Miss-sold a loan from the government

anna2007

The original Student Loans Act 1990 was amended by the 1998 Act, specifically to facilitate the sale of student loans to the private sector, a matter of months before the Act was repealed altogether and replaced with the Income Contingent loans scheme. Why do that if the provisions of the original Act were sufficient to legally allow transfer of student loans to the private sector?

http://www.legislation.gov.uk/uksi/1998/211/note/made

So, the right to 'transfer the loans to a third party', as set out in the original Act and loan agreement, became the 'right to sell the loans to the private sector' in the 1998 Act, 8 years after I signed my first credit agreement. I'm sure I would have read the clause relating to the 'right to assign or transfer to any person', but as a naive 18 year old signing my first credit agreement, I had no idea of the implications of that clause and it certainly wasn't pointed out or explained to me - quite the opposite - I was told, as were many others, that these student loans were different to commercial loans, safe as they were issued by our Government, wouldn't affect future credit, etc, etc.

Erictheking's point about financially gaining from minors seems perfectly valid to me - it wasn't uncommon then for students to start University at 17 (I'm in Scotland, so perhaps different to rest of the UK?). Anyone under 18 and taking out a loan had to "ratify" that loan on turning 18, before they would be given a further loan - so either these loans weren't valid in the first place, or the Government was covering its own @rse - possibly both.

When the Chair of the BIS Select Committee inquiry into Student Loans questioned the Rt Hon David Willetts MP in January on the proposed model for future sales of the student loans book being likened to a Ponzi Scheme (using sale proceeds to fund future loans), his response to Mr Willett's reply is quite telling:

"Q125 Chair: This approach was likened by one of the participants at our last hearing to a Ponzi scheme. Could you outline the difference between this and a Ponzi scheme?

Mr Willetts: All I know about Ponzi schemes is that they are completely disreputable and fraudulent, and the Government would not do that kind of thing where students and graduates are involved.

Chair: You could say that, but I couldn’t possibly comment".

http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/business-innovation-and-skills-committee/student-loans/oral/5316.pdf (pages 10/11 of 24)

http://www.parliament.uk/business/committees/committees-a-z/commons-select/business-innovation-and-skills/inquiries/parliament-2010/student-loans/?type=Oral#pnlPublicationFilter

There are reports in the press today that three quarters of students won't be able to afford to pay off their debts (with a staggering average of £44,000 owed by each student), even by the end of the 30 year repayment period:

http://www.independent.co.uk/news/education/higher/tuition-fees-three-quarters-of-students-wont-be-able-to-pay-off-their-debt-9866446.html

If the Government thought the remaining Mortgage Style loans (a collective loans value of under £1 billion, owed by around 250,000 borrowers) were "underperforming", how likely are they to want to keep these IC loans until they have to be written off? If the IC loans are eventually sold off to the private sector, is it really that difficult to envisage a misselling scandal that makes PPI look like peanuts? Millions of graduates with hundreds of £billions of student debt would be at the mercy of greedy private sector debt collectors applying DCA tactics, manipulating contract terms that are supposed to be set in stone, to maximise their profits.

Hanky_Panky

ericctheking wrote: »

Which is? you haven't even asked a question!
Is it about how much compensation ex-students should be paid for mental distress? ha-ha
I'm only half joking there because if you take a look at the Erudio student loans thread some people are suffering sleep-less nights and disabled people are being bullied.

It's quite clear in my first response to you - you don't seem to have trouble reading reams of reports but don't seem to be able to get the salient points out of them - maybe that's your problem.

Anyway - the question was and is, 'what's your motive?'

ericctheking

Hanky_Panky wrote: »

Anyway - the question was and is, 'what's your motive?'

To have the pre 1998 loans taken back by the government as I don't believe the sell off was legal.

To stop the sale of the current loan book and future issued loans to the private sector as I don't believe that is legal too.

Hanky_Panky

ericctheking wrote: »

To have the pre 1998 loans taken back by the government as I don't believe the sell off was legal.

To stop the sale of the current loan book and future issued loans to the private sector as I don't believe that is legal too.

(Text removed by MSE Forum Team)

For what purpose ? What will you get out of it ?

And also what evidence do you have that it wasn't or isn't currently legal because so far you have offered nothing except a good rant. Even anna2007 who agrees with you has at least pointed to the legislation that was changed. You may not agree with that change but all you can do is not support any MP who voted for it.

MPH80

Ok - I'll bite.

You have three core arguments: 1) They shouldn't have marketed to minors, 2) it wasn't explained the loans could be sold on and 3) They were sold as not being reported to CRAs.

On point 1:
The CCA 1974 section 50 was specifically excluded under the Student Loan Act 1990 - Schedule 2, section 3, paragraph 8. (http://www.legislation.gov.uk/ukpga/1990/6/schedule/2/enacted) So no offence was committed under the CCA 1974.

On point 2:
As someone else has pointed out - the right to pass on loans to the private sector was within the terms and conditions of the loan. This is a standard procedure for a loan company.

