MSE News: Guest comment: How banking bonuses have hit student loan repayments 22 October 2014 at 11:23AM in Loans 42 replies 8.3K views

Former_MSE_Helen

Freelance higher education writer Andrew McGettigan explains how banking bonuses have affected the new deferment rate...

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Guest comment: How banking bonuses have hit student loan repayments




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Voyager2002

Fascinating.

There is a whopping great discrepancy between the figures from the Annual Survey of Hours and Earnings and those on Average Weekly Earnings.

kathrynha

Very interesting.

Makes me glad I'm far enough below the threshold, though if I worked full time with child benefit taken in to account it would be too close for comfort.

Also don't trust Erudio to make deferring easy for those that have previously had to pay.

Joe_Bloggs

Clearly the concept of the student loans model is broken if the government has to sell parts of its loan book off to debt collectors for less than 5p in the pound.

To make matters clear the debt collectors want 100p in the pound.

Had the government offered a 10p in the pound discount to the affected group of debtors then they may have got a better deal for the tax payer in the sale.

This would of have undermined the ongoing future of the student loan system. Hence it is necessary to sell the loan on to a shark with teeth at a loss to maintain the illusion of student loan credibility.

J_B.

Credit-Crunched

How very MSE to blame bankers for everything, are they naive enough to think that other well paid sectors do not also adopt a similar pay strategy?

You may also like to calculate how much income tax these bankers contributed to the benefits pot too....

Another cheap shot at an easy target

ericctheking

Everyone who has a student loan that has been sold to a private company. (and this will happen to the rest of the student loans) was MISS-SOLD the loan in the first place.
Profit making businesses are not allowed to target minors for loans as the SLC did. The loophole was the government isn't profit seeking therefore the loans could be promoted and dished out to anyone regardless of ability to pay back the loan (the latest Wonga scandal for example)
As soon as the loans are sold on to private companies they have been miss - sold and should be written off ( like the Wonga loans)

kathrynha

Credit-Crunched wrote: »

How very MSE to blame bankers for everything, are they naive enough to think that other well paid sectors do not also adopt a similar pay strategy?

You may also like to calculate how much income tax these bankers contributed to the benefits pot too....

Another cheap shot at an easy target

If you read the article you will see that they aren't blaming bankers for everything, they are blaming the goverments change of tax rate, which resulted in companies paying bonuses later.

And I'm not sure what bankers income tax has got to do with the deferrment level for student loans.

ericctheking

Credit-Crunched wrote: »

How very MSE to blame bankers for everything, are they naive enough to think that other well paid sectors do not also adopt a similar pay strategy?

You may also like to calculate how much income tax these bankers contributed to the benefits pot too....

Another cheap shot at an easy target

Actually I would suggest anyone who is over the threshold to adopt these strategies!
Adjust pay so you are under the threshold in the months around deferment time and get paid more the rest of the year.
Nothing illegal about it, it is all in the regulations! It is perfectly legal to use this approach.
Just ask your employees to adjust your pay for certain months folks.

Anyone who disagrees with this might like to calculate how ex-students not paying back the loan will benefit the British economy by keeping money and VAT payments in this country rather than have the money go to the USA.

Stochasticity

Looking at the calculation, the distorted April 2013 figure would also have been used in last year's calculation.

Presumably then the threshold last year would have increased by far more than otherwise.

James_B.

Credit-Crunched wrote: »

How very MSE to blame bankers for everything, are they naive enough to think that other well paid sectors do not also adopt a similar pay strategy?

You may also like to calculate how much income tax these bankers contributed to the benefits pot too....

Another cheap shot at an easy target

I suppose that at least this one did not outright allege criminality of all bankers based on the purported crimes of one in a thousand.

For some reason a "banker" earning £500k seems to be expected to pay more tax than a lawyer on the same amount (and, given the bonus tax, has actually had to do so in recent years), despite virtually no-one outside the sector being quite sure what the people in those towers in the city actually do.

Credit-Crunched

kathrynha wrote: »

If you read the article you will see that they aren't blaming bankers for everything, they are blaming the goverments change of tax rate, which resulted in companies paying bonuses later.

And I'm not sure what bankers income tax has got to do with the deferment level for student loans.

I did read the article and the premise is that deferral of bankers bonuses skewed the figures

This rate kicks in on annual income over £150,000 and many City workers had their bonuses delayed to benefit from the tax change, which artificially inflated the ASHE data