'A threat to the government on students' Ј21,000 loan repayment' blog discussion

A question about : 'A threat to the government on students' Ј21,000 loan repayment' blog discussion

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's A deliberate threat to the Government; I will organise mass protest if there's a U-turn on the Ј21,000 student loan repayment threshold Blog.

Please click 'post reply' to discuss below.

Best answers:

• Hear hear!
• Your colours are now surely nailed to the mast, Martin, Sir.
  Excellent leadership of a type very sadly missing in parliament unfortunately.
• Have been warning about student loans for some time now.
  Don't forget if the conservatives win the next election the loans will be sold off to nasty debt collecting agencies who will get the extra money from the threshold U-turn and not the government.
  This is not about money for the taxpayer it is corruption pure and simple. It is about making money for foreign owned debt collecting agencies!
• Don't the following also constitute changes to student loan terms and conditions?
  • Student loan repayment holidays announced by John Denham in 2007 (graduates will be entitled to take 5 year repayment holidays from 2012). See Martin's blog below. This never happened despite appearing in the SLC guide to terms and conditions (e.g. 2009/10: studentloanrepayment.co.uk/pls/portal/docs/PAGE/RPIPG001/RPIPS001/RPIPS006/SLC%20TERMS%20AND%20CONDS%200910.PDF - add www. at start) and never making it into the regulations.
  Martin's blog on this at the time: blog.moneysavingexpert.com/2007/07/10/student-loan-five-year-payment-holiday-take-it-take-it-take-it
  • The student support guarantee for those getting EMA also announced by John Denham in 2007. This never happened.
  webarchive.nationalarchives.gov.uk/+/ [add www. here] direct.gov.uk/en/EducationAndLearning/UniversityAndHigherEducation/StudentFinance/Applyingforthefirsttime/DG_171570
  Martin says "It hasn't happened before...". Well the above shows it has. The point is there is a reason why the regulations can be amended as part of the agreement students sign (unlike the mortgage-style loans for pre-1998 students). And the regulations will always be amended with some positive change and some negative change. The 'change' Martin bases his blog on would not even be an amendment to the regulations as the regulations do not state that the Ј21000 is to be uprated.
  The uprating of the Ј21000 repayment threshold is not part of the terms and conditions so it would not be a retrospective change. The repayment of ICR student loans are governed by The Education (Student Loans) (Repayment) Regulations 2009 as amended, which effectively form the terms and conditions of repayment of ICR loans as you sign an agreement to repay your loan in accordance with these regulations as they are amended. These regulations (as amended in 2012) state that the threshold for repayment for post-2012 loans is Ј21000. Any decision on increasing this threshold has only ever been an intention and can only be implemented if affordability can be guaranteed, which clearly at present it cannot. When the first ICR repayment threshold of Ј10000 was uprated to Ј15000 in 2005, the Labour government stated an intention of uprating it annually by RPI from 2010 but due to circumstances such as the financial crisis chose not to amend it (in effect freezing it at Ј15000). Only from 2012 did this threshold start to be increased (despite the Browne review recommending it be increased to Ј21000 as it had been frozen for so long that level was only applied to post-2012 loans). The repayment holidays and 'EMA guarantee' were also dropped. Government policy decisions need to be monitored and reviewed as implemented policy develops.
  Postgraduate loan policy is also currently in development and it has been suggested that these could be repaid concurrently at 9% above the same Ј21000 threshold which would be frozen for 5 years. I think this would be a good policy decision if you consider the facts that the budget needs to support the uncapping of student numbers and it was clearly never intended that the RAB charge on student loans would balloon so high due to how economic variables developed. The regulations (terms and conditions) have always allowed the government to amend them for all borrowers so that they can be reviewed to maintain a sustainable system. This allows the government to review and amend variables such as the repayment rate (currently 9%) and the repayment threshold. Certainly in the infancy of a new system you would expect these types of decisions until the system has been fully embedded when the terms are generally fixed at the point of any loan sale - repayment of post-2012 loans don't even start until 2016.
  Under Labour's initial ICR system the threshold level of Ј10000 was frozen between 2000 and 2005 to allow the system to be monitored and was later reviewed and amended for all graduates to Ј15000 (not just those starting courses after the threshold was increased). Real pay is nowhere near as high as the government anticipated so if the Ј21000 threshold was uprated not only would the system be unaffordable but graduates would be making lower repayments than intended, so getting a better deal. It is right that the system needs to be tweaked to ensure that we have an affordable university finance system for all and that the new repayment system operates as it was intended to operate when policy was first developed in 2010.
• Oh dear, so now we have a newbie poster seeking to split hairs and to discredit Martin in a post that reads like it has been crafted within a government spin department.
  If you are going to post in such tones, matt.t, may we please know who exactly instructed you to do so before you left the office for the weekend ?
  If what you say is the official government view, then I suggest that all Repayment Loan 2 students immediately write complaining of mis-selling. The loans should all be declared unenforceable.
  I hate crooks. I especially hate crooks in government.
• agarnett, it's good to know what past governments have done and what is written into the formal rules or not. Also good to know what public marketing undertakings were at the time the loans were issued, since normal practice is that those would be binding on a normal financial services firm making such claims.
