Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Former MSE Paloma
    • By Former MSE Paloma 12th Aug 14, 5:35 PM
    • 526Posts
    • 245Thanks
    Former MSE Paloma
    MSE News: Student loan deferment threshold to fall: Q&A on why it's happening
    • #1
    • 12th Aug 14, 5:35 PM
    MSE News: Student loan deferment threshold to fall: Q&A on why it's happening 12th Aug 14 at 5:35 PM
    "The Government is lowering the earnings threshold for people with a pre-1998 mortgage style loan. We find out why... "...

    Read the full story:

    Student loan deferment threshold to fall: Q&A on why it's happening



    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

Page 1
    • rizla king
    • By rizla king 13th Aug 14, 6:37 AM
    • 2,843 Posts
    • 1,903 Thanks
    rizla king
    • #2
    • 13th Aug 14, 6:37 AM
    • #2
    • 13th Aug 14, 6:37 AM
    Still stinks to high heaven.
    • kathrynha
    • By kathrynha 13th Aug 14, 6:53 AM
    • 2,351 Posts
    • 12,847 Thanks
    kathrynha
    • #3
    • 13th Aug 14, 6:53 AM
    • #3
    • 13th Aug 14, 6:53 AM
    That totally stinks, although sigh of relief from me that I am part time, because my full time wage is only £188 a year below it, so with child benefit I would be over the level, but working only 30 hours a week it drops me safely below the level. Phew!

    It is going to effect an awful lot of people though, especially with Erudio taking all benefits into account.

    If it goes down further I wonder, is changing child benefit to be paid to my husband instead of me allowed?
    • CLAPTON
    • By CLAPTON 13th Aug 14, 7:28 AM
    • 41,650 Posts
    • 30,691 Thanks
    CLAPTON
    • #4
    • 13th Aug 14, 7:28 AM
    • #4
    • 13th Aug 14, 7:28 AM
    why does it stink


    the T&Cs are as agreed when the loans were taken out and everyone concerned has had over 16 years to plan for this day.


    anyone with these pre 1998 loans has had a better deal that subsequent students
    • Lungboy
    • By Lungboy 13th Aug 14, 7:56 AM
    • 1,719 Posts
    • 1,873 Thanks
    Lungboy
    • #5
    • 13th Aug 14, 7:56 AM
    • #5
    • 13th Aug 14, 7:56 AM
    It stinks because it's only the 2nd drop in deferment threshold in the history of these loans, and it's a huge drop too (~£2k), just after Erudio bought the loans. Plus, all of the publically available ONS data shows average wages going up every month, yet somehow the government data (which doesn't seem to be available to the public) shows a massive drop in average wage.

    I don't personally think there has been anything dodgy going on, but releasing the data on which their calculations have been based would really help.
    • CLAPTON
    • By CLAPTON 13th Aug 14, 8:14 AM
    • 41,650 Posts
    • 30,691 Thanks
    CLAPTON
    • #6
    • 13th Aug 14, 8:14 AM
    • #6
    • 13th Aug 14, 8:14 AM
    It stinks because it's only the 2nd drop in deferment threshold in the history of these loans, and it's a huge drop too (~£2k), just after Erudio bought the loans. Plus, all of the publically available ONS data shows average wages going up every month, yet somehow the government data (which doesn't seem to be available to the public) shows a massive drop in average wage.

    I don't personally think there has been anything dodgy going on, but releasing the data on which their calculations have been based would really help.
    Originally posted by Lungboy


    if indeed there has been a new unannounced way of calculating the threshold than that would seem unreasonable


    has anyone contacted their MP and asked for an explanation?
    • cluelessfish
    • By cluelessfish 13th Aug 14, 10:33 AM
    • 46 Posts
    • 43 Thanks
    cluelessfish
    • #7
    • 13th Aug 14, 10:33 AM
    • #7
    • 13th Aug 14, 10:33 AM
    or does BIS/ons think average earnings are going to fall by 7% surely that should m ake mainstream news on its own
    • CLAPTON
    • By CLAPTON 13th Aug 14, 10:59 AM
    • 41,650 Posts
    • 30,691 Thanks
    CLAPTON
    • #8
    • 13th Aug 14, 10:59 AM
    • #8
    • 13th Aug 14, 10:59 AM
    or does BIS/ons think average earnings are going to fall by 7% surely that should m ake mainstream news on its own
    Originally posted by cluelessfish




    there does seem some evidence that most 'new' jobs are min wage


    so if employment continues to rise then that would mean that average wage would fall




