Changes to a student loan contract

sean9461 wrote: »

I took out a student loan on the original agreement that I wouldn't pay back the money until I earn over 21000 and I pay 9% of my income.

The 21000 was supposed to go up yet I've just noticed previous news that they changed that contract without consulting people. If this was a loan from a bank it would be not be allowed.

I just seen another news article where the government doesn't rule out increasing the 9%.

What can students do to fight this? As I don't believe it's fair.

The worst fear is the government changing the loan entirely into one of those mortgage style loans and selling them off so that they can come bankrupt me and force sale of my house for this debt.

Have a read of this article and the comments at the bottom:

http://www.hepi.ac.uk/2016/07/28/why-the-moneysavingexpert-is-wrong

The person that wrote this article (Nick Hillman) was a Special Adviser to the Universities Minister at the time the 2012 changes were made and is now Director of HEPI, a think tank.

Bottom line is no-one has changed the contract. If you read the contract you signed (which you were told to do before signing it) you'd have seen that you were agreeing to repaying your loan in line with the REPAYMENT REGULATONS that apply at the time the repayment is due and AS THEY ARE AMENDED. The repayment regulations MAY BE REPLACED BY FURTHER REGULATIONS.

And in the case of the £21,000 threshold freeze, no-one has changed the repayment regulations either as an automatic threshold increase regulation was not put into them (whereas it was for pre-2012 students in the 2011 amending regulations: http://www.legislation.gov.uk/uksi/2011/784/regulation/6/made which were further amended in 2014 to continue increasing that threshold annually: http://www.legislation.gov.uk/uksi/2014/651/regulation/4/made). Instead increasing the threshold requires the current regulations to be amended (which you've agreed to in the contract).

The original regulations are the following:

http://www.legislation.gov.uk/uksi/2009/470/contents/made

The regulations that amended the above regulations to bring in most of the 2012 changes are the following. The one relevant to the £21,000 threshold is the following:
http://www.legislation.gov.uk/uksi/2012/1309/regulation/11/made

To change the threshold requires further amending regulations and the current Government decided not to make them (which they are perfectly entitled to do).

sean9461 wrote: »

I read my contract and have it on me actually and I can't find the small print on changing regulations.

However even if it did say that. That's basically saying that the government has the right to change the loan agreement whenever they want.

If a loan company put that in the agreement there would be uproar.

If the government has the power to change any part of the agreement then I don't think that is right at all.

They have froze the 21000 which basically means by 2020 minimum wage is going to be 18000+ a further few years and minimum wage will be at 21000 and students will be forced to repay money they cannot afford.

The terms that students sign up to are the following:



As you read the guide to terms and conditions you were told to in paragraph (b), you'll know that on page 3 it states that loan terms may change from time to time. It mentions nowhere in those terms that the £21,000 threshold would increase in future so that required a change to the terms to bring about.

The legislation to go with paragraph (c) can be found online, and as with all legislation, can be amended from time to time, subject to Parliamentary scrutiny.

The key repayment parameters are set out in these regulations which have been subsequently amended by (for example) these regulations.

So the answer is, yes, the loan terms set out in these regulations can be amended by subsequent regulations for both new and existing borrowers. However detrimentally amending legislation retrospectively doesn't happen that often.

'Negative' changes to student loans so far have not actually involved amending the regulations.

For example, the repayment threshold for post-2012 loans is £21,000 in the regulations and is still £21,000. No changes to the terms were needed to freeze it. But the Government are free to amend the regulations from time to time, so can increase (or indeed decrease) it as they please by amending the regulations. These particular regulations are subject to the 'negative resolution' procedure, which means Parliament do not need to approve them for them to become law, but an MP can raise an objection to them and force a vote if they want. Thus Parliament can effectively block changes they don't like, although it would take an MP to pray against the regulations.

Post-2008 starters were meant to get 'repayment holidays' but these were quietly dropped in 2010 and were never legislated for.

Bottom line is, once something is in the regulations, it becomes much more unlikely that it will negatively change because Parliament can block it if it wants. However before it makes it into the regulations, Governments can simply change their mind and decide not to implement something. This is exactly what happened when they left the threshold for post-2012 loans at £21,000 and dropped repayment holidays.

The threshold for pre-2012 loans was £10,000 from 2000 to 2005 when the Government raised it to £15,000 for all borrowers by amending the regulations. They committed to increasing it in 2010 but changed their mind due to negative inflation which ended up leaving the threshold at £15,000 until 2012. The Coalition Government amended the regulations in 2011 to include an uprating mechanism for the £15,000 threshold to annually increase it by RPI from 2012 (initially until 2015, but they then amended the regulations again in 2014 to remove the time limit and allow it to increase indefinitely).

These aren't commercial loans and shouldn't be compared to such loans. They don't go on credit files and don't need to be repaid in full. They are an income contingent loan scheme - effectively a tax - and taxes change each year...