ERUDIO student loans help

ElwoodBlues

I see in the news that our wise Government are selling off another tranche of student loans - £3.7b worth. Not the mortgage style ones like ours, it's the first of the income contingent type that replaced them. No hints as to which bottom feeders might be buying these ones. But the official line is that the SLC will continue to 'manage' the loan accounts after they're sold off, which suggests that the account holders won't have to deal directly with the likes of Arrow/Erudio and their ilk. God job really, since the repayments are collected directly out of their pay packets. That could open up a whole world of pain. At least we can cancel our direct debits if Erudio start taking payments that they shouldn't be.

Princess_Coupon

So after 21 years under the repayment threshold, it looks like I'm going to have to pay from next May for the first time.

In May I will have 3 years and 5 months before the loan is written off, this means the most they could hope to recoup is about 65%.

With nothing to lose I was considering writing to them just before deferment pointing out the looming write off, and that as I intend to drop to part time this year (a fib) I will remain in deferment until the loan expiry. On this basis I felt moral obliged to offer something towards my borrowing.

How much would anyone suggest as an offer for full and final settlement?

Lungboy

When is your current deferment due to end? This year Erudio sent out links to the online deferment page 12 weeks before deferment was due, so you might be able to defer early and get an extra 12 months of no payments. Normally i'd never advocate using their online form and signing away more of your rights, but that close to the end it might be worth it due to the amount of money you could potentially save yourself.

Mr_McGuffin

Here is the announcement last Tuesday 31 October from the Minister of State for Universities, Science, Research and Innovation Jo Johnson on the resumed sale of ICR loans:

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-10-31/HCWS205/%20%5D

The last paragraph is striking:

“The sale terms are expected to include a number of warranties and indemnities for sale arrangers and investors, which give rise to contingent liabilities for Government. In this case, although there is specific statutory authority for the liability under the Sale of Student Loans Act 2008, in line with HM Treasury rules I believe it is appropriate to notify Parliament before incurring these liabilities. As a matter of record I have placed a Departmental Minute in the Libraries of both Houses describing the contingent liabilities that the Department for Education will hold on behalf of Government as a result of this first sale of the pre-2012 English student loan book. The maximum contingent liability against the Department for Education is unquantifiable and is expected to be in place for as long as there are outstanding securities.”

This seems to say that while Government policy is to sell these loans, the Minister has decided to explain to Parliament that "warranties and indemnities for sale arrangers and investors" are to be given in the sale that will produce liabilities that are “unquantifiable”.

So the Government believes it is in the best interests of 'the taxpayer' to sell these loans now, despite this sale incurring a "maximum contingent liability" that is "unquantifiable".

I take this to mean that the Government proposes to make agreements now that will be binding on future governments and taxpayers, with unlimited contractual liabilities to "sale arrangers and investors". This appears to mean agreement to an unknowable and unlimited future liability, which seems extraordinary and alarming.

badmemory

Mr_McGuffin wrote: »

I take this to mean that the Government proposes to make agreements now that will be binding on future governments and taxpayers, with unlimited contractual liabilities to "sale arrangers and investors". This appears to mean agreement to an unknowable and unlimited future liability, which seems extraordinary and alarming.

I think they call it mates' rates!

erudioed

Thanks for that Mr McGuffin, it does read like that.
This is the sale companies like Arrow Global have been dreaming of. The one where they pay for the £3.7 billion loan book and then just sit back and watch the cash roll in without having to do anything for the next 20 odd years. In fact, as HMRC will be collecting the money and making sure every ex-student pays the right amount, it looks to me like the taxpayer will actually paying for the servicing of the loans after they have been sold. I wonder what kind of stink that will cause when it gets out after the loan sale is announced...i wonder if that is one of the unknowns.
When, i say 'companies like Arrow Global', i only mean Arrow Global. My inner conspiracy theorist has quietly assumed they took up our sale to make a bit of cash, but mainly to put the company in pole position for this windfall of the IC loans.
In essence, the government looks like it will be selling guaranteed income for many years to come for one much smaller lump sum payment today. And i am confident no one in the mainstream press will mention anything about it until after it is completed.

erudioed

Just to infuriate everyone even more, i just came across The Collections and Customer Service awards for 2017 for debt/money collectors and see Arrow Global sitting pretty in 3 nominated categories. In another life this would have been amusing, with the 3 categories being:
1) Vulnerable Customer Support Initiative
2) Debt Purchaser of the Year
3) Best Training Provider

It should also be noted that HMRC also has specific people nominated for awards at the same event. Public and private in one nightmare sandwich once again.
Here is the finalists page: https://www.creditstrategy.co.uk/events/events/css-awards?tab=finalists

As another aside, i think the sale of Capquest to Arrow Global also involved Appleby's in some way, the company at the center of the paradise papers leak. Here is a document on the proposed acquisition of Capquest: http://www.arrowglobalir.net/files/file/download/id/185

I have yet to find the part that mentions the role of Appleby Trust (Jersey) Limited, but i know its there somewhere.

datlex

I noticed that there is no where obvious on their website about when loans are written off. My graduation year was 1995 so my 25 years is up in 2020. Yet no where is it mentioned. I have a feeling the cheeky sods will try to say I can't get it due to them delaying a deferment in a previous year.

The student loans company gave two months grace on repayments, if for any reason there was a delay getting the deferment accepted. e.g. if you got a Christmas bonus but that still wouldn't take you over the yearly threshold.