• I'm becoming more and more concerned about my children's student loans. Younger one is being charged 5.5%, seems a rip off rate.
• Not every borrower would find that the freezing of the Ј21000 threshold would be a bad thing. Those with both pre-2012 and post-2012 loans would actually find it a good thing as they repay above a lower threshold anyway and freezing the higher threshold would allow more of their repayments to be allocated to the loans with higher interest rates (ie. the post-2012 loans) as repayments above Ј21000 get allocated to plan 2 balances and repayments below to plan 1 balances.
  Personally I don't see the next government having much choice as you can't justify running a loan system with a 50% RAB charge, especially when that wasn't the intention when the system was set up. The threshold is higher in real terms than they thought it would be based on (now shown to be inaccurate) estimates of inflation and earnings in 2010. They shouldn't have made promises they weren't sure they'd be able to keep (where've I heard that before?!) but that was in part down to messy Coalition compromises and the Coalition won't be around forever. Corrective action of some sort needs to be taken to tweak the system into a more sustainable position.
  There are all sorts of defects in the student loan system, not least the use of RPI (now a discredited inflation statistic) in setting interest rates and the repayment threshold is just another fault.
• I hope you do indeed do this Martin as you will have been well and truly set up by the government when they know you are a trusted voice to so many. Since the onset of student fees I have always felt that despite all assurances to the contrary these are just an excuse for the government to avoid helping our youth have a free further education that they themselves enjoyed while hoping to ease in ways of profiteering from them through the back door. I have been on the Save the Student site and they say that when they had some fairly respected economists go over the contracts there was absolutely nothing to guarantee anything in them from being changed which would hardly be accepted under any other form of contract. Further I read that in America the government are looking to take the loan book back into state hands such is the aggressiveness some of the loan companies use to harass graduates including ringing them in the early hours of the morning etc. we usually follow here what happens there and I'm afraid that's where I think this is leading and sadly you will always get government plants such as above and people who don't have kids and don't care making the governments excuses and reasonable sounding arguments for them. The ferocity that has been used against students daring to protest and virtual media blackout on such protests smell to high heaven and point to a potential major money maker for any present or future administration and their business pals.
  Save the student also say that early repayment charges etc. are also being mooted despite being denied earlier in the big con that is student fees. I have advised my son to borrow as little as he can as I don't want him to be at the mercy of these untrustworthy crooks. Unfortunately as a single parent I can't help him much and I fear for his future while politicians are as corrupt as ours. I tell as many of my friends as I can about this as it is so complicated a process I seriously think people don't understand all of the implications. I wish you all the best and would fully support any protest you intend to make if it happens so the government don't get away with hiding this bad news. Well done martin.
• What I don't understand is how can contracts that have clearly illegal and unfair terms in them and be non diss-chargeable in bankruptcy be set up and people are told it is okay because it is from the government.
  Then the loans get sold off to private companies!!!!!!
  So private companies can get the benefits of illegal miss-sold loans.
• Isn't this how the Lib-Dems started with the we won't allow anyone to stop uni grants?
• As an early "baby boomer", but not someone who claimed a student grant, back in the days when only 2.5 percent of the population went to "real" universities (*), I just thought I would make a posting so I can track the progress of this election vote looser.
  The reality of the situation is that our productivity per worker is going DOWN while the amount of money raised by taxation, or printed, or borrowed from my primary school aged grandchildren, continues to RISE.
  This pain is going to be spread across all the generations - it is not going to go away as more and more people scrabble for less and less resources.
  At the last election the elephant in the room was the deficit - I just could not believe it when NO party mentioned it.
  So what is going to be the elephant in the room this time round ?
  (*) There were some other degree level opportunities offered by institutions called technical colleges - and a prime minister whose lifetime achievement was setting up "The Open University".
• The problem is (and this is way the Eruido people haven't got the sympathy they deserve) that a lot of people see student loans as something that must be payed back at any costs because these idiots think it is the moral thing to do and people borrowed the money so they should pay it back type of hand wringing.
  What these absolute idiots do not realize is how the loans were sold. They were not sold as regular loans! They have basically been miss-sold on a huge scale if the money must be re-payed to the last penny by everyone who took out the loans (this is what the idiots want!)
  You can see the propaganda from the government about default rates etc in the press (these aren't real defaults these are poeople who fulfill their contract by not paying or paying very little because they don't earn enough. The aim of this is to turn the public against anyone with a student loan and make people see people who took student loans and haven't paid it all back as immoral.
  Added to this is the privatisation of the loans. The idiots still thing that these private companies that are owned by Americans and have structured there affairs in such away to avoid paying tax deserve this money!