ERUDIO student loans help

Mitch_Sorenstein

Ok let's say Erudio somehow win this benefit argument. What's to stop people ceasing their benefit claims, filling in the deferral form saying they don't receive benefits, signing and dating it, sending it off, then making new benefit claims the following day? Absolutely nothing in my eyes. You wouldn't be lying on the form.

Pluthero

Mitch_Sorenstein wrote: »

Ok let's say Erudio somehow win this benefit argument. What's to stop people ceasing their benefit claims, filling in the deferral form saying they don't receive benefits, signing and dating it, sending it off, then making new benefit claims the following day? Absolutely nothing in my eyes. You wouldn't be lying on the form.

Great Idea! You should be in government or Banking

Mr_McGuffin

Hello anna2007, and thank you for all your hard and excellent work on this, I have followed this site and mumsnet since the beginning. Thank you also to everyone else who has worked so hard to try to fight this. I have not posted before.

No, I am not saying that the fall in the deferment threshold is down to the Government trying to keep to the 1989 targets. I’m suggesting the possibility that the opposite might be the case, that they may have been attempting to do this over the years and are now abandoning this practice with the sale to Erudio, together with the adjustments to the threshold required to produce it.

I have a longer reply and will send you that as a personal message, to avoid clogging the thread.

anna2007

Mr McGuffin's post got me thinking, and digging around (again). Something I read in a Hansard report back in 1990 about the proposed student loans system being comparable to the Scandinavian system, which had a very low record of defaulted loans.

So I had a look at the stats from the SLC, and it includes loans which are deferred (but have arrears) in with the remaining loans in arrears (which will be the defaults).

If you remember the Government's press release on the sale back in November, they said that:

"46% are earning below the repayment threshold; 14% of borrowers are still repaying and 40% are not repaying their loans in accordance with their terms".

Looking at the 2012/13 data for English loans http://www.slc.co.uk/official-statistics/full-catalogue-of-official-statistics/student-loans-debt-and-repayment.aspx (they don't seem to have stats for the U.K. as a whole, and I haven't got the heart to go through all 4 tables), if you add the deferred loans with arrears to the other deferred loans, the actual percentages are:

In deferment 57%
In default 33%
Repaying 10%

And if you take out the loans in repayment, it's even worse:

In deferment 63%
In default 37%

Note that BIS said in the press release that "40% are not repaying their loans in accordance with their terms" - NOT 40% are in default.

So a little fiddling with the statistics, a big fat lie about the number of loans in deferment - and it doesn't look quite so bad (for BIS)... that's almost TWO THIRDS of the loans book (excluding ones in repayment) which are in deferment!!!

erudioed

Mr_McGuffin wrote: »

I have a longer reply and will send you that as a personal message, to avoid clogging the thread.

I dont think it would clog up the thread, this is the best place for it. It was an interesting post to read. Who knows what might trigger something that triggers something else...
I for one would like to hear your longer thoughts.

anna2007

Mr_McGuffin wrote: »

Hello anna2007, and thank you for all your hard and excellent work on this, I have followed this site and mumsnet since the beginning. Thank you also to everyone else who has worked so hard to try to fight this. I have not posted before.

No, I am not saying that the fall in the deferment threshold is down to the Government trying to keep to the 1989 targets. I’m suggesting the possibility that the opposite might be the case, that they may have been attempting to do this over the years and are now abandoning this practice with the sale to Erudio, together with the adjustments to the threshold required to produce it.

I have a longer reply and will send you that as a personal message, to avoid clogging the thread.

Hi Mr McGuffin, I got your PM, but not all of your message?

I agree with erudioed that it's worth posting up on the forum (if you're ok with doing that), as you never know where it all might lead

Mr_McGuffin

That is very interesting anna2007, and new to me.

There are many, many aspects to all this. The statistics are impenetrable and there is every opportunity for sleight of hand.

There is no serious scrutiny of any of this, as you will know from the BIS evidence and Report and the December 2013 Public Accounts Committee evidence and following Report. There is simply no one who is getting down to anything like the level of detail required to understand what has really gone on with our loans, or is happening with the later loans. BIS and the Shareholder Executive can in effect do whatever they like.

Here is one glaring example. At the heart of the decision to sell the loans to Erudio was the assertion that they were ‘underperforming’ or ‘distressed.’ The 25 November Press Release said:

“Most borrowers repaying their loans on schedule should have fully repaid by now according to the original loan terms…

The vast majority of the remaining loans that have now been sold belong to borrowers who are currently not meeting their obligations under the terms of the loan agreement, or who are earning below the deferment threshold and so at present have no obligation to repay under the terms of the loans.”