On point 3:
I took out a loan - I remember understanding it didn't leave a footprint on my credit file and that, unless I was in dire circumstances I was unlikely to be asked about it during my mortgage application. However, I am wondering whether you expect gyms to start warning you that taking out a membership may affect your ability to get a mortgage (taken from the daily mail article you linked to):

The Financial Conduct Authority recently changed its rules for mortgage applications, meaning that such monthly outgoings as student loan repayment, gym membership and the amount spent on socialising will come into play when assessing an applicant’s eligibility for a mortgage

Perhaps bars need a sign in the window? "Spending too much on alcohol may affect your chances at future credit?"

Anyway - I'm done here - just wanted to make the points.

magpiecottage

Pixie5740 wrote: »

This is actually true. I had just turned 17 when I started university and was able to get a student loan in my first year.

It would be interesting to know what FOS would say if you argued that, as a minor at the time, the loan is unenforcible.

Actually, if a financial adviser sold you a debt of, maybe £60,000 (which for a six former starting next year will be commonplace) in exchange for an investment which may or may not make a profit it is almost certain that FOS would uphold a complaint about it.

The reality is, too, that when they talk about average earnings for graduates being higher, they are referring to something called them mean. To do this, they total up all earnings of all graduates and divide it by the number of graduates. Then they do the same thing for non-graduates and it is lower.

This sounds reasonable but has two flaws. The first is that the non-graduates includes not only those capable of getting a degree who chose not to but those who could not have got one even if they wanted to.

So you are comparing the average level of capability not the average level of knowledge - and the capability is not affected by whether you choose to use it to get a degree or not.

The other is that the way they work out the average allows mega high earners to skew the figures upwards. There are different ways of working out averages.

An interesting comment on Radio 4 yesterday in a discussion about EU benefit migrants. It was said that many EU citizens coming to this country bring in considerable amounts of money and fees from students at our universities were specifically cited.

They pay exactly the same fees as UK students so if true it seems that universities are profiting from our students.

10pence

magpiecottage wrote: »

An interesting comment on Radio 4 yesterday in a discussion about EU benefit migrants. It was said that many EU citizens coming to this country bring in considerable amounts of money and fees from students at our universities were specifically cited.

Members of the EEA can apply for a student loan. But let not ruin this thread with this sort of talk.

ericctheking

MPH80 wrote: »

Ok - I'll bite.

You have three core arguments: 1) They shouldn't have marketed to minors, 2) it wasn't explained the loans could be sold on and 3) They were sold as not being reported to CRAs.

On point 1:
The CCA 1974 section 50 was specifically excluded under the Student Loan Act 1990 - Schedule 2, section 3, paragraph 8. (http://www.legislation.gov.uk/ukpga/1990/6/schedule/2/enacted) So no offence was committed under the CCA 1974.

On point 2:
As someone else has pointed out - the right to pass on loans to the private sector was within the terms and conditions of the loan. This is a standard procedure for a loan company.

On point 3:
I took out a loan - I remember understanding it didn't leave a footprint on my credit file and that, unless I was in dire circumstances I was unlikely to be asked about it during my mortgage application. However, I am wondering whether you expect gyms to start warning you that taking out a membership may affect your ability to get a mortgage (taken from the daily mail article you linked to):



Perhaps bars need a sign in the window? "Spending too much on alcohol may affect your chances at future credit?"

Anyway - I'm done here - just wanted to make the points.

Before I reply in full regarding point number two, you say this is standard for a loan company. The argument is that students have been tricked into thinking they weren't signing up to regular loans with a regular loan company otherwise students might think twice about the "eye-watering" amounts esp. these days. They were signing up to a safe government loan which has nice conditions ( a kind of no win no fee kind of model like lawyers if you must) Then the loans have been sold off and the company that has them lies, screws around, trys to do everything it can to get people to pay back the money when they shouldn't according to the terms and conditions, this company (Eruido) can not be trusted with direct debits, can not be trusted to calculate interest and can not be trusted to administrate these loans!!

ericctheking

MPH80 wrote: »

On point 1:
The CCA 1974 section 50 was specifically excluded under the Student Loan Act 1990 - Schedule 2, section 3, paragraph 8. (http://www.legislation.gov.uk/ukpga/1990/6/schedule/2/enacted) So no offence was committed under the CCA 1974.

On point 2:
As someone else has pointed out - the right to pass on loans to the private sector was within the terms and conditions of the loan. This is a standard procedure for a loan company.

These points contradict each other;
What are these loans?
Government loans which don't have to apply to the law because they are from the government

or

regular loans which can be assigned for profit and all that entails?

If you agree with what has happened it means you support a very sneaky way of selling debt to minors!
Shame on you all!

jonesMUFCforever

ericctheking wrote: »

These points contradict each other;
What are these loans?
Government loans which don't have to apply to the law because they are from the government

or

regular loans which can be assigned for profit and all that entails?

If you agree with what has happened it means you support a very sneaky way of selling debt to minors!
Shame on you all!

When did you actually receive the student loan monies?
I bet you were over 18.