MSE News: Graduates brace themselves for September interest rate hike as inflation cr

steve_redfern

My son is (slowly) repaying his student loan whilst living and working in Germany.

Last year (April 2015 – March 2016) his threshold (the point at which he starts making a repayment) was £17,335.

The threshold differs from country to country depending on the comparative cost of living compared to the UK, and the threshold for Germany for the last five years has been the same as the UK’s (and the same as for most of Western Europe).

The previous year it was £16,910, some £16,300 the year before that, and so on (lower each previous year) going back at least 5 years.

This year (starting April 6th 2016) I am informed that instead of the threshold for Germany increasing slightly (with inflation I had previously been advised), as the UK's has done, the threshold has suddenly DECREASED by some 20% to £14,000, which means my son's monthly repayment will jump quite considerably.

The SLC tells me that the German government annually provides data to the World Bank, who then provide information to the BIS in the UK, who then tell the SLC what the forthcoming year’s threshold will be

If the increase/decrease really is based on inflation/deflation then without doubt Germany has not suffered a 20% deflation over the last 12 months, nor has the cost of living suddenly dropped by 20%

My question is, what is the explanation for a near 20% drop in this years threshold ?

Has an error inadvertently been made in the long process from the German government to the SLC, or if not, what is the cause of this year’s astonishing drop which appears to have no justification in logic ?

Midas

steve_redfern wrote: »

My son is (slowly) repaying his student loan whilst living and working in Germany.

Last year (April 2015 – March 2016) his threshold (the point at which he starts making a repayment) was £17,335.

The threshold differs from country to country depending on the comparative cost of living compared to the UK, and the threshold for Germany for the last five years has been the same as the UK’s (and the same as for most of Western Europe).

The previous year it was £16,910, some £16,300 the year before that, and so on (lower each previous year) going back at least 5 years.

This year (starting April 6th 2016) I am informed that instead of the threshold for Germany increasing slightly (with inflation I had previously been advised), as the UK's has done, the threshold has suddenly DECREASED by some 20% to £14,000, which means my son's monthly repayment will jump quite considerably.

The SLC tells me that the German government annually provides data to the World Bank, who then provide information to the BIS in the UK, who then tell the SLC what the forthcoming year’s threshold will be

If the increase/decrease really is based on inflation/deflation then without doubt Germany has not suffered a 20% deflation over the last 12 months, nor has the cost of living suddenly dropped by 20%

My question is, what is the explanation for a near 20% drop in this years threshold ?

Has an error inadvertently been made in the long process from the German government to the SLC, or if not, what is the cause of this year’s astonishing drop which appears to have no justification in logic ?

I hadn't heard of differential rates for different countries before. What a lot of unnecessary bureaucracy. Could the change be accounted for by currency movement?

steve_redfern

No, the threshold is calculated each year in sterling, and it is this year's sterling figure for Germany of £14,000 (a drop of 20% from last year) that I am complaining about. The monthly repayment figure is then withdrawn in sterling from a UK bank account.


I understand the reason for each country's individual threshold figure because the average wage and the cost of living is a lot lower in, say, Albania than it is in, say, Switzerland.


Which is why it is so difficult to understand why Germany's threshold is lower this year than for France, Austria, Belgium, the UK etc , as if the average wage/cost of living for Germany had suddenly dropped by 20% compared to these other countries which it was previously in synch with.