This counted together two wholly different categories as forming a ‘vast majority’. It also said borrowers ‘should have fully repaid by now’. Of course any borrower who meets the criteria to defer is fully entitled to do so, it is not the case that they 'should have' repaid the loan. ‘Most’ borrowers of the mortgage-style loans issued between 1990 and 2000 had indeed repaid their loans. The Press Release concerned the sale of the final ‘residual’ 17%. And ‘most’, 60% in fact, of the remaining 17% of borrowers whose loans were sold in 2013 were either repaying or deferring repayments, as they were entitled to do.

The NAO report in November 2013 confirmed that the SLC counted loans in deferment as ‘in a repayment channel’. Mick Laverty of the SLC told the PAC in December 2013 that ‘the definition of repayment channel essentially means people behaving exactly as you would expect… we are classifying on the basis of the BIS definition of ‘repayment channel’ that we are working with.’

In fact 60% (by their own figures) of the loans sold to Erudio were ‘in a repayment channel’ according to the SLC and BIS, and had consequently been counted as a favourable statistic to demonstrate their success in achieving repayments, before being counted as part of a ‘vast majority’ of ‘underperforming’ loans sold to Erudio.

Mr_McGuffin

Thank you erudioed and anna2007, it’s nice to meet you both.

Here is the message I sent to anna about my post:

No, I am not saying that the fall in the deferment threshold is down to the Government trying to keep to the 1989 targets. I’m suggesting the possibility that the opposite might be the case, that they may have been attempting to do this over the years and are now abandoning this practice with the sale to Erudio, together with the adjustments to the threshold required to produce it.

I think this is possible, because the percentage of borrowers heading towards cancellation prior to the sale seems to be within the range of the estimates for cancellation in 2016-2027, as a percentage of loans issued. I haven’t checked the figures, but from your calculations on here, and also by others (lungboy I think? Apologies if I have forgotten who took the effort to do it) I recall that the historic threshold appeared to be higher than the ONS figures for 85% of average income. If these figures had in fact been used, the number of borrowers having deferred for many years would be lower now.

Why would this be? Why did BIS and its predecessor departments not use a lower figure, as represented by the ONS figures from 1998 onwards, when it would mean more people would repay? Why did the wording of the definition of the deferment threshold include room for the lender to ‘estimate’ ‘based on’ the ONS figures? Is it possible that the Government were not necessarily trying to get the most people to repay, but to stick to the early projections for the scheme? If that was not the objective of adjustments to national income when setting the deferment threshold, what was it?

Yes, the story of the beginning of the legislation and its early implementation are all in Hansard. The 1990 Act was pushed and rushed through and fleshed out as it went. The estimates for the percentage of borrowers who would repay, defer, cancel etc first appeared in a White Paper in 1988, and these projections were closely followed in later details given on 24 July 1989 by the Parliamentary Under-Secretary of State for Education and Science, Robert Jackson, who did most of the work of steering the Bill through the Commons. These estimates are most interesting as they include the figures I quoted for cancellation, and show the steady state the scheme was imagined to reach by 2025, with a stable turnover of all borrowing, repayment and other outcomes. These figures in turn formed the basis for a speedily produced report by Price Waterhouse (Pricewaterhouse Coopers advised BIS on the Erudio sale) that the Government followed in developing more detail on the Bill and the proposed operation of its scheme.

There was a firm plan for how the loan scheme should perform that the Government were committed to, before the 85% of average earnings threshold was confirmed by the Secretary of State for Education and Science John MacGregor in October 1989. This figure received some criticism as arbitrary and illogical and likely to contradict the objectives of the scheme, notably from the economist Lord Peston when the Bill went to the Lords. He in fact proposed a ‘probing amendment’ to make the threshold 120% of average income.

The Government was committed in 1990 to two things that over time would not necessarily add up to the same result. The first was the performance and behaviour of the new loan accounts, which had been argued over and fought over and which the Government had estimated in detail. The second was the 85% rule. And this was not set in stone, because until 1998 the deferment threshold was stated by the Government as a figure in annual Regulations, not as the percentage of anything.

