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    • UKParliament
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    • By UKParliament Verified User verified user 11th Jul 16, 8:36 AM
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    UKParliament
    Have your say on changes to the student loans agreement
    • #1
    • 11th Jul 16, 8:36 AM
    Have your say on changes to the student loans agreement 11th Jul 16 at 8:36 AM
    Hi Everyone,

    On Monday 18 July at 4.30 pm, MPs will debate in Westminster Hall the e-petition relating to changes to the student loans agreement. The Petitions Committee invite you to share your comments on this topic with them and inform the debate. Your comments will be shared with Members taking part in the debate.

    Questions
    1. How does the freezing of the income threshold affect you, or someone you know?
    2. How do you think the freeze will affect higher education, students, graduates and their families?
    3. What do you think about the Government’s response to this petition?
    4. Do you think the Government should be able to change student loans T&Cs retrospectively?
    5. What questions would you ask the Government during the debate?

    Watch the debate
    You can watch the debate live or catch-up later on Parliament TV.
    Last edited by UKParliament; 11-07-2016 at 9:47 AM.
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Page 1
    • Former MSE Andrea
    • By Former MSE Andrea 12th Jul 16, 12:27 PM
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    Former MSE Andrea
    • #2
    • 12th Jul 16, 12:27 PM
    • #2
    • 12th Jul 16, 12:27 PM
    Also read the blog we've just published: Tell your MP to fight disgraceful retrospective student loan hike
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    • Ed-1
    • By Ed-1 12th Jul 16, 2:22 PM
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    • #3
    • 12th Jul 16, 2:22 PM
    • #3
    • 12th Jul 16, 2:22 PM
    Originally posted by UKParliament
    I think it's helpful to provide some background to how these student loans have evolved to place this is in context as if you're coming into this debate without this background (as current students/parents would be), there's considerable potential for misunderstandings.

    The first misconception to sweep away (as Martin has discovered from his lawyers) is that this is perfectly legal. These 'income-contingent' student loans are not commercial loans and are not regulated by the Consumer Credit Act in light of their 'better than commercial' terms. As a result the terms operate in the same way as a tax and they aren't written off in bankrupty. The student loan contract has been the same since 1998 and the terms have always been able to be changed retrospectively for all students with these loans.

    The loans are made under primary legislation (The Teaching and Higher Education Act 1998) and the detailed terms are set out in regulations made under section 22 of this Act. Part of section 22 was amended by section 76 of the Education Act 2011 which allows higher-than-inflation interest rates to be levied on post-2012 loans (up to market rates). Any retrospective changes to interest rates for pre-2012 loans (while allowed by the loan contract) would therefore require primary legislation (and in turn a vote by Parliament). This is the only condition in any of the terms that is set in statute in this Act. All other terms are set in regulations (statutory instruments) which can freely be amended from time to time by ministers. For example the interest rates on post-2012 loans are currently capped at RPI+3% by regulations. However this could be retrospectively changed without primary legislation as long as the rates set on post-2012 loans are below market rates. The current main regulations are currently the Education (Student Loans) (Repayment) Regulations 2009 (these regulations consolidated the 2000 Regulations and all amendments to the regulations made from 2000 to 2008). The regulations have been amended countless times over the years retrospectively for all students. For example, the Education (Student Loans) (Repayment) (Amendment) (No. 2) Regulations 2012 brought in new terms for post-2012 loans which in particular set a new repayment threshold to be an amount of £21,000 (regulation 11 of the amendment regulations inserted regulation 29(8) into the main regulations).

    An example of a retrospective change to the terms is regulation 8 of the 2012 No.2 amendment regulations which meant credit interest would only be paid on an overpayment for 60 days rather than indefinitely and applied to all borrowers with 1998+ loans. That is an example of a retrospective change to the terms.

    So it's perfectly legal to amend the terms retrospectively for income-contingent loans. That's not in question. Ironically what is being campaigned against here isn't in the terms and never has been! It needs to be distinguished here between a retrospective change to the terms which is already in the regulations and in force and an intention/promise by a government minister to implement or amend a particular term.

