MSE News: Student loan early repayment penalty plan scrapped

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Graduates who repay their student loans early will not be hit with huge penalties, following a government rethink ..."

Read the full story:
Student loan early repayment penalty plan scrapped

setmefree2

Great news.:T I am grateful to MSE for campaigning against the introduction of penalties... :T

mintymoneysaver

Pleased to see this, as it will help those who do come into money and could pay it all off immediately. I should imagine though, that because of the way the system works there would be no benefit whatsoever in just overpaying a bit at a time, as you could end up paying more over the 30 years than you would have done without the overpayments.
My daughter will be the first year with these loans, and although I think they are very high, I also realise that she will never actually know any different. Her loan will come out at source ( when she earrns enough) and she will never have known what it was like to have that money in the first place. I have made myself, and her, fully aware of the implications but I think it is the people who are not on forums like this that need to be taught.

michaels

No early repayments was to stop the rich paying back early and thus paying less graduate tax than those who couldn't afford this. Obviously the Tories were not in favour of this bit and now have waited until the libdems are under the cosh to drop this fairness factor.

silvercar

We were thinking of trying to fund our youngest's time at uni, to avoid him being saddled with loans that we couldn't help him pay back without penalty. Now it makes sense to take the loans and we can help him pay back as and when we can afford it.

silvercar

2sides2everystory wrote: »

So, the real reason Martin suspects the government have scrapped the early repayment penalty is that government cashflow forecasts are so dire that they need repayments to start flowing in much faster than originally planned.

Agreed, coupled with the realisation that high tuition fees, funded by the government, would be an even bigger dent in the country's cash flow.

lordash

michaels wrote: »

No early repayments was to stop the rich paying back early and thus paying less graduate tax than those who couldn't afford this. Obviously the Tories were not in favour of this bit and now have waited until the libdems are under the cosh to drop this fairness factor.

Its the Tories who came up with the idea of charging for early repayment - those born into wealth would most likely have had their fees paid up front by their parents, whereas those of the poorer clases who ended up working hard after graduation (and getting lucky at the same time) so that they could afford to repay their debts would be penalised. Good way for the Tories to prevent those from the lower classes moving up.

Lokolo

lordash wrote: »

Its the Tories who came up with the idea of charging for early repayment - those born into wealth would most likely have had their fees paid up front by their parents, whereas those of the poorer clases who ended up working hard after graduation (and getting lucky at the same time) so that they could afford to repay their debts would be penalised. Good way for the Tories to prevent those from the lower classes moving up.

Actually the opposite. Those that are wealthy enough would take out the loans, try and make a profit and then pay back without incuring a penalty. This would have been stopped with the introduction of early repayment penalty fee. See post a few up from yours.

However, you are right in that it would have had a knock on effect on those that felt they wanted to over pay their student loan debt.