ERUDIO student loans help

Mr_McGuffin

Is it certain the same deferment threshold calculation has been used since the beginning? Between 1990 and 1997 the threshold figure was given by the Secretary of State in fresh regulations each year, then in the 1998 Regulations set in the form that applies now. This is prescribed as the 'lender's estimate' that is 'based on' the ONS figures, with no calculation specified. There is room for the 'lender' to interpret how to make this estimate isn't there? And nothing to say the calculation method has to remain unchanged.

In comparison, there is more room built into the 'lender's estimate' of the deferment level than there is of the interest rate for these loans, which as specified in the 1998 Regulations is to be read directly from ONS figures.

BIS seem to show that their calculations for the deferment level this year are the same as last year. I may have missed this but has it said the same calculation has been used since 1998? Or since 1990? Or 2010 for instance, when the NAO says the 'SLRM' (student loan repayment model) developed in the early 1990s was abandoned?

I don't know if the method of calculation has changed over the years since 1990. Is there anything to say it has remained the same?

anna2007

Mr_McGuffin wrote: »

I don't know if the method of calculation has changed over the years since 1990. Is there anything to say it has remained the same?

I don't know for sure Mr McGuffin, I was making a big old assumption there, as far as I know, there hasn't been any significant change to the deferment level (other than the ones explained by tax avoidance measures by the rich), which you might expect to see if there was a major change in the method of calculation? It seems likely they were using the same calculation in 2009 and 2010, as there were similar blips in the deferment levels, brought about by the introduction of the higher tax rate in April 2010. It should be fairly easy to check the ONS data, although not sure how far back it goes.

Also, the basis of the calculation seems clear from the debates detailed in the Hansard docs, before the legislation was passed, i.e. average earnings based on ONS data (I remember them also discussing whether average earnings should be based on male earnings, and whether the 85% level was appropriate).

Although the method isn't shown, the basis of the calculation is now set in the 1998 regs and as BaffledbyErudio points out, there shouldn't be much scope to fiddle with the deferment level. BIS also remain responsible for setting it and would have to justify any change to the calculation. Maybe they can tinker with the method, but any change to the basis (85% of average earnings as published by ONS) would surely represent a change to the terms of our loans, which BIS have assured us will remain the same? I think the explanatory notes in the 1998 regs also say those regs replaced the original terms of the loan agreement?

erudioed

Just spending way too much time thinking about all this as usual and would like some clarification. I was just reading Arrow's official news release about this sale and came across this rather strange phrase that i am hoping someone can definitively explain to me. :
"The sale was completed today, delivering £160 million of aggregate consideration to the Government."

So what is aggregate consideration exactly?

ACL7

What can I do?The deferment threshold has been reduced by two thousand and this has just put me into the repayment threshold. I can't afford to pay the £180 back per month my loan now owned by Erudio is calculated at. Can anybody give me some advice. The threshold reduction by BIS is scandalous. From April when repayments start I'm going to be in real financial trouble. Can this decision be challenged?

anna2007

@ erudioed Saw that last week at the same time I came across Arrow's accounts - think it basically means they don't pay the £160m upfront, but in stages? It's no doubt linked to the loan notes you mentioned from the accounts, but I don't know the exact workings of it all, sorry.


I don't really see how the taxpayer (or public debt) benefits much from such a set up?

Mr_McGuffin

anna2007 wrote: »

Although the method isn't shown, the basis of the calculation is now set in the 1998 regs and as BaffledbyErudio points out, there shouldn't be much scope to fiddle with the deferment level. BIS also remain responsible for setting it and would have to justify any change to the calculation. Maybe they can tinker with the method, but any change to the basis (85% of average earnings as published by ONS) would surely represent a change to the terms of our loans, which BIS have assured us will remain the same?

Yes, some interesting explanation and noble words from BIS in the Andrew McGettigan article:

"We provide a transparent and consistent method of calculation based on the ONS statistics for the preceding 12 month period of April to April. This is the methodology that has been used since the calculation's inception and ensures a transparent, consistent approach, free from departmental, political or third party interference.

Any action by the department to artificially raise or lower the threshold would not only compromise the integrity of the calculation, but may also breach the legal framework to which we must adhere."

So BIS says:

'This is the methodology that has been used since the calculation's inception'

To me this seems to say that the calculation has remained the same for as long as it has been the same. No date is given for this 'inception'. Was it one of the two obvious dates, 1990 or 1998? Or at some other time?

I think the 1998 Regulations did leave considerable room to adjust the method of calculating the deferment threshold, as they require a 'lender's estimate' that is 'based on figures' from the ONS.

The 1998 Regulations define the lender as:

'"lender" means the Student Loans Company Limited and any person to whom that Company may transfer its rights and obligations under the loan agreement'

Under the 'legal framework' of the Regulations, it appears the 'lender’s estimate' would more correctly be an estimate by Erudio, Thesis and Honours. For BIS to retain the function of calculating this threshold after transferring the rights and obligations from the SLC appears to be a choice, and under the 1998 Regulations alone is not a legal obligation to which it 'must adhere'. The retention of this function by BIS is therefore presumably governed by the terms of the sale agreements, rather as the 1998 and 1999 sale agreements ensured the deferment process would continue to be operated by the SLC.

