'Student loan sell-off – should you be worried? ' 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.




Please click 'post reply' to discuss below.

Replies

  • Dumb idea - yet more pre-election short-termism. Make no mistake, we are well in to the 'A general election is coming! What can we do to make it look like we've done a good job? ' phase.

    Selling the loans will generate some cash and help to reduce the deficit today. In the long run it will cost us more money as the loans will have to be sold for less than they are worth in order to interest a private company.
  • RafterRafter Forumite
    3.8K Posts
    Although I cannot see a risk to consumers, I do wish this kind of financial engineering by government was outlawed.

    So the goverment effectively reduces the national debt by kicking the can down the road and ending up paying more in interest just so it can make political headlines about debt reduction.

    Just like the private finance initiative (PFI), it costs private companies more to borrow money than goverments, so tax payers end up paying more in the end.

    This government seemed to start out with the noble intention about being more transparent about borrowing and debt and is still making the same noises about a budget responsiblity bill in 2014.

    It has to be consistent though - only sell the student loan debt if it will save the tax payer money in the long term - case not proven in my view.

    R.
    Smile :), it makes people wonder what you have been up to.
  • That of course doesn’t entirely rule out it happening, but the political flak on it would be huge (I’d be out campaigning against it too). So I think on balance, it still remains unlikely

    Parliament proposed to foist £40k+ of debt onto 18 year olds and quickly stamped out any dissent by dubious police tactics so to attempt the argument that "government wouldn't dare" is faintly ridiculous. These loans are a soft target, students and the young are already politically alienated so what's a few more millions out of the pocket of the already indebted to secure a few more brown envelopes?
  • Ange1979Ange1979 Forumite
    1 Post
    Seventh Anniversary Combo Breaker
    MoneySaving Newbie
    Hi I am new to MSE and the Forum so please forgive me if this is a silly question...


    I have 4 Mortgage Style Loans which are currently in deferment as I earn well below the repayment threshold due to maternity. I have just received a letter regarding the Notice of Assignment and a Fair Processing Notice was included to sign and return to Erudio Student Loans. However I am worried regarding the wording of this and the implications it may have with credit reference agencies (CRAs).


    I believe at present with the old style loans (please correct me if I am wrong) that your credit file would only be impacted if you defaulted on payment. In the wording of the Fair Processing Notice however it states...

    "we may only share details, if, in future you defer payments, or if you borrow and do not repay in full or on time and are not eligible for deferment. Otherwise if your account is in order, data on your 1998 or later account will be shared only if you do not make payments in accordance with the agreement".


    "However, as a record of an up to date account can have a positive impact on your ability to obtain credit and/or can help verify your identity, if you apply for services you may consider it to your advantage for your record of up to date payments to be available on your credit file. If so, you may also instruct us to share information about your account by providing consent in the form set out at the end of this communication or by calling customer service".


    My question is regarding the deferment wording as I am due to go back to university to complete further training which is essential to my employment. During this time I will be requesting again deferment of my loans. Will this now have an impact on my credit rating? My current mortgage deal is coming to an end and I will be looking for a new deal later in the year so I am worried that this will impact on this. It does not stipulate anywhere on the form that it has to be signed and returned. I am probably reading too much into this and figure if I don't sign the form to give consent that nothing changes!?!?!


    I am sure others will be in a similar situation. Any advice would be greatly appreciated.
  • want_to_savewant_to_save Forumite
    401 Posts
    Eighth Anniversary 100 Posts Mortgage-free Glee!
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    i just got my deferrment pack from them and its like filling in a bloomin tax form am not happy. i dont have lots of savings but have to declare everything. not happy bunny why should they know everthynig about me . previously i just had to declare my income and now i have to declaire that i get 8.50pm interest (i know not alot and i should stop moaning but its the principle!!!)
  • pbs84pbs84 Forumite
    31 Posts
    No need to supply eberything they ask for. All you have to do under the law is to prove gross income. The rest of the stuff is just them phishing for info.

    Useful info here http://www.mumsnet.com/Talk/legal_money_matters/2028211-erudio-student-loans?pg=3
  • ericcthekingericctheking Forumite
    328 Posts
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    We should all be very worried about the sell off, it is an absolute disgrace that ex students are starting to be tricked into signing agreements (that is what erudio will try to pull off with their ridiculous deferment forms) that will allow erudio to put deferred loans on credit records.
    The government have sold people into a very murky world.
    I would advise everyone to be very wary about student loans from now on.
  • edited 25 September 2014 at 10:49AM
    Freaky_BeakyFreaky_Beaky Forumite
    5 Posts
    edited 25 September 2014 at 10:49AM
    In a MSE link posted by atypical in the "Nearly £900 million of student loans taken out during the 1990s have been sold off by the Government..." blog discussion, the repayment for pre-1998 loans was £28,775 as of 10/12/13 (article date). I understand that the interest rate in April of each year is fixed for that year each September (so to see average perhaps) and the interest rate is fixed for each year - 2013-14 it was 3.3% as indicated in the article.

    2014-15 I understand has recently been set (as of September 2014) at 2.5%.

    Question - WHY has the amount you need to earn before repayment suddenly appear to have dropped - by a whopping 7%???

    The MSE guide about whether to repay student loans for pre-1998 loans states "you must make repayments if you earn over £26,727 per year". This was also confirmed by a letter from Erudio today stating if I earned more than £2,227.25 per month I would need to repay (which has led me to MSE & the forum).

    My calculations led me to believe repayment would be the £28,775 + 2.5%.

    So not only WHY has the amount you need to earn before repayment suddenly appear to have dropped, but also HOW has this decreased by over £2,000?

    Many thanks for your help with my understanding.

    PS I've also posted this in the "Nearly £900 million of student loans taken out during the 1990s have been sold off by the Government..." blog discussion.
  • I think I understand better from my telephone call to Erudio:
    The interest rate set is what the amount you borrowed goes up.
    The income level is set at the UK average - obviously changeable each year.
    So whilst annual inflation affects how much I pay back, the income I earn is set against the national average - which I'm not quite sure Martin Lewis actually explains in his MSE guide "student loans and whether you should pay back" - I believe this info regarding average income should also be clearly explained to promote a fully informed decision. Thanks
  • ericcthekingericctheking Forumite
    328 Posts
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    Well it turned out you all should have been more than worried about the sell-off!
    Miss-sold , miss-sold, miss-sold student loans have been miss-sold!
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