    EDITED TO ADD


    ons measure the drop at 0.2% and also observe that pay in april 2013 was affected by the change in tax from 50% to 45% causing a artificial spike in incomes for the high earners which hasn't been repeated in april 2014
    Last edited by CLAPTON; 13-08-2014 at 11:07 AM.
    • cluelessfish
    • By cluelessfish 13th Aug 14, 12:46 PM
    • 46 Posts
    • 43 Thanks
    cluelessfish
    • #9
    • 13th Aug 14, 12:46 PM
    • #9
    • 13th Aug 14, 12:46 PM
    granted more lower paid new jobs would bring the average down( also any reduction in massive bonuses ) but does 7% still not seem like a big drop.

    if ons gives 0.2% drop then why 7% drop in deferment threshold.

    also deferment threshold is gross income so shouldn't be affected by tax cuts/rises.

    ok typing that last bit i think i figured it out.

    deferment threshold is based gross income including certain benefits

    but government has been busy capping benefits and is switching to universal credit .
    • Lungboy
    • By Lungboy 13th Aug 14, 12:54 PM
    • 1,719 Posts
    • 1,873 Thanks
    Lungboy
    There was a piece on the radio news earlier about average wages falling in the latest figures. I guess the ONS and Government are expecting that trend to continue, giving ~5 months of average pay decreases. If the benefit thing is also true, then that could make a significant amount, although 7% still seems huge.
    • cluelessfish
    • By cluelessfish 13th Aug 14, 1:23 PM
    • 46 Posts
    • 43 Thanks
    cluelessfish
    i'm not sure about benefits either as i have never claimed any. Just going on what have seen on the news with regards to caps and universal credit.

    are the benefits that are included in deferment application named in the original t&c's? or is there just a catch all term used and a list of things excluded?
    • anna2007
    • By anna2007 13th Aug 14, 1:51 PM
    • 1,182 Posts
    • 2,079 Thanks
    anna2007
    Firstly, thanks to MSE for following up on the previous article, and seeking clarification from BIS on the calculation.

    However, I'm even more confused as a result of this article - the figures just don't add up if all the calculation is based on is average earnings and earnings growth. I'm no expert at reading stats, but there is no way that earnings growth is negative to the tune of 7%, as far as I can tell it was up 0.7% in April 2014 on the previous April (see table 15, page 63 of 73 here):

    http://www.ons.gov.uk/ons/dcp171778_363998.pdf

    The 0.7% is the growth figure for total pay (regular pay + bonus pay), but if you check the table 15(1) on page 64 showing the earnings growth for bonus pay only, this shows -7.4% - if BIS used this figure in their calculation, rather than the 0.7% for total pay, that doesn't seem a very accurate calculation of earnings growth? The reason given for the unusually low growth figure for bonus pay is on page 18 of the above pdf file:

    "The single month growth rate for total pay for April 2014 (minus 1.7%) was the lowest since March 2009. This reflects an unusually high growth rate for April 2013, due to some companies which usually paid bonuses in March paying them in April".

    BIS also said in the MSE article that they've taken the average earnings figure from the Annual Survey of Hours and Earnings (ASHE) for April 2013 - April 2014, but going by previous years' releases, this isn't due to be published until the end of this year. The latest ASHE, released 12 December 2013, covers the period to April 2013:

    http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-and-earnings/2013-provisional-results/stb-ashe-statistical-bulletin-2013.html#tab-Annual-earnings

    Would MSE be willing to ask for the actual figures used by BIS to calculate the latest deferment level, along with the figures for the previous year's calculation, and the ONS source of these figures? I think that would go a long way in helping us to understand this year's 7% reduction in the deferment level.
    • anna2007
    • By anna2007 13th Aug 14, 1:59 PM
    • 1,182 Posts
    • 2,079 Thanks
    anna2007
    granted more lower paid new jobs would bring the average down( also any reduction in massive bonuses ) but does 7% still not seem like a big drop.

    if ons gives 0.2% drop then why 7% drop in deferment threshold.

    also deferment threshold is gross income so shouldn't be affected by tax cuts/rises.

    ok typing that last bit i think i figured it out.

    deferment threshold is based gross income including certain benefits

    but government has been busy capping benefits and is switching to universal credit .
    Originally posted by cluelessfish
    Something else has to be included, if you look at the average earnings figures over the years, they're below the deferment level (and the deferment level's set at 85% of average earnings).

