What the flip is this all about, and what does it mean for University students?

Petra_70

http://www.bbc.co.uk/news/education-34336404

"Freezing the earnings threshold"

"In July, Chancellor George Osborne announced a consultation on freezing the threshold for five years, rather than linking it with average earnings."

"This would affect those who took loans from 2012, when annual tuition fees were raised to a maximum of £9,000 in England."

"From next April these so-called "repayment plan 2" graduates whose earnings exceed £21,000 will start to repay the loans."

What does it mean?

What are they intending to do?

And how will it affect people who have taken out student loans over the past 2 - 3 years?

And how the flip can they just change the rules like this?

People took out these loans in good faith knowing the rules, and when they'd have to start paying the money back etc, and now they move the goalposts?!

What's it all about? How will uni students/post graduates be affected? I can't work it out from the article.

Can anyone enlighten me?

Many thanks.

fermi

See: http://blog.moneysavingexpert.com/2015/01/09/a-deliberate-threat-to-the-government-u-turn-on-the-21000-student-loan-repayment-threshold-i-will-organise-mass-protest/

Petra_70

fermi wrote: »

See: http://blog.moneysavingexpert.com/2015/01/09/a-deliberate-threat-to-the-government-u-turn-on-the-21000-student-loan-repayment-threshold-i-will-organise-mass-protest/

Thanks Fermi.

However, I must be thick because I still don't understand exactly what it means or what they (possibly) intend to do.

What does it all mean?

Does it mean that they will no longer pay back 9% of any salary over £21,000, but a higher percentage? (ergo they will have to pay back more with less pay?)

Or does it mean they will have to start paying back money to the Government BEFORE they earn £21,000, like when they earn £18,000 or something? (ergo they have to pay back more with less pay?!)

Sorry for being thick.

MataNui

Its nothing to worry about short term. At the moment you dont have to pay it back until you earn over 21k. That is for now. As things are at the moment in 2 or 5 years time the threshold wouldn't be 21k, it might be 25k. The threshold rises with average earnings.

what they are proposing is to remove that so it will stay at 21k (so today for example the average earnings are 21k and the threshold is 21k. In 5 years the average earnings might be 30k but the threshold will STILL be 21k).

As its assumed we live in an inflationary economy then its assumed the average earnings will always increase meaning that at some point in the future you will have to start repaying the loan if you earn below the average (now you dont). At the moment though its pretty static (inflationary wise) so in the short term (5 years or so) its not going to make much difference despite the scaremongering in the media.

ericctheking

Another concern is your loans are being sold off to debt collecting agencies who are told to bend/change the terms and conditions so they can make big profits.

Petra_70

MataNui wrote: »

Its nothing to worry about short term. At the moment you dont have to pay it back until you earn over 21k. That is for now. As things are at the moment in 2 or 5 years time the threshold wouldn't be 21k, it might be 25k. The threshold rises with average earnings.

what they are proposing is to remove that so it will stay at 21k (so today for example the average earnings are 21k and the threshold is 21k. In 5 years the average earnings might be 30k but the threshold will STILL be 21k).

As its assumed we live in an inflationary economy then its assumed the average earnings will always increase meaning that at some point in the future you will have to start repaying the loan if you earn below the average (now you dont). At the moment though its pretty static (inflationary wise) so in the short term (5 years or so) its not going to make much difference despite the scaremongering in the media.

Thank you. So people who leave uni in 1-2 years time aren't going to have to suddenly start paying 10% of their salary even when it's only £10K then! Or start having to pay a fifth of their salary when they earn £21K?

So do they normally move the threshold in line with inflation then?

ericctheking wrote: »

Another concern is your loans are being sold off to debt collecting agencies who are told to bend/change the terms and conditions so they can make big profits.

That is a BIG worry. I feel so sorry for the people who have this Erudio loans issue.

Edited to ask... if they are are freezing the threshold, how can it be 'retrospective?'

andyfromotley

because the T & C's were clear, the threshold would rise in line with earnings. The are now proposing that is doesn't and is frozen. This is a retrospective change.

Petra_70

Oh thanks Andy!

Thanks to all of you. It is much clearer now.