MSE News: PM pledges to raise student loan repayment threshold

silvercar

Ed-1 wrote: »

But I can envisage a world in which if these ever get sold off to the private sector there could be massive discounts offered on paying off the account in one lump sum.

I thought the wisdom was that never could be allowed to happen, as it would favour those with money at the expense of those from poorer families. In fact there was talk of penalising people for paying early at one point.

That is one reason why we won't move to a graduation tax, as not all students take loans. If a grad tax was introduced then everyone would take the max they could.

setmefree2

Ed-1 wrote: »

My worry is they'll turn to increasing the repayment rate from e.g. 9% to 12% which would probably have to apply to pre-2012 loans too.

I can't see them doing that. This is a massive political problem now.

setmefree2

silvercar wrote: »

If 40% would be better off with a higher threshold, that means that 60% wouldn't. So it isn't clear cut.

I have 2 children, one with a pre-2012 loan and one post 2012; it was the younger one with the post-2012 that I thought was hard done by - now I'm not so sure.

I know.

Remember the dash to get to Uni in 2011. Students putting off their gap year.

Little did they know that some of them would be better off going in 2012.

setmefree2

silvercar wrote: »

I thought the wisdom was that never could be allowed to happen, as it would favour those with money at the expense of those from poorer families. In fact there was talk of penalising people for paying early at one point.

That is one reason why we won't move to a graduation tax, as not all students take loans. If a grad tax was introduced then everyone would take the max they could.

I think they will move to a grad tax. Or they could just go back to the Pre-2012 system. I think there will be change however.

silvercar

I wonder what percentage of students don't take their full entitlement of student loans?

I'm talking older students who have worked for a few years and saved up rather than taking on the debt, the well off, those that take only the tuition fees and fund their own maintenance, those whose family think the non means tested element is too invasive so don't take that portion....

If they all suddenly took the loan, the government could have a greater funding issue and this is more likely to happen if they have a grad tax.

Ed-1

setmefree2 wrote: »

I can't see them doing that. This is a massive political problem now.

I'm not talking about this government. But by bumping up the threshold so much they're creating an unsustainable ticking time bomb mountain of debt that a future government under current terms would have to write off. There will be massive pressure on public spending to write off half the post-2012 loan book and so towards the time there'd be massive pressure to adjust terms to reduce the write offs on the grounds that "when the system was introduced, the write offs were forecast at 28% not 50%".

Maybe that's the politics at the moment - give Corbyn's Labour even more debt to deal with. But it's completely irresponsible after Cameron's government spent 2015 trying to fix the system by freezing the threshold until 2021...

Lingua

Are they moving the threshold for those taking the postgraduate loan too? Currently it is set to the same 21k threshold as undergraduate loan repayments.

Lingua

Ed-1

Lingua wrote: »

Are they moving the threshold for those taking the postgraduate loan too? Currently it is set to the same 21k threshold as undergraduate loan repayments.

Lingua

No. It's been confirmed that the postgraduate threshold will stay frozen at £21k meaning bizarrely there will now be 3 repayment thresholds (£18,330 for pre-2012 undergrad loans, £21k for postgrad loans, £25k for post-2012 undergrad loans)

http://www.researchresearch.com/news/article/?articleId=1370662

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-10-09/HCWS145/

Lingua

That's going to add even more confusion into the system. Thank you for providing the links, I couldn't find anything definitive online!

Lingua

Ed-1

Lingua wrote: »

That's going to add even more confusion into the system. Thank you for providing the links, I couldn't find anything definitive online!

Lingua

What a mess.