'Urgent! Help fight the Government’s student loan U-turn that could cost...'

Ed-1

N1AK wrote: »

The fact the government has done something immoral before doesn't make it any more ok for them to do it again.

Whether student loan terms should be fixed is another debate - the fact is they are not fixed to allow them to work like a tax. Taxes can be changed retrospectively so why shouldn't student loans be?

When intentions are made, they are made based an assumptions about government having the money to afford them.

The justification for not charging interest at -0.4% and not implementing repayment holidays etc. was that it would be unfair on taxpayers. That is the exact same justification being used for freezing the £21,000 threshold - that it is higher than intended as earnings are lower than was assumed they would be, so continuing with the intention to increase the threshold would be unfair on taxpayers owing to the increased amount they would have to write off.

In light of student loans terms not being fixed (I'm not saying they shouldn't be but basing this on facts that they aren't), and how intentions have been dropped retrospectively before, I think it is entirely reasonable to freeze the threshold.

People are not against this because they think they would have a bad deal if the threshold was frozen (as they still would have a very good deal), they are basing it on a principle of retrospective change. But retrospective changes are allowed and have happened before so what's the difference - why wasn't everyone campaigning when retrospective changes have happened before? The answer is because they accepted that they could happen. 2012+ starters suddenly are not accepting it - but in fact have accepted it by signing the loan agreement!

Ed-1

dizzie wrote: »

After all, if they are allowed to get away with changing the terms and conditions on loans already taken out ONCE.....what is stopping them doing it again in the future?

The point is this would not set a precedent as previous governments have already changed intentions on student loans retrospectively as I have pointed out.

MothballsWallet

I CBA personalising the letter, so sent it as was.

Anyway, I've received a reply today.

dizzie

Ed-1 wrote: »

Whether student loan terms should be fixed is another debate - the fact is they are not fixed to allow them to work like a tax. Taxes can be changed retrospectively so why shouldn't student loans be?

Don't agree with your argument at all. Taxes can be changed but then with most taxes, you retain a level of control over what you pay. If income tax goes up....then if you are unhappy to pay as much tax, you can take unpaid leave and earn less...or maybe even chose to seek work abroad. If VAT goes up, you may chose not to purchase certain goods, or to buy more second hand. The point is, that taxes can go up but they are applied on the transactions and earnings you make at the point in time that the tax rise is enforced.

Student loans ARE different. Once a loan is taken, you have no opportunity to wind the clock back and "untake" that loan.

And you say that it is more of a tax than a loan? So why call it a loan? Why masquerade as a loan?....because a loan implies that the terms and conditions are fixed!

This government made a great deal of noise about how student loans would work to reassure people having second thoughts. Why make bogus claims about how loans will work when you can change them at a whim afterwards once you have people trapped? It is nothing short of a SCAM.

dizzie

N1AK wrote: »

There is no difference between changing a loan from -0.4% to 0% and changing one from from 2.2% to 2.6%. You wouldn't expect to be called ridiculous when a mortgage lender added 0.4% to a fixed rate mortgage for example before they felt like it.

Ethically, I would not expect to take a loan and then see the interest rate turn negative and then effectively be GAINING interest from the lender! That's not being naive in my book, it's about looking at it from a common sense perspective.

Ed-1

dizzie wrote: »

Don't agree with your argument at all. Taxes can be changed but then with most taxes, you retain a level of control over what you pay. If income tax goes up....then if you are unhappy to pay as much tax, you can take unpaid leave and earn less...or maybe even chose to seek work abroad. If VAT goes up, you may chose not to purchase certain goods, or to buy more second hand. The point is, that taxes can go up but they are applied on the transactions and earnings you make at the point in time that the tax rise is enforced.

You can choose to earn less if a tax threshold goes down just as you can choose to earn less if a student loan repayment threshold doesn't change.

dizzie wrote: »

Student loans ARE different. Once a loan is taken, you have no opportunity to wind the clock back and "untake" that loan.