My deferment expires end Jan. Sorting out new one shortly. I am surprised that they would accept a P60 when surely that shows what you earned last year not this. Hopefully won't have any issues with them this year as not had any weeks of overtime. On previous years had problems and ended up having to submit additional payslips to show a couple of weeks of overtime was the except rather than the rule. I even wrote out a whole spreadsheet for them.

erudioed

This may seem like deja-vu, but according to the FT yesterday in the article "UK government to book £800m loss from student loan sale" reprinted on reddit, the student loan sale will be going through very soon, with a very complicated structure based on a US model for such deals, which includes a £800 million loss...when you see the predicted sale price will be £1.7b, that is a rather sizable chunk:

"The deal will raise around £1.7bn in cash through the securitisation process, where assets are packaged together and sold off as bonds to investors. The process is a common feature of financing for student borrowing in the US, but has rarely been used in the UK."

Who would have ever thought when they took out a government student loan that that very student loan would somehow, through financial scumbaggery by the 'best and brightest', become a product that would end up being traded.
Oh, and the raised money wont be going to buy, fund or create anything, it will be going down the same path as the money raised from our own sale, to lower a number in the 'books':

"Part of the motive for the sale is to reduce public debt. The cash generated from the transaction will go towards reducing public sector net debt."

And after this sale goes through without much public awareness, heres whats coming:

"The government aims to raise a total of £12bn through selling an unspecified amount of pre-2012 student loans over the next five years."

As an aside, I actually tweeted ever labour MP, student organisation and labour affiliated group i could find on twatter yesterday in a blitz and got not one anything from any of them!
There is also a nice list of advisors hired by the government to help the taxpayer get value for money, a group known for its sympathy towards the ordinary UK citizen:

"Barclays is acting as sole arranger for the sale, alongside bookrunners Credit Suisse, Lloyds and JPMorgan. Rothschild is acting as an independent adviser to the government."

There seems to be some debate about the accuracy and meaning of the some of the things in the FT article on the reddit forum (https://www.reddit.com/r/ukpolitics/comments/7gl5mk/uk_government_to_book_800m_loss_from_student_loan/) but my guess is that it will be an even more terrible deal than anything predicted to happen, as we know from our own sale. Here is the article reprinted from reddit for anyone who cant be bothered to click elsewhere:


"The UK government is set to book a loss of almost £1bn from its largest ever privatisation of student loans, raising questions over the valuation of tens of billions of pounds of remaining graduate debt.
The controversial sale of a batch of student loans this week is expected to raise around £1.7bn, according to an Financial Times analysis of deal documentation.
The loans, which had a face value of £3.7bn last year, are part of a total of £43bn in loans made to students up to 2012, which are currently on government books valued at just under £30bn, according to the Department of Education’s latest published accounts, as of the end of March this year.

Three-quarters of graduates ‘will never repay student loans’
The sale to specialist investors — including pension funds and hedge funds — values the block of loans at around £800m lower than their accounting value on the books of the DfE, based an FT analysis of UK public accounts and the offer documents.
The government has previously warned the assets would be sold below their face value, but the scale of the losses in relation to their accounting value was not apparent until initial pricing ranges of the securitisation were released this week.
The deal will raise around £1.7bn in cash through the securitisation process, where assets are packaged together and sold off as bonds to investors. The process is a common feature of financing for student borrowing in the US, but has rarely been used in the UK.
The government’s loan book sale is dependent on passing a “value for money” test, which is designed to ensure that public assets are not sold too cheaply. The details of the test will not be made public, but it is expected to provide a different, lower valuation for the loans compared to those on the DfE accounts.
The sale of the loans is part of a wider government effort to sell public assets “in a way that secures good value for money for taxpayers”, according to a statement on the student loans company website. The government aims to raise a total of £12bn through selling an unspecified amount of pre-2012 student loans over the next five years.
Barclays is acting as sole arranger for the sale, alongside bookrunners Credit Suisse, Lloyds and JPMorgan. Rothschild is acting as an independent adviser to the government.
UK Government Investments, the government agency managing the sale, and the Department of Education both declined to comment.
40%
Proportion of graduates with outstanding loans who failed to make a payment in 2015-16
The transaction is made up of loans issued between 2002 and 2006, on which repayments are linked to income.
Around half of students who borrowed during that period had already paid off their loans by the end of the 2015-16 financial year, meaning the pool of debt included in the deal is likely to be of a lower credit quality.
Of those graduates with outstanding loans, only 60 per cent made a repayment in the same financial year.
Although the low sale price could call into question the valuation of all loans slated for securitisation, pools of student loans originated after 2006 may be valued differently.
Part of the motive for the sale is to reduce public debt. The cash generated from the transaction will go towards reducing public sector net debt, which was £1.79tn at the end of October. Unlike cash, student loan assets do not count towards the calculation of public sector net debt.
Rob Ford, a partner at investment firm TwentyFour Asset Management, said the riskiest portion of debt sold through the securitisation is “basically . . . a distressed debt-like instrument”.
“If 40 per cent of them didn’t pay a penny then you’ve really got to assume that that’s a trend that isn’t necessarily going away,” he said."

Black_Eyeliner

Can anyone here help me? I’ve recently contacted Erudio to ask to defer replatnwnts, as I have been made redundant and am currently out of work. Erudio have responded by saying that I’m not entitled to defer because my loan has ‘matured’. Does anyone know what that means, and whether they’re correct?