    Benefits would seem the obvious answer - I suppose it might include all of the benefits declared on the deferment application form, which I think is pretty much everything except disability-related benefits?
    • anna2007
    • By anna2007 13th Aug 14, 2:11 PM
    • 1,182 Posts
    • 2,079 Thanks
    anna2007
    It stinks because it's only the 2nd drop in deferment threshold in the history of these loans, and it's a huge drop too (~£2k)
    Originally posted by Lungboy
    I noticed when trying to figure out the calculation that the ONS changed its measure of average earnings in 2010:

    "AWE was accredited as a National Statistic in late 20094, and replaced the Average Earnings Index in January 2010 as ONSís lead measure of changes in earnings"

    That could well be the reason for the only other drop in deferment level, in 2010, i.e. a change in the way average earnings are measured?
    • cluelessfish
    • By cluelessfish 13th Aug 14, 3:12 PM
    • 46 Posts
    • 43 Thanks
    cluelessfish
    but there is no way that earnings growth is negative to the tune of 7%, as far as I can tell it was up 0.7%
    there's also outside possibility that someone at bis hit "+/-" in stead of " . " button on calculator when doing the sums.
    • patanne
    • By patanne 13th Aug 14, 3:41 PM
    • 1,270 Posts
    • 2,553 Thanks
    patanne
    As I believe it is based on figs estimated for Jan 15 could it be based on a much higher increase in unemployed youth than the norm. If under normal circumstances you get say 80 people reaching state retirement age & actually retiring and 100 young people leaving school/college/uni for full time work. That leaves 20 struggling to find a job.

    If you change things such as state retirement age that could leave still 100 young people looking for work but 60 only reaching state retirement age leaving 40 young people struggling to find a job on very low job seeking benefits. That would weight the system.

    If you then factor in the number of women most affected by retirement age changes at the moment that may reduce their hours without an employer taking on more staff it would weight it even further.
  • wxm123
    Big drop = big repayments
    I appreciate that I will need to pay my mortgage style loan back, but I cannot believe they are lowering the earning threshold by £2k. Erudio now include ALL your income including CHILD BENEFIT! Your average person is still in the midst of austerity, and with this £2k drop, my repayments will be £185 per month, which is a huge jump!
    It might be worth my while to take a £500 pay cut come April!
    • ffacoffipawb
    • By ffacoffipawb 14th Aug 14, 9:27 AM
    • 2,680 Posts
    • 1,837 Thanks
    ffacoffipawb
    I appreciate that I will need to pay my mortgage style loan back, but I cannot believe they are lowering the earning threshold by £2k. Erudio now include ALL your income including CHILD BENEFIT! Your average person is still in the midst of austerity, and with this £2k drop, my repayments will be £185 per month, which is a huge jump!
    It might be worth my while to take a £500 pay cut come April!
    Originally posted by wxm123
    What is the repayment method for these, eg 9% of income above a threshold or is it some other method?
    • anna2007
    • By anna2007 14th Aug 14, 10:01 AM
    • 1,182 Posts
    • 2,079 Thanks
    anna2007
    What is the repayment method for these, eg 9% of income above a threshold or is it some other method?
    Originally posted by ffacoffipawb
    Once earnings are over the threshold, you pay the outstanding amount over 60 months (84 months if you have more than 4 loans).
    • rizla king
    • By rizla king 14th Aug 14, 11:35 AM
    • 2,843 Posts
    • 1,903 Thanks
    rizla king
    On Radio 5 Martin said even he and his team can't get a straight answer from BIS and ONS on the maths and figures used for this.

    Martin thinks it's a "horrible coincidence" this year.

    Maybe it is (doubt it), but until it's properly justified and explained which the actual calculations, it smells like a 5 years old barrel of rotten kipppers.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,424Posts Today

5,723Users online

Martin's Twitter
  • Mini MSE is on half term next week, so I'm excited to be taking the week off to be daddy. As normal I'm signing of? https://t.co/G3366shWh1

  • I once blurted out on @gmb "Theresa May hasn't been given a poisoned chalice - she's been given a poisoned chalice? https://t.co/onfRbY3XVg

  • It'd be fascinating to know how history will judge Theresa May's premiership. Currently, it is hard to see it as a? https://t.co/eH77G0O9LA

  • Follow Martin