MSE News: Chancellor cites sale of student loan debt as reason NOT to reverse changes

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The potential sale of student loan debt has been cited by the Chancellor as a reason not to stop retrospective changes...
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'Chancellor cites future sale of student loan debt as reason NOT to unfreeze repayment threshold'
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  • edited 8 February 2017 at 1:42PM
    3vergreen3vergreen Forumite
    1 Post
    edited 8 February 2017 at 1:42PM
    This is hopefully a response that will be seen my MSE's team and Martin, because we really need someone to help stand up for our rights on this one.

    Martin often speaks about legal action as a possible recourse, and that these underhanded actions by the government could well see them being a necessity. If the time for that course has not come now, then when will it come? There are massive concerns both for the country, and for the students involved here, which I would be grateful if the MSE team, Martin himself, or anyone with genuine authority on the subject could address.

    1) First, as Martin points out in another article, no private company would be allowed to change the terms of a contract like this. How are they able to get away with this legally? Is it purely the fact that they aren't challenged on it? How is it possible that the government, or anyone for that matter, could retrospectively change the terms of a contract? It seems to defeat the entire point of a contract.

    2) Second, 'assurances' are worthless from the government now, which is partly a corollary of actions like this one, which invalidate the trust people have in their governments, and their assurances. We were 'assured' of the terms of a loan when we took them out, and that was put into a legal contract. If that doesn't hold up, what possible faith would we have in 'assurances' that loan terms won't change? If the terms can be changed like this, what is to stop the private company who buys the loans from changing them further? Demanding higher repayments, changing thresholds more, any number of nefarious things. We seem to be idiotically nodding along to government assurances when they consistantly change the terms of those.

    If this ability to change contract terms isn't challenged now, what happens when the government or private company decide to renege on wiping student loans after 25 years? What is happening now is indicative of allowing governments the ability to sunder people's lives with no resistance; these loans are massive elements of people's ability to live their lives. Perhaps the changes are small(ish) now, but if they are allowed, what stops further, life-altering changes later?

    3) How can the government regulate the private company's management of the loan, particularly if they've already writtena clause into the contract which says the terms of the loan can be legally changed?

    Martin, we need legal representation on this. The younger generations have been sold out and sold out again by the baby-boomers, and there is a naive assumption that the fabric of society remains unaffected, but it doesn't. When trust and responsibility vanish, we lay the foundations for swathes of a population who have no stake in the future, who have no desire to invest in the country. Without hyperbole, it is actions like this that will be the groundwork of society's failures of the future. We absolutely must challenge the legality of such a move.
  • edited 8 February 2017 at 5:23PM
    Ed-1Ed-1 Forumite
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    edited 8 February 2017 at 5:23PM
    3vergreen wrote: »
    1) First, as Martin points out in another article, no private company would be allowed to change the terms of a contract like this. How are they able to get away with this legally? Is it purely the fact that they aren't challenged on it? How is it possible that the government, or anyone for that matter, could retrospectively change the terms of a contract? It seems to defeat the entire point of a contract.

    You, like Martin and many others, miss the point. The Government haven't retrospectively changed the contract, nor the terms. The contract states the terms will be set out in regulations passed by Parliament, subject to being amended from time to time.

    The contract is such that it is intended for the terms to be changed from time to time (although the terms haven't changed in the case of freezing the threshold as only the current threshold level was written into the regulations at the time, nothing about future intentions to increase it). Income contingent student loans are meant to work like a tax. This has always been the case since they were introduced in 1998. The contract has always said the terms, as set out in regulations, are subject to amendment from time to time.
    3vergreen wrote: »
    2) Second, 'assurances' are worthless from the government now, which is partly a corollary of actions like this one, which invalidate the trust people have in their governments, and their assurances. We were 'assured' of the terms of a loan when we took them out, and that was put into a legal contract. If that doesn't hold up, what possible faith would we have in 'assurances' that loan terms won't change?

    The Government never assured anyone the terms wouldn't be changed. In fact they did the exact opposite.

    The terms, as set in regulations for 2012+ students, stated "the repayment threshold is an amount of £21,000."

    That term hasn't changed! It is still £21,000 and until the Government changes the terms to increase it, it will remain at £21,000.

    So when the Coalition promised to increase it from 2017, it was conditional on them still being in power when the time came to alter the terms, as written, and increase it. The new post-2015 Government decided to leave the terms as they are with the threshold at £21,000.

    See the letter from the Minister to Chair of the Economic Affairs Committee - response to Question 3:

    http://www.parliament.uk/documents/lords-committees/economic-affairs/Student_loans/20161207%20Jo%20Johnson%20to%20Chairman%20-%20Student%20loans.pdf
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