Loans

asmita

STUDENT LOAN DEBACLE. I'm sure a lot of you are in the same situation as me. Please read and see if you agree with me...

Below is an Open Letter, written to my MP, Vernon Coaker.

Mr. Vernon Coaker MP,
Arnot Hill House
Arnot Hill Park
Nottingham Rd
Arnold
NG5 6LU

Dear Mr Coaker,
This is an open letter to you as my Member of Parliament. I would greatly value your support and I have no doubt, so would the other thousands of young graduates in my position.

I took out a student loan at the age of eighteen to study Civil Engineering at the University of Nottingham. Unfortunately, I was in the first cohort year of undergraduates who were charged the increased fees of £9,000 per year, from £3,000 – a huge hike in student fees. When I took out the student loan, we were told the loan was at a very low interest, and at the time was around 0.5%.

I was still in the Sixth Form at school, when I agreed to the student loan. I had no experience of loans, credit cards or mortgages. Like all the other thousands of students in the UK, we trusted the Government that the interest rate would remain low - at around 0-0.5%.

I graduated with a huge debt of around £41,000.
We have just learned of the underhand way, the Government has sold our loans to a private company which has caused the interest rate to skyrocket. At no point was I consulted about this, and of course I would never have agreed to this enormous increase in fees.

Now graduates, we feel we have been cheated by a government who encouraged many of us to undertake higher education, despite trebling the cost of attending university.
The current interest rate is now around 3.9%. We were told our loans were around 0.5% interest. I am now lucky enough to own a property, and my mortgage is around 3% - less than my student loan.

From the attached image you will see some months the interest on my student loan is over £180.
The student loan repayment is currently 9% of anything over £21,000. The total interest on my debt between March 2015 and March 2016, is £1828. Below is a simple calculation to see how much I would need to earn, just to cover the interest in a year:

£1828. (total interest last year)
£1828/0.09 =£20311 (In order to find out how much money above the threshold)

£21000 + £20311 = £41311 (total amount needed to be earned to cover interest)

Therefore, just to cover the interest, I would need to be earning over *£41,000* a year.
Unless I earn that much, my student loan will increase due to the interest.

I would like to know how many new and recently qualified graduates are earning over £41,000? I am only 22 years old and out of university less than a year.

I have actually set up my own business and have been able to employ two people! As I am employing two people my own salary is lower, which means my student loan will be increasing due to the interest.

I feel we have been mis-sold the loan. A commercial firm would not be allowed to buy loans from another company and then hike the interest rates. This is not what I and thousands of others signed up to. How can it be allowed? How can our loan agreements be altered without our prior knowledge. This is a disgraceful act by a government which encouraged us when at school, to go on to higher education – helped by a government loan with the promise of a low interest repayment scheme. Along with many of my former university colleagues, we have lost our trust in this Government. We have been told that as graduates, we are the future leaders of the country in politics, engineering and commerce.

I trust when our generation reaches parliament, our future government is never so short sighted as to treat their “future leaders” in such an underhand way.

Mr Coaker, I am putting this to you, in the hope you will be able to bring some pressure to bear on the outrageous situation this government has now left me and my generation in, after the hike in interest on our already large student loans and without our prior knowledge. This is not the way to keep our future leaders’ trust……..or votes.

I look forward to hearing from you and I value your support.

Yours Sincerely,

Simon Crowther, BEng (Hons)

CC
The Rt Hon David Cameron MP.
Prime Minister
10 Downing Street
London
SW1A 2AA

CrowCrow

I don't follow? The interest terms were clear from the get go that they were RPI + 3%.

timefortea

Is this actually your letter, or are you copying and pasting the one that's doing the rounds? http://www.huffingtonpost.co.uk/entry/graduate-criticises-governments-underhanded-student-loan-changes-in-viral-letter_uk_57458dd0e4b02163fae82d05

Your loan hasn't been sold to a private company (yet), they're selling off pre-2012 loans. And the advertised interest rate for your cohort has always been RPI + 3% while you're studying, then a variable rate between RPI and RPI + 3% after you leave university, depending on how much you're earning. If you're earning less than £21,000 per year you won't make any repayments, and the interest rate will be RPI. The highest interest rate of RPI + 3% only applies if you're earning £41,000 per year or above.

The only retrospective change is the repayment threshold of £21,000 not rising, which is what was promised. That is unfair, and is what Martin Lewis is challenging. But your accusations are inaccurate.