What I am suggesting is of course purely speculation, but I can imagine that in the early years of the scheme’s operation from 1990 -1997 there may have been considerable pressure that it should keep its promised shape, and that the projected percentage of borrowers who deferred, repaid, etc. should be realised. To be too successful in producing repayments would also be a failure, as the Government had promised that some students could defer, and some would have their loans cancelled. If everyone ended up repaying with a threshold at 85% of national earnings this would make a nonsense of the Act, and the Government’s promises, and the 85% level. And many thought the Act nonsense in the first place. And as the deferment level was not in the Act, but was changed every year by a Statutory Instrument, it could easily be adjusted.

In fact, if my maths is correct, the deferment threshold increased in each year from 1990 by +9.33% in 1991-2, +7.11% in 1992-3 , then +3.1%, +4.38%, +4.19%, +3.87%, and so on, with some quite large increases (+6.58% in 2002-03, +6.53% in 2004-05). From 1990 to 1995-6 the threshold increased by 32% in five years. There was no fall until -2.22% in 2010-11. Until the -7.12% drop just announced, the average change each year over 23 years was +4.07%. I am not a statistician, but will explore more whether these figures reflect increased earnings or indicate the figure was being adjusted for another reason.

JeLaw

anna2007 wrote: »

I think it could be really useful, yes. Are you able to do this JeLaw, or do we need a volunteer?

Remember there are a couple of FOI requests in, one I put in to BIS and SLC for info given to students (although I read on Mumsnet that SLC has already confirmed they don't hold anything that far back, in response to an identical request), and one for info supplied to the Uni's (Sarebear78's I think).

I should hear back from BIS soon - they did email to clarify if it was info for Scotland or England & Wales, which I thought sounded promising that they hold something?

I'm happy to go the British Library and have a look through the newspaper archive. Assuming I get a readers pass. I've applied for pre-registration online but have to complete the registration in person. The website states they can't guarantee everyone who applies gets one but hopefully my reasons are good enough.

I just thought it might be useful to see how the introduction of loans (to replace grants) was covered by the media at the time. The FOI requests are great (and I hope we get some answers, and I'm really grateful to everyone who has put a request in).

I think it would also be good to see whether the media (of the time) reporting on the loans backs up our experiences of how they were pushed/sold to us. This is why I feel we were mis-sold. Yes, I now know that the very small print buried in the original agreements states that the loans could be sold on (although not in such simple English). But this was never pointed out to me by the student finance department of my university. The loans were heavily pushed/sold to us as being safer because they were government loans rather than with a private company. And from what I understand several of the recent big mis-selling issues (not student loans) had some similarities in that the small print did state something but the institutions selling the products did not clarify the points covered in small print (sorry this is a bit garbled - I'm tired!).

anna2007 wrote: »

No, you're not being too paranoid! You should black out everything that is irrelevant to the income you're declaring on the deferment application, so all of the debits you mention, any credits that don't relate to your income (including the gift payment for your boy's birthday). I think the same goes for running balances - can't see that as relevant, as it's not income, just your account balance?

Not too sure about the NI and employee numbers, as I didn't submit payslips, but I'd have thought if the payslips show your name and gross pay, that's all Erudio need to see, maybe someone else could confirm that?

Just had to add that I too feel paranoid about Erudio! I didn't worry as much about SLC holding private information (I've sent bank statements in the past to them and never blacked anything out) but I don't like Erudio having anything so personal.

I didn't think to blank out my bank balance but I have blanked out all outgoings.

I really must get to bed now - but just wanted to thank Mr McGuffin for your research!

erudioed

I think that paranoia about Erudio holding personal information (info given to the government and assumed to be private) is very well founded. I am obviously not sure where it is being shared but i would suggest access by Ventura and big daddy Capita, Arrow Global will have access, i am sure The Wilmington Trust probably own it as they are registered as controlling Erudio. Then there is that rather mysterious Experian Collections Network set up by Arrow Global that seem to invite all debt, loan related businesses with an invite to share information between themselves to make their operations more 'efficient'.
I would suggest this alone should be a scandal hitting the pages of the mainstream press...but as we have seen, there isnt really any real investigative journalism going on at all. But if such journalism was prevalent on all companies, then we wouldnt be where we are, with the system we currently have. That business interest usually supersede those of the public, and journalists doing good work have been slowly brow beaten or discreetly let go, we are left in a climate where there is a free for all, and after what has happened in Greece just recently, it shows these businesses really do have a free hand to interfere in what used to be national policy issues. They are called in for discussions with ministers when plans are being hatched, often pay for the talks and such things to establish the agendas before the major trade negotiations at a work/regional level, and in the US (as the worst example of all of this big business collusion) control who does and does not get elected. They can even take over from certain failing councils in some states.