Issue

rawr123

some one at sixth form was saying that there parents had used an accountant to move there money (self employed) so that she could gain the maximum maintenance loan. Is this even legal, she claimed it was?

Surely it is not fair on those with a lower household income and receiving less

IAmWales

Tax avoidance may not be ethical but it is lawful. It's likely they have set up a limited company so they are only paid a salary as an employee.

TheGardener

Someone who goes out of their way to get the maximum maintenance loan obviously isn't fully aware of how the SLC system works. Since last year the maintenance element has been a loan - not a grant. It just means their parents are making sure that their child has a bigger debt to pay back and the parents are not expected to contribute anything...
I'd be a pretty gutted if my parents did that to me.

Ed-1

TheGardener wrote: »

Someone who goes out of their way to get the maximum maintenance loan obviously isn't fully aware of how the SLC system works. Since last year the maintenance element has been a loan - not a grant. It just means their parents are making sure that their child has a bigger debt to pay back and the parents are not expected to contribute anything...
I'd be a pretty gutted if my parents did that to me.

A bigger debt doesn't necessarily mean you pay more. Many people with £20,000 debts would pay exactly the same as someone with a £100,000 debt as the Government writes off anything unpaid after 30 years.

Similarly someone with a £0 debt could pay the same as someone with a £100,000 debt if they earn under the repayment threshold over the 30 years.

That's how the SLC system works.

TheGardener

I appreciate that. The OP appeared to be under the impression (I may have misread?) that a fellow students parents were deliberately manipulating their income in an attempt to get the maximum maintenance loan for their child. All that does is give the student a bigger debt. There are a lot of parents around who have not realised things have changed from maintenance grant to maintenance loan and are under the impression that they are helping their child. I had this very conversation with a colleague a few weeks ago and they were mortified that they hadn't realised it was now a loan and their child was now responsible for a bigger student debt.

Whether they pay it off or not is academic. I just can't see any advantage in a parent making sure their child gets the maximum debt - unless of course they are working on the theory that the child will never earn enough to pay it back.

silvercar

If you are manipulating your income to such an extent that your standard of living is vastly different, you are going to struggle to maintain standards on that level of income for 3 years.

Ed-1

TheGardener wrote: »

I just can't see any advantage in a parent making sure their child gets the maximum debt - unless of course they are working on the theory that the child will never earn enough to pay it back.

And that wouldn't be a bad assumption to make.

In fact the debt and interest are now so high that more of it only benefits the student as they have more money and end up not repaying it, making it a de facto grant.

Forget there's a maximum balance owing at all, treat all maintenance loans as if they are grants and accept a 9% tax above a threshold for 30 years.

Voyager2002

One could argue that a 'soft' debt is a benefit, albeit a lesser benefit than a grant.