mortgage type student loan thresholds 4 December 2020 at 4:59PM in Loans 4 replies 273 views

loanstar5

Anyone know why this years repayment threshold for mortgage style student loans has DECREASED over 2019, while loan thresholds for Type 1 and 2 loans have both INCREASED ?        Does anyone know what items are taken into consideration to establish the threshold level and what is the logic behind using it for people that reside outside the UK and are affected by swings in currency exchange rates. 

nick74

The deferment threshold for the original mortgage-style student loans was set in their terms and conditions as a percentage of UK average earnings. Often this increases year on year, but in certain years it has decreased, such as this one. The subsequent type 1 and type 2 loan schemes did not include any such provision.

loanstar5

Nick74.........many thanks for the explanation. Would you agree covid has had an affect on the UK average earnings ? Effects of furlough in the UK automatically reduce average earning, but for ex students who live and work outside the UK there is no change on their ability to make payments. Therefore these people are drawn into a payments situation through manufactured marketplace earnings, which is unfair. I feel the threshold should be challenged and adjustments made. Terms and conditions are always available to change. Nobody said Mortgage type loans would be sold off to private businesses when they were first introduced.  

ItsComingRome

loanstar5 said:

Nick74.........many thanks for the explanation. Would you agree covid has had an affect on the UK average earnings ? Effects of furlough in the UK automatically reduce average earning, but for ex students who live and work outside the UK there is no change on their ability to make payments. Therefore these people are drawn into a payments situation through manufactured marketplace earnings, which is unfair. I feel the threshold should be challenged and adjustments made. Terms and conditions are always available to change. Nobody said Mortgage type loans would be sold off to private businesses when they were first introduced.  

None of this matters.  It's what you agreed to.

Nobody had to agree to their loan being sold on because they don't need to.  If a creditor wants to sell their debt on they're free to do it, they don't need the agreement of the debtor

nick74

I'm not sure I follow your logic that the job retention scheme made average UK earnings artificially low? If anything I suspect that without it average earnings would have fallen even further.

If average earnings have not fallen so much in the country where you now live then that is a good thing surely?

I consider that as someone who was a student in the early 90s I was incredibly lucky compared to the subsequent generations who have to contend with tuition fees and the resultant massive debts they often leave university with now.