Why is BIS calculating the deferment threshold for Erudio? Could it be, rather than the high-minded commitment that this 'ensures a transparent, consistent approach, free from departmental, political or third party interference', that the contractual terms of the previous sale agreements oblige it to do so? Like the 1998 Regulations, the 1998 sale agreement does not specify a particular calculation, but obliged the Authority, then meaning the Secretary of State, his Scottish counterpart and DENI, to produce the deferment figure each year based on the ONS figures. It seems that the 'legal framework' to which BIS refer here may not primarily be the Education (Student Loan) Act and Regulations 1998, but the 1998 and 1999 sale agreements with their consequential effect on sales to other debt owners.

And how can BIS possibly conceive of itself as operating some transcendent, 'transparent, consistent approach, free from departmental, political or third party interference' when it is actually a commercial vendor, selling loan products to the highest bidder in exchange for money and on negotiated terms? It cannot and does not. This is not an authentic description of its purpose and actions.

Can Link and Arrow/ CarVal renegotiate the role of the Secretary of State in producing the 'lender’s estimate' to do it themselves in future? This may be to all their advantages. The terms of the 1998 Regulations appear to require the purchaser/ 'lender' to estimate the deferment level, so anything that modifies this would have to be determined by agreement between BIS and the purchasers.

It seems to me that the setting of the deferment level by BIS is not the result of it benevolently seeking to protect borrowers and citizens. Rather it follows from its obligations to meet the contractual agreements made by the Labour government in 1998 and 1999 and its wish to satisfy all purchasers by making consistent and similar provision for all its student loan debt owning 'customers', Arrow, CarVal, and Link. These relationships are what matter to BIS and the Shareholder Executive. It no longer considers itself to have any relationship with borrowers.

Student1983

Erudio have totally ignored my request to defer using a formal letter. On the plus side they have told me that the terms and conditions have not changed. This worries me. I have been so concerned about the t & c's only to now realise that they are correct. The t & c's have not changed. It is the interpretation that can legally be changed. Interestingly Bis have not got back to me regarding age cancellation. I have a feeling that somewhere in the t&c's this can be manipulated. For example cra reporting was not something we were used to but using clause 16 enables this. Just wonder what other options they can utilise without breaching the t &c's. I am waiting on my repayment happening on Monday as I have not filled out their form. I reckon they will not call this as they want to make it as difficult as possible. So here I am telling them to take my payment if deferral not successful but I bet they won't. Cause you are damned no matter how you play their game. So on Monday if they have not taken my repayment I will phone them. The guy at erudio told me if it hasn't been taken it will not be my fault. Do I trust them. No.

erudioed

anna2007 wrote: »

@ erudioed Saw that last week at the same time I came across Arrow's accounts - think it basically means they don't pay the £160m upfront, but in stages? It's no doubt linked to the loan notes you mentioned from the accounts, but I don't know the exact workings of it all, sorry.


I don't really see how the taxpayer (or public debt) benefits much from such a set up?

I would be very interested to know exactly what it means. I wonder if they are basically collecting from us and paying the government as they take it from our accounts. Surely, if Arrow/CarVal havent paid for it upfront, then they dont fully own it? All they would have is an agreement that hasnt been fulfilled yet.

rizla_king

Student1983 wrote: »

Erudio have totally ignored my request to defer using a formal letter. On the plus side they have told me that the terms and conditions have not changed. This worries me. I have been so concerned about the t & c's only to now realise that they are correct. The t & c's have not changed. It is the interpretation that can legally be changed.

The law says you must be deferred if you can "show" them you are under the deferment threshold. That therefore doesnt have to be via their forms. Can be via a letter and evidence if you choose. They have no right to refuse you, as you have met the conditions set down in the law.

zombi

Clothkitty wrote: »

I have a growing catalogue of problems with Eruido. I have not received any communication informing me they are now the owners of my debt. I have requested this twice via their customer service line but not recieved anything. (I moved in Jan 2014 and Feb 2014 but informed the SLC of my new address both times unsure why Erudio did not have this information)
I completed and returned my deferment form in time and with a covering letter explaining my emloyment situation and why I had 11 payslips covering a 12 week period only for them to contact me a few weeks later informing me I had not submitted the correct information. Following a further phone call to the service centre and speaking to a supervisor he confirmed that my loan had been deferred and no payments would be taken and written confirmation would be sent. I did not recieve anything but a couple of weeks later I received an annual statement saying that as my loan is deferred they have to send out an annual statement confirming my loan amount etc. I contacted the service centre again to request details of who I could write to with my complaint about not recieving formal confirmation of deferement and my still outstnding Welcome Pack. After much effort a name was forth coming and I was in the process of drafting a complaint when I checked by bank statement today to find they have taken a repayment amount in early October. Surfice to say my complaint has now escalated from minor administrative concerns to a more serious nature. I have cancelled the DD to prevent them taking any further amounts but have concerns about their ability to competently administer my loan and its deferment.

This is almost identical to what has happened to me (see previous post on page 109 or thereabouts). I will be forwarding my complaint to the financial ombudsman as soon as I can, as Erudio acknowledged my complaint over two months ago and I've heard nothing since.