I've hired lawyers to investigate judicial reviewing Govt's retrospective student lo

Paul_Herring

Out of interest, does anyone have a link to the actual contract that has the clause about increasing the wage level each year? I've seen lots of articles talking about it, but I can't seem to find a copy of the actual contract from Google...

C_Mababejive

Governments can do pretty much what they like/what they can get away with. The ordinary people are mere chattels of the state.

Whilst accepting that such matters should not be retrospective, in real terms its still a bargain for your average student. Al that education and all paid for by others in the full knowledge that you may never pay it all back. Indeed many pay nothing back. But who benefits? Graduate boy or girl when they leave and seek out the career that is their birthright.

Ed-1

Paul_Herring wrote: »

Out of interest, does anyone have a link to the actual contract that has the clause about increasing the wage level each year? I've seen lots of articles talking about it, but I can't seem to find a copy of the actual contract from Google...

There isn't an actual contract like you would sign for a commercial loan. This is because income contingent student loans are made under section 22 of the Teaching and Higher Education Act 1998 which exempts them from Consumer Credit regulation and allows them to essentially work in the same way as a tax.

All there is is a declaration form which you send to SLC saying that "you agree to repay your loan in line with the regulations that apply at the time the repayments are due, and as they are amended. The regulations may be replaced by future regulations."

The regulations are the Education (Student Loans) (Repayment) Regulations 2009 as amended practically every year. These regulations consolidated the Education (Student Loans) (Repayment) Regulations 2000 (the original regulations for income contingent loans) and all subsequent amendments.

The Education (Student Loans) (Repayment) (Amendment) (No.2) Regulations 2012 set out how repayments would work for post-2012 loans. Notably, it just set the threshold to be £21,000. It did not implement any uprating regulation which meant this uprating was worth about as much as a vote for Vince Cable (the MP that originally announced it) at the last election - nothing! Therefore this isn't a retrospective change as the uprating never formed part of the terms at any time (remember, something only forms part of the terms when it has been written into the regulations and come into force).

Examples of previous changes that were retrospective (i.e. altered something already written in the regulations) have been:

When the threshold was amended from £10,000 to £15,000 for all borrowers old and new in 2005 and when uprating by RPI of this threshold was written into the regulations in 2011 (to start 2012).

Examples of intentions not yet written into the regulations that have been retrospectively altered include:

• 5 year repayment holidays announced in 2007 for borrowers starting 2008 onwards - dropped completely in 2010 after borrowers due to benefit had already taken out loans.
• Uprating the repayment threshold by RPI from 2010 - this ended up not being implemented until 2012 (essentially a further 2 year freeze following a 5 year freeze to the £15,000 threshold).
• Setting interest at the lower of RPI or base rate + 1% - this intention was altered in 2009/10 as interest was applied at 0% rather than -0.4%. Note that this did not require an amendment to the regulations as the regulations state that interest does not have to be charged on student loans (i.e. if the government decides not to charge interest in a particular year, the rate is 0%).
• Uprating the post-2012 repayment threshold by average earnings - dropped in favour of an initial 5 year freeze.

Some of the above are summarised in articles and most of the changes are justified on the basis of cost to taxpayers, e.g.:

http://blogs.thisismoney.co.uk/this_is_money_blog/2009/05/student-loan-interest-rate-decision-is-a-disgrace.html

http://www.thisismoney.co.uk/money/saving/article-1674618/Government-breaks-student-loans-pledge.html

Will_Haines

It's a tax. Listen to David Willetts on Moneybox 28/29th November.

Is it a tax? Is it a loan? Is it the greatest example of political spin this century?

Simple test:

If you insist on calling it a loan, then you have to remember the 20+ ways in which it isn't (your 'Myths').

But you can think of it as a tax with just one caveat; the Government may cancel your liability for the tax when (if, more likely) they reckon you've coughed up enough.

Willetts reckons the electorate has been so bamboozled by the unremitting spin about 'loans' that they couldn't cope if politicians told the truth and started calling it a Graduate Tax. How convenient! Nobody really likes students – they riot, they drink, they stay in bed all day, they waste their time at university (though not on taxpayers money any more, thank goodness). A nice, easy target for the populist politician to pretend to be shooting at.

But a Graduate Tax invites all sorts of difficult questions. You really want to penalize the educated? You think a doctor should pay more tax than someone without a degree? And if it's so wonderfully 'fair' then it's even more 'fair' to extend the tax to every graduate who has received a free university education. Especially our current crop of graduate MPs, who have unblushingly promoted this travesty. Roll on the next few elections, which should start bringing some Graduate Tax-paying MPs into the House. I look forward to the scheme being killed off early – build that into your advice.

Meanwhile, what to do? Well, you could take on the Herculean task that David Willetts thinks is impossible and start educating the British public about the true nature of the current student finance mechanism. Blow away the 'loans' nonsense – it's a tax.

Paul_Herring

Ed-1 wrote: »

"you agree to repay your loan in line with the regulations that apply at the time the repayments are due, and as they are amended. The regulations may be replaced by future regulations."

If that is indeed the case, then I think Martin's lawyers are going to be the winners here.

Charliescruff

Whilst you're looking at student loans, try investigating the Repayment of Teachers Loans scheme that was introduced in 2001 to attract graduates into a profession with a recruitment crisis. A government scam that promised student loans to be paid off after 10 years employment as a teacher. No, it wasn't. A quick search of the TES forums and you'll see that many teachers were seen off! Once again there is a teacher shortage and the govt is proposing schemes similar to the RTL - students, don't be fooled!

Lokolo

Paul_Herring wrote: »

Since it's equivilent to salary sacrifice, that's (after tax) £1.18 less net pay per week.

I am a bit out of the loop with 2012+ loans but the loan repayments have never been part of salary sacrifice (and they definately aren't for 1998-2012). It is calculated from NET but paid from GROSS. So there are no tax advantages.

dillydilly

avoid the trap of clouding this issue with debates on tax/loan, taxpayer/individual etc, key issues here are the principles the government are breaking and trying to ignore and hope we won't notice

Retrospective - we make decisions based on existing facts and assurances, I choose to buy my petrol based on the sign on the street. Most people would get annoyed if they are told at the till the price had gone up. On a larger scale, we invest in pensions based on existing laws and rules, would we expect the payout to be less on retirement because these rules had been backdated ? I think not

Regressive - this only affects those people who subsequently earn lower salaries - nurses, teachers etc, those lawyers/doctors/accountants on £50k+ will not be affected, yet they're the ones most able to address deficits without noticing

you are so spot on Mr Lewis...

Paul_Herring

dillydilly wrote: »

Retrospective - we make decisions based on existing facts and assurances, I choose to buy my petrol based on the sign on the street. Most people would get annoyed if they are told at the till the price had gone up.

Bad analogy. More appropriate would be complaining that the petrol station advertised last week that they'd keep the price at 99.9p/l this week, you vowed to buy from them this week as a result, but it's actually 102.9p when you turned up this morning.

On a larger scale, we invest in pensions based on existing laws and rules, would we expect the payout to be less on retirement because these rules had been backdated ?

Anyone with any interest in pensions would not be investing based solely on existing laws and rules - the government (of both stripes) have shown themselves to be unable to stop meddling with them. (Women's SPA stuff happening at the moment, rise of age of access from 50 to 55 on private pensions are two examples.)

Ed-1

Paul_Herring wrote: »

If that is indeed the case, then I think Martin's lawyers are going to be the winners here.

On what basis?