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MSE News: Student loan early repayment penalty plan scrapped

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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 ..."

Comments

  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    Great news.:T I am grateful to MSE for campaigning against the introduction of penalties... :T
  • 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
    michaels Posts: 29,104 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    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....
  • silvercar
    silvercar Posts: 49,532 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    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.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • silvercar
    silvercar Posts: 49,532 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    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 Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • lordash
    lordash Posts: 62 Forumite
    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.
    DEBT OUTSTANDING [14.01.12]: £6,900 / £21,725 (REPAID 68%)
  • Lokolo
    Lokolo Posts: 20,861 Forumite
    Part of the Furniture 10,000 Posts
    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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