    Examples of terms already implemented which have been retrospectively changed for all students are the following (in addition to the overpayment interest change above) and have been legislated for by: regulation 6 of the Education (Student Loans) (Repayment) (Amendment) Regulations 2011 retrospectively changed the £15,000 repayment threshold that had applied from 2005 to 2012 by inserting an uprating term by RPI which provided for annual increases up to 2015 and then regulation 4 of the Education (Student Loans) (Repayment) (Amendment) Regulations 2014 legislated for annual increases beyond 2015 (by removing the 2015 time limit); and regulation 7 of the Education (Student Loans) (Repayment) (Amendment) (No. 2) Regulations 2004 retrospectively changed the £10,000 threshold to £15,000 from 2005.

    At the moment the £21,000 threshold is a nominal figure in the regulations (namely regulation 29(8) of the main 2009 regulations) and until that regulation is amended, it will stay at £21,000. This is not about retrospectively altering a term already made - it's about not implementing a promise to uprate the threshold made by the minority partner in the last coalition government (albeit agreed by the Tories). It's ironic with the regulations as they stand that if retrospective changes to the terms weren't possible, changing the threshold wouldn't be possible as the methodology for increasing it hasn't been legislated for (whereas it has for the pre-2012 threshold).

    Another example of a term that was promised to students but was never implemented was 5 year repayment holidays which Martin blogged about when they were announced. These were promised to be part of the terms for borrowers entering repayment from 2012 onwards in 2007 by John Denham, the then Secretary of State responsible for universities and were even included in the SLC guide to terms and conditions for 2008/09 (page 14) and the SLC guide to terms and conditions for 2009/10 (page 14) which students are instructed to read and agree to when they sign their loan declaration. Like the promise to uprate the £21,000 repayment threshold with earnings, this was never implemented - a retrospective change to the intended terms.

    In fact policy on the student loan threshold has changed multiple times retrospectively from the start. For example did you know that borrowers from 1998 were promised that the then £10,000 repayment threshold would be uprated with earnings? This intention (as with the £21,000 threshold now, the term in the regulations set the repayment threshold to be a nominal figure of £10,000 that was subsequently amended to £15,000 as explained above) was changed retrospectively as part of the package of reforms that came with variable top-up fees and the 2004 Higher Education Act. See paragraph 37 of this document:

    37. Raising the threshold from £10,000 to £15,000 will increase the cost of student loans to Government. From April 2010 it is intended that it should increase in line with inflation. However, since the cost of the current loans is assessed on the basis that the threshold will rise in line with earnings growth, there are offsetting savings associated with uprating by inflation instead. The combined effect of the two is expected to be a small net saving in cost to Government over the period during which variable fees will be introduced.

    It was at this time during the 2004 reforms that ensured student loans would no longer be written off if a borrower declared bankruptcy:

    "We will reflect the non-commercial nature of the student loan by preventing such loans forming part of a bankrupt’s estate." (See paragraph 78 onwards of the the above document.) Section 42 of the Higher Education Act 2004 and regulation 80(2) of the Education (Student Loans) (Repayment) Regulations 2009 legislate for this.

    See this article and this article for a further retrospective change to intentions on setting interest. When RPI spiked to 4.8% a year earlier, the government stated it had no intentions of departing from the regulation of setting interest in line with RPI (or bank base rate + 1% if this is lower). Like the current justification for freezing the £21,000 threshold because of increased costs to taxpayers than had been budgeted and planned for, interest was in fact not charged on pre-2012 loans when RPI went negative in 2009, seemingly against the spirit of the Teaching and Higher Education Act 1998 which sets an upper bound on interest at inflation to make sure loan balances don't increase in real-terms, despite it technically allowing interest not to be charged at all (making the rate 0% and as a result of it being higher than RPI, allowing the loan balance to increase in real-terms):

    "The decision [on interest rates] has been taken because loans are already well subsidised, and it would be difficult to justify to taxpayers a situation whereby students take out loans in 2009/10 and their balances are immediately reduced."

