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MSE News: Student loan early repayment penalty plan scrapped

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MSE News: Student loan early repayment penalty plan scrapped

edited 30 November -1 at 1:00AM in Student Money Saving
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MSE_GuyMSE_Guy MSE Staff
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edited 30 November -1 at 1:00AM in Student Money Saving
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 ..."

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  • setmefree2setmefree2 Forumite
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    Great news.:T I am grateful to MSE for campaigning against the introduction of penalties... :T

  • mintymoneysavermintymoneysaver Forumite
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    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.
  • michaelsmichaels Forumite
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    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.
    I think....
  • silvercarsilvercar Forumite, Board Guide
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    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.
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  • silvercarsilvercar Forumite, Board Guide
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    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.
    I'm a Board Guide on the Debate House Prices & the Economy, House Buying, Renting & Selling, Mortgages and Endowments, In My Home incl DIY, Overseas Holidays & Student boards.
    I volunteer to help get your forum questions answered and keep the forum running smoothly.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to [email protected]. Any views are mine and not the official line of moneysavingexpert.com.
  • edited 17 February 2012 at 2:27PM
    lordashlordash Forumite
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    edited 17 February 2012 at 2:27PM
    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.
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  • LokoloLokolo Forumite
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    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.
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