No, but you can repay it at any time you wish.

dizzie wrote: »

And you say that it is more of a tax than a loan? So why call it a loan? Why masquerade as a loan?....because a loan implies that the terms and conditions are fixed!

It is called a loan to enforce the repayments from overseas graduates. For graduates in the UK tax system, it is very much like a graduate tax where the threshold can be set by governments in the same way as income tax thresholds can.

dizzie wrote: »

This government made a great deal of noise about how student loans would work to reassure people having second thoughts. Why make bogus claims about how loans will work when you can change them at a whim afterwards once you have people trapped? It is nothing short of a SCAM.

The last government did. There has been a change of government since then. The Liberal Democrats banged on about the system being progressive but failed to ensure the uprating commitment on the threshold was made part of the terms and conditions of the loan. Instead, by not including it in the legislation, it remained an intention which was always at risk of getting axed should the Lib Dems no longer be in government.

I don't believe the Conservatives would have proposed freezing the threshold had earnings been higher meaning the threshold was lower relative to earnings (as had been intended). As it is, it is unaffordable.

Ed-1

dizzie wrote: »

Ethically, I would not expect to take a loan and then see the interest rate turn negative and then effectively be GAINING interest from the lender! That's not being naive in my book, it's about looking at it from a common sense perspective.

You would be gaining interest in cash terms but not gaining anything in real terms. That is the point of setting interest at inflation - to maintain the real value of the loan balance.

By setting interest above the rate of inflation, the government were making money in real terms, even though they weren't adding any cash interest onto the balance.

The mortgage-style loans (pre-1998) had interest set at -0.4% as their terms are fixed and regulated by the Consumer Credit Act.

Income contingent loans are not as they are treated in the same way as a tax, so legally, their terms can be changed at any time by the government.

dizzie

Ed, you can escape any tax changes in the UK by choosing to move to another European country and paying your various taxes there. You can't do that with student loans! What they are proposing is effectively like retrospectively increasing council tax for everyone and asking for a back payment! Once a loan is taken, the deed is done. You cannot undo the debt but it seems that they can alter the terms and force a person to pay more.

And on the subject of student debt being "unaffordable", perhaps that is the fault of Cameron claiming that £9000 would be able to be charged in "exceptional circumstances".....and then failing to define what would constitute those circumstances! Ooops! And then when debates were going on in the House of Commons and the government were being told that the proposed system would not save the taxpayer any money....why did they not listen? Perhaps the answer lies in the fact that they knew they could change the rules retrospectively anyway.....but they didn't want to give the game away that they would.

The fact is this, Higher Education has just become another ego trip race for the UK government. We do NOT need the numbers of graduates we are producing and the taxpayer is losing far more money by seeing vast numbers of disappointed graduates working in low paid non-graduate style jobs. But hey ho, so long as we keep up with China etc I guess they think that is okay!

Why are we not looking to see how they are managing their finances in other EU countries and how they manage to offer degree courses at a lower cost to the student?

dizzie

Ed-1 wrote: »

Income contingent loans are not as they are treated in the same way as a tax, so legally, their terms can be changed at any time by the government.

So they call them a loan but really it is a tax, so they obfuscate the terminology to bamboozle people.....but really they want the best of both worlds: they want to treat it as a tax when it suits them so that they can change terms, but they want to treat it as a loan too so that people cannot escape it by moving away from the UK!

I think it is called "Having your cake and eating it"

N1AK

dizzie wrote: »

Ethically, I would not expect to take a loan and then see the interest rate turn negative and then effectively be GAINING interest from the lender! That's not being naive in my book, it's about looking at it from a common sense perspective.

I'm not sure how looking at it from a financially uninformed perspective makes any difference. If someone take out a loan I expect for the terms to be honoured, not honouring the terms is both unethical and immoral. The terms of the loan clearly allowed for negative interest rates in periods of deflation (where the size of the debt increases in real terms, so the 'gaining' merely keeps the size of the outstanding loan the same in real terms); only someone with a poor grasp of economics would discount the chance of deflation entirely when setting terms for a loan.