to debt collectors for less than 5p in the pound.
  To make matters clear the debt collectors want 100p in the pound.
  Had the government offered a 10p in the pound discount to the affected group of debtors then they may have got a better deal for the tax payer in the sale.
  This would of have undermined the ongoing future of the student loan system. Hence it is necessary to sell the loan on to a shark with teeth at a loss to maintain the illusion of student loan credibility.
  J_B.
• How very MSE to blame bankers for everything, are they naive enough to think that other well paid sectors do not also adopt a similar pay strategy?
  You may also like to calculate how much income tax these bankers contributed to the benefits pot too....
  Another cheap shot at an easy target
• Everyone who has a student loan that has been sold to a private company. (and this will happen to the rest of the student loans) was MISS-SOLD the loan in the first place.
  Profit making businesses are not allowed to target minors for loans as the SLC did. The loophole was the government isn't profit seeking therefore the loans could be promoted and dished out to anyone regardless of ability to pay back the loan (the latest Wonga scandal for example)
  As soon as the loans are sold on to private companies they have been miss - sold and should be written off ( like the Wonga loans)
• Looking at the calculation, the distorted April 2013 figure would also have been used in last year's calculation.
  Presumably then the threshold last year would have increased by far more than otherwise.
• The bankers did nothing wrong they just followed the rules and regulations to benefit themselves.
  I put this out there.
  How about ex students doing the same?
  It might not be moral but it is legal.
  Was it moral of the government to sell these loans and put debt collectors with semi -legal tactics on to ex-students?
  Think how student loans are sold;
  "don't worry it isn't a normal loan it is with the government"
  "It won't effect your ability to get credit or a mortgage in the future as they don't go on credit records"
  etc....etc....
  Now maybe ex-students where foolish in not reading the terms and conditions to the letter (although isn't that miss-selling when the terms and conditions aren't explained sufficiently?)
  But the conditions have a huge loophole in them where ex-students can move income to different months of the year to be always under the threshold even if they are billionaires!
  Why not use this?
  It would be interesting to hear a bankers opinion!!!
• The same thing happened back in 2010, but effectively in reverse, when the higher rate of tax increased from 45p to 50p, bonuses were paid early to avoid the higher rate. The effect on the deferment level was around a Ј500 drop in the annual amount for 2010, but the upshot of that was the 2009 level was artificially high (as the early bonuses skewed average earnings). Obviously some graduates would have benefited, able to defer when their earnings were above the true average earnings figure, so it's not always to the borrower's detriment.
  Although I agree that common sense should have prevailed and these anomalies adjusted for in the past, I think it would be dangerous for changes to be made to the calculations, now that the loans are in the hands of private sector debt collectors.
  Although not ideal, at least it's consistent, and the skewed deferment level rights itself in the following year?
• 1) The headline is tacky and MSE's rush to the bottom when it comes to journalistic presentation continues.
  2) It's a swings and roundabouts situation that will even itself out.
• Quite honestly, how many people is this going to affect?
  Let's assume that the affected people started University in 1997, the last year that the old style loans were in place. And assume also that they studied a 4-year Masters' degree, with a placement year. They finished university, then, in 2002. I know there will be exceptions but in the most part they will likely be doctors, architects, etc. whose qualifications took longer, and they will be earning far more than Ј27k by now.
  If the loan is paid off over 5 years, then anyone who is still earning below the threshold has been doing so for at least 7 years. They've either taken themselves out of full-time employment (e.g. becoming a full time parent, who won't be affected), or are in work and exhibiting a staggering lack of ambition - they're earning less than the average UK wage, 12 years after graduating.
  Let's also add that tuition was free pre-1997, so loans were only to cover the cost of living and were certainly less than Ј2k/year. Assuming that ex-students owe Ј10k (unlikely), they need only find Ј166 per month, on a salary of Ј26,727. As a ball-park figure, that's under 10% of their post-tax/NI/pension income.
  This must rank as one of the biggest non-stories MSE has ever covered, and as others have said, the headline seems like a rather pointless slice of banker-bashing.