MSE News: Narrow defeat in Lords for bid to block retrospective student loan hike

Legacy_user

A last-minute attempt to stop the Government retrospectively raising student loan repayments has ended in defeat...

Read the full story:
'Narrow defeat in Parliament for bid to block retrospective student loan hike'

Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.

Ed-1

MSE_Callum wrote: »

A last-minute attempt to stop the Government retrospectively raising student loan repayments has ended in defeat...

Read the full story:
'Narrow defeat in Parliament for bid to block retrospective student loan hike'

Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.

It's ironic that the amendment to primary legislation that was put forward would have actually had the opposite effect: it would have prevented Ministers from changing the threshold at all from the level currently set out in regulations (£21,000 in relation to post-2012 loans). In order to raise that threshold Ministers need the freedom to retrospectively amend the secondary legislation which the amendment would have prevented. So I'm not surprised it was voted down as it was useless. Far from forcing the Government to return to the Coalition's intention to raise the threshold from April this year, it wouldn't have even come into force until after April when the Higher Education and Research Bill is expected to become law in May time.

I'm still astounded that some people are so surprised that the threshold remained frozen at £21,000. Retrospectively changing intentions on repayment thresholds has happened as recently as 2009 when the £15,000 threshold was meant to annually change by RPI from April 2010 but the decision to cancel the first increase as a result of a marginally negative RPI (see Minister's explanation below) ended up leaving the threshold at £15,000 until April 2012 (high RPI of 4.4% in March 2010 was not used to increase the threshold in April 2011):

https://www.theyworkforyou.com/wrans/?id=2009-11-24b.301475.h&s

On the issue of regulating ICR loans under consumer credit legislation, the arguments against this centred on these not being commercial loans so they should not be regulated as such. Whilst that is true (ICR loans are a statutory loan scheme with terms set out in secondary legislation subject to parliamentary oversight), I was surprised no peer put forward the fact that pre-1998 loans were also not commercial loans (indeed they had a lower interest rate than post-2012 ICR loans), yet these were regulated under the consumer credit legislation. So the argument put forward by the likes of Lord Willetts that the SLC would have to comply with Know Your Customer requirements and assess the creditworthiness of students is a weak argument as pre-1998 loans were universally available yet still regulated under CCA 1974.

The amendment to HE&R Bill that was proposed to amend both the Teaching and Higher Education Act 1998 and the Sale of Student Loans Act 2008 is below (the problems with adding (5A) to the 1998 Act I've already mentioned: it would prevent the current threshold levels from being able to change at all and it would also prevent the necessary technical changes to loan administration such as changes to PAYE from being incorporated into the terms. (5B) would have no effect on changes to terms made prior to the HE&R Act coming into force so couldn't have blocked the threshold freeze in any case so the title of this MSE piece is once again misleading. It would get very interesting if these clauses were law as to whether the 'promise' to increase thresholds was actually part of the 'repayment conditions' as it wasn't included in the secondary legislation even though it would've had to have been put in to take effect. So the threshold freeze would very likely satisfy these clauses in any case, as no changes are being made to the current repayment conditions. Raising the threshold requires a change to the repayment terms which the clauses forbid!).

“Financial support: loans

(1) In section 22 of the Teaching and Higher Education Act 1998, after subsection (5) insert—
“(5A) No provision may be made relating to the repayment of a loan that has been made available under this section which would change the repayment conditions of that loan once the first payment has been made to the borrower or directly to the institution to whom the borrower is liable to make payments.
(5B) No provision may be made relating to the repayment of a loan that has been made available under this section, and under which any payments have been made prior to the commencement of section (financial support: loans) of the Higher Education and Research Act 2017, which would make any further changes to the repayment conditions of that loan after the commencement of that section.”
(2) In section 8 of the Sale of Student Loans Act 2008 (consumer credit), for subsection (1) substitute—
“(1) Loans made in accordance with regulations under section 22 of the Teaching and Higher Education Act 1998 are to be regulated by the Consumer Credit Act 1974.””