    Post-2012 loans (through the RAB charge) are also well subsidised and so freezing the threshold can easily be justified.

    Retrospective changes to terms or intentions on terms are part and parcel of these loans as they are set up like a tax. They've happened multiple times before. So why pick out this one change to complain about and make it out to be unprecedented? Very strange and uninformed whatever the merits on morality.

    Martin says "...its retrospective nature goes against all the rules of good governance. No commercial company would be allowed to do this – the regulator wouldn’t allow it." Well how does he explain all the previous retrospective changes (which he didn't make a fuss about)? You only have to look through the countless amendments to the regulations to see how many there have been and that doesn't include the changes to promises to implement terms of which this is one. The only time the terms haven't been changed retrospectively is when there have been wholesale system-wide reforms as in 2012 (this would have required changing multiple terms for existing borrowers rather than individual policy levers within the existing structure as this is an example of, so it was easier to implement 2012 policy mainly for new borrowers).

    Retrospective changes to the intentions of a previous government aren't all that bad - and in this case the minister that was part of the reforms (David Willetts) actually recommended this change in a major policy pamphlet paper!

    Some other things threshold-related:
    • Borrowers that took out a student loan between 1998 and 2011 currently have a different repayment threshold to post-2012 borrowers. The repayment threshold for pre-2012 borrowers was £10,000 from 1998 to 2005 and then it was retrospectively increased to £15,000 from 2005 to 2012 and then it was retrospectively increased by RPI inflation annually from 2012. See here for historical thresholds. As explained above, the methodology for increasing the pre-2012 threshold annually by RPI inflation is now legislated for by regulation 6 of the Education (Student Loans) (Repayment) (Amendment) Regulations 2011 which provided for annual increases up to 2015 and then regulation 4 of the Education (Student Loans) (Repayment) (Amendment) Regulations 2014 legislated for annual increases beyond 2015 (by removing the 2015 time limit).
    • The rationale for only increasing the repayment threshold to £21,000 for post-2012 loans seemed to be mainly to allow comparisons between the new more generous repayments and the existing higher repayments, rather than lowering the repayments for all borrowers since 1998, as happened in 2005 when the threshold was last increased from £10,000 to £15,000; and also for consistency of applying the new terms only to new post-2012 borrowers.
    • As a result of two repayment thresholds now applying to different borrowers, the system is made much more complex as employers now have to determine which threshold to apply for different employees (in comparison to income tax etc. where thresholds alter regularly for all employees).
    • Moreover, borrowers may have both a pre-2012 and a post-2012 loan and in this case, the current terms are that they make repayments at the lower threshold which currently stands at £17,495 (regulation 8 of the Education (Student Loans) (Repayment) (Amendment) Regulations 2013 inserted a regulation 29(9) in the main 2009 regulations). Only repayments above the higher repayment threshold are allocated to their post-2012 loan balance which accrues higher interest (regulation 6 of the Education (Student Loans) (Repayment) (Amendment) (No. 2) Regulations 2012 inserted a regulation 18A in the main 2009 regulations). As a result, for these borrowers increasing the higher threshold (currently £21,000) would mean them repaying more of their lower-interest loan than their higher-interest loan - very unfair when in addition their higher-interest loan isn't written off for 30 years after this later loan came into repayment. The net effect is that increasing the £21,000 threshold when it is already much higher than the pre-2012 threshold (and also much higher in real terms than was intended compared to earnings), these borrowers would be kept in repayment much longer than would be fair without increasing the pre-2012 threshold to £21,000.
    • David Willetts recommended in his policy pamphlet paper freezing the higher £21,000 repayment threshold as a result until the lower pre-2012 threshold catches up with it which would be close to the scheduled review in April 2021, probably allowing both thresholds to be increased together from April 2022, substantially simplifying the system for employers as repayments would be the same for all borrowers with income-contingent loans and reducing the costs of operating the system:
      "...the new repayment threshold has ended up much higher relative to actual earnings than was ever intended ... freeze the £21,000 threshold for this parliament ... continue to up-rate the £15,000 threshold, which some forecasts suggest would then reach £21,000 in perhaps six years ... up-rate the new single threshold."
    • The postgraduate student loan repayment threshold has been set at £21,000 in nominal terms as well. Increasing the undergraduate post-2012 threshold would substantially increase operational costs and complexity if this threshold was not also increased, and if it was increased it would make the postgraduate loans unsustainable. Regulation 39(7) of the Education (Postgraduate Master's Degree Loans) Regulations sets out the repayment threshold as an amount of £21,000. Incidentally, these regulations have already been retrospectively amended by the Education (Postgraduate Master's Degree Loans) (Amendment) Regulations 2016, albeit due to a typo!
    Last edited by Ed-1; 13-07-2016 at 12:20 PM.
    • Ed-1
    • By Ed-1 12th Jul 16, 8:37 PM
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    • #4
    • 12th Jul 16, 8:37 PM
    • #4
    • 12th Jul 16, 8:37 PM
    Questions
    1. How does the freezing of the income threshold affect you, or someone you know?
    2. How do you think the freeze will affect higher education, students, graduates and their families?
    3. What do you think about the Government’s response to this petition?
    4. Do you think the Government should be able to change student loans T&Cs retrospectively?
    5. What questions would you ask the Government during the debate?
    Originally posted by UKParliament
    In answer to the questions:

    How does the freezing of the income threshold affect you, or someone you know?

    I am a borrower with a plan 1 (pre-2012) loan and a plan 2 (post-2012) loan from a PGCE course. I know several others of this "dual borrower-type" and also some who will hold a plan 2 loan and a postgraduate loan when these become available in 2016/17.

    My view is clear: Not freezing the plan 2 threshold at £21,000 would be unfair on borrowers like me. From April 2016, I make repayments above the lower plan 1 threshold, currently £17,495, and only repayments from above the plan 2 threshold (£21,000) are allocated to my higher-interest plan 2 loan. As this freedom of information release shows, this policy aimed not to make it onerous for borrowers to repay a plan 2 loan whilst also holding a plan 1 loan. Clearly when the plan 2 threshold is substantially higher than the plan 1 threshold and also higher than intended in real-terms as a result of earnings not increasing as fast as forecast during the period between 2010 when the £21,000 threshold was set and now, increasing the £21,000 when it is already higher than intended while not increasing the plan 1 threshold to £21,000 threshold now would be unfair on borrowers with both a plan 1 and a plan 2 loan as it would make plan 2 repayments onerous because only repayments over the plan 2 threshold (a threshold which would become ever higher if not frozen) are used to repay the higher-interest plan 2 loan, while not reducing repayments overall for these borrowers as the plan 1 threshold wouldn't increase as fast (inflation vs earnings) and start from a lower starting point, clearly at odds with the policy intention.

    We should remember that the plan 1 threshold was frozen for 5 years at £10,000 and then 7 years at £15,000.

    We should also look back to the Browne Review to find the rationale for the £21,000 threshold. It recommended a 'one-off increase' to £21,000 as a direct result of the threshold been stuck at £15,000 since 2005: "As the threshold has not been increased since 2005, there will be a one-off increase at the start of our new system from £15,000 to £21,000." (Page 40 of the Browne Review.)

    However the Government did not retrospectively increase the threshold from £15,000 to £21,000 for all borrowers, new and existing, as it had done in 2005 from £10,000 to £15,000. Instead it left the existing threshold at £15,000, probably to allow comparisons between the lower repayments compared to the higher repayments before, and to be consistent with applying all changes to new borrowers only, and to save money on continuing to collect higher repayments from pre-2012 borrowers, and to belatedly implement Labour's intention to increase the threshold with inflation from April 2010 (which in practice did not happen until April 2012). However by not increasing the threshold retrospectively from £15,000 to £21,000 for all borrowers, it completely went against the precise justification for raising the threshold to £21,000 in the first place (because the threshold had remained at £15,000 since 2005).

    In addition, the interest rate taper of RPI to RPI+3% came from the Browne Review's recommendations: "the interest rate will be equal to the Government’s cost of borrowing (inflation plus 2.2%)". There is an argument by way of mitigation to review the interest rate as the Government's cost of borrowing is now substantially lower than the RPI+2.2% that it was at the time of this recommendation and therefore the RPI+3% cap, set by way of regulation (even though the Education Act 2011 allows for up to market rates) is higher than it need be. To bring the interest rate closer to the Browne Review's recommendation there is a case for bringing the interest rate closer to the discount rate of RPI+0.7% which now applies (to reflect the Government's cost of borrowing). However given that in the main only higher income graduates repay the interest (for those borrowers with only plan 2 loans), it may be seen as a beneficial change for higher income borrowers. For people like me who have borrowed less under plan 2 as a result of taking shorter courses/borrowing for undergraduate degree under plan 1, and who are likely to repay the interest even when not on high earnings it would be a beneficial change to have a rate that better reflected the lower cost of government borrowing, however. An increased rate in my case simply serves to keep me in repayment longer which is why it's so important that the plan 2 threshold remains frozen.

    How do you think the freeze will affect higher education, students, graduates and their families?

    It would affect higher education by ensuring the system is sustainable to the general taxpayer - it would be unfair to impose a higher burden on taxpayers through increased loan write-offs (RAB charge) when many taxpayers have not benefited from higher education and many do not earn even the frozen £21,000 threshold.

    Indeed the government was elected with a mandate to "ensure the continuing success and stability of these reforms, so that the interests of both students and taxpayers are fairly represented." (Page 35 of the Conservative Party 2015 Manifesto).

    Sustainability and affordability of the student loan repayment system is paramount to ensure future students can continue to be funded generously through increased maintenance loans and universities funded well through increased and differentiated tuition fee loans through the TEF with the Higher Education and Research Bill 2016 currently going through Parliament.

    If the plan 2 threshold is not frozen, it would disproportionately affect borrowers with both a plan 1 and a plan 2 loan as explained above. Nevertheless, the change would not be unfair on borrowers with only a plan 2 loan as the threshold is already more generous relative to earnings than was intended, as earnings are lower than was forecast in comparison to the fixed threshold figure when it was set. The only 'unfairness' comes with a retrospective nature of a change, not that it is an unreasonable or disproportionate change, but given that these are income-contingent loans with variable terms, you can't use a retrospective nature as the basis for a claim for unfairness.

    It would not impact families as only graduates repay when earning a good income and could indeed benefit future families of students as maintenance support can continue to be generous through the highest ever level of maintenance loan (with the RAB charge continuing to subsidise the loans generously through write-offs after 30 years) and further support social mobility through the reprioritisation of existing budgets: e.g. the postgraduate loan age eligibility criteria being raised to age 60 rather than set at age 30.

    Likewise, it would not impact on students. It would only impact prospective students through misunderstanding if they lose confidence as a result of believing their loan terms can't be changed - so it should be made clear to borrowers when they take out loans that terms of repayment are variable and may change from time to time. This could be done by putting in bold the clause in students' loan declarations that "you must agree to repay your loan in line with the regulations that apply at the time the repayments are due, and as they are amended. The regulations may be replaced by later regulations" and sending a letter to borrowers to notify them when terms that have applied previously are due to change (the freeze to the £21,000 threshold would not be such an example as it is not changing a previously applied term; it just doesn't implement a previous intention).

    There is therefore a major case for simplification. The postgraduate student loan threshold has been aligned at the same level as the plan 2 threshold which is a step in the right direction. Uprating the plan 2 threshold when it is already higher than intended would have knock on cost consequences for the postgraduate repayment threshold: if the postgraduate threshold was not uprated but the plan 2 threshold was, it would require further operational costs and complexity for employers as they would need to determine between a further different threshold to apply; and if the postgraduate threshold was increased it would have direct cost implications at root through lower repayment collections than budgeted for (and may require, for example, retrospective increases to the 6% repayment rate to make up for the shortfall). Given that the £21,000 nominal figure is higher in real terms than had been forecast, and that a 'one-off increase' to the plan 1 threshold was not implemented in line with Browne's rationale, waiting for the plan 1 threshold inflation increases to catch up with £21,000 (which would happen close to the end of the review period in April 2021) would be fair and desirable for all in terms of achieving a simplification objective: borrowers for understanding, employers for administration and the Government for operational cost.

    What do you think about the Government’s response to this petition?

    I think it is fair and provides the rationale for the change. David Willetts' policy pamphlet paper explains the issues behind the changes in more detail, as does the consultation response.

    Do you think the Government should be able to change student loans T&Cs retrospectively?

    My view is that you can't have it both ways in that you can't have better-than-commercial terms (i.e. in all but name, a tax) while still having the protections of commercial terms. So yes, I think the Government are fine in being able to operate tax-like loans as a tax and therefore retrospectively change the parameters from time to time. International comparisons show that income-contingent loans operate like this. For example in New Zealand recently they increased the repayment rate from 10% to 12% for existing and new borrowers and in Australia a recent budget reduced the threshold retrospectively for all borrowers.

    The Sale of Student Loans Act 2008 prevents a government from retrospectively amending terms to better promote a sale and there have been perfectly valid reasons for all retrospective changes so far which is the source of most of the 'fear' surrounding retrospective changes (e.g. concerns that the government would attempt to change interest rate regulations on pre-2012 loans to facilitate a sale which would have required primary legislation).

    Ironically, fear of a sale due to retrospective changes afterwards by a private entity is entirely misplaced as the terms and regulations would have to be fixed at the point of a loan sale.

    What questions would you ask the Government during the debate?

    I would ask the Government whether it still believes a maximum rate of interest of RPI+3% on post-2012 loans is fair and reasonable given that the Browne Review recommended an interest rate in line with the Government's cost of borrowing and the discount rate reflecting Government's cost of borrowing has been reviewed to now be RPI+0.7%, rather than RPI+2.2% when the RPI to RPI+3% taper was set.
    Last edited by Ed-1; 12-07-2016 at 9:33 PM.
    • Former MSE Andrea
    • By Former MSE Andrea 13th Jul 16, 11:43 AM
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    • #5
    • 13th Jul 16, 11:43 AM
    • #5
    • 13th Jul 16, 11:43 AM
    Great feedback Ed-1!

    Looking forward to getting more.
    Could you do with a Money Makeover?


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    • bwoolven
    • By bwoolven 13th Jul 16, 12:21 PM
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    • #6
    • 13th Jul 16, 12:21 PM
    A parent's view of the new student loans system
    • #6
    • 13th Jul 16, 12:21 PM
    When the new student loan system came in, in 2012, everyone was told that from April 2017 the £21,000 repayment threshold would start to rise annually with average earnings. This information was then communicated to students like me and formed a core part of the calculations given about how much university would really cost.

    The decision to backtrack on this is hugely damaging. It means I will likely have to pay thousands more over the life of my loan than I’d legitimately planned on. Effectively, the T&Cs for these loans have been written after they’ve been taken out.

    This is outrageous, unfair, and should not be allowed to happen.

    However, even more important than the additional cost is the message this sends. The regulator would not allow any commercial lender to make a change to its terms this way. It is therefore surely wrong for the Government to do so – retrospective changes are bad governance.

    Of course, there was a consultation before the change. Yet only 5% of consultation responses were in favour of this change – 84% were against. So I am confused why, despite such cross-society opposition, the Government pushed ahead with the retrospective change anyway?

    This is a bigger issue than just money. A retrospective change will destroy any trust I, and future generations, have in the student finance system, and perhaps even more widely, in the political system as a whole. After all, how can anyone in good conscience now explain student finance to young people when the system can be unilaterally changed, even after they’ve signed their loan contracts?

    With a new Government coming in, there is a chance for it to look again at this injustice.
    • Ed-1
    • By Ed-1 13th Jul 16, 12:52 PM
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    • #7
    • 13th Jul 16, 12:52 PM
    • #7
    • 13th Jul 16, 12:52 PM
    How can anyone in good conscience now explain student finance to young people when the system can be unilaterally changed, even after they’ve signed their loan contracts?
    Originally posted by bwoolven
    The same as they've always done when previous retrospective changes to intentions came in? Where are my repayment holidays that I planned to take - I shouldn't have to be repaying at this point in time under the terms I agreed to at the time in 2008/09 but I am! Also, why am I paying so much - where is my higher repayment threshold which I was promised would be uprated from 2010 (not 2012) by inflation (and which Browne recommended should be increased to £21,000 as it had been frozen for so long)? Is it fair that I should have to borrow for substantially increased fees while not benefiting from the higher £21,000 threshold (let alone an uprated version of it) which was meant to cushion the blow?
    Last edited by Ed-1; 13-07-2016 at 1:17 PM.
    • Ed-1
    • By Ed-1 19th Jul 16, 8:14 PM
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    • #8
    • 19th Jul 16, 8:14 PM
    • #8
    • 19th Jul 16, 8:14 PM
    Hi Everyone,

    On Monday 18 July at 4.30 pm, MPs will debate in Westminster Hall the e-petition relating to changes to the student loans agreement. The Petitions Committee invite you to share your comments on this topic with them and inform the debate. Your comments will be shared with Members taking part in the debate.

    Questions
    1. How does the freezing of the income threshold affect you, or someone you know?
    2. How do you think the freeze will affect higher education, students, graduates and their families?
    3. What do you think about the Government’s response to this petition?
    4. Do you think the Government should be able to change student loans T&Cs retrospectively?
    5. What questions would you ask the Government during the debate?

    Watch the debate
    You can watch the debate live or catch-up later on Parliament TV.
    Originally posted by UKParliament
    Nice that not one of my comments was passed on - the most one-sided debate I've ever witnessed...
    • kayte
    • By kayte 20th Jul 16, 2:22 PM
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    kayte
    • #9
    • 20th Jul 16, 2:22 PM
    When student loans are regarded as income
    • #9
    • 20th Jul 16, 2:22 PM
    If students apply to have free prescriptions and dental treatment, their loans are treated as income. Even if they do not take their loan it is assumed they do receive it and the Government can refuse to provide free dental treatment or prescriptions.
    My sons have no income. They have a small amount of savings. They get a small student loan which of course they must repay. They have been told they are not eligible for prescriptions or dental checks.
    Its a disgraceful state of affairs when a loan is treated as income, its not income unless you are a student.
    • Ed-1
    • By Ed-1 20th Jul 16, 2:43 PM
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    Ed-1
    If students apply to have free prescriptions and dental treatment, their loans are treated as income. Even if they do not take their loan it is assumed they do receive it and the Government can refuse to provide free dental treatment or prescriptions.
    My sons have no income. They have a small amount of savings. They get a small student loan which of course they must repay. They have been told they are not eligible for prescriptions or dental checks.
    Its a disgraceful state of affairs when a loan is treated as income, its not income unless you are a student.
    Originally posted by kayte
    It's treated as income as the fact is you don't need to repay it unless you later earn enough and only then you repay 9% of your salary above a threshold and only then for a maximum of 30 years. Student loans are counted as income for all benefit means-testing. Why should students automatically get free dental care etc. I didn't when I was a student.

    See point 20 of Martin's guide: http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes

    If loans don't count as income for a student, how would you define student income?
    Last edited by Ed-1; 20-07-2016 at 2:47 PM.
    • glider3560
    • By glider3560 20th Jul 16, 9:01 PM
    • 3,788 Posts
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    glider3560
    4. Do you think the Government should be able to change student loans T&Cs retrospectively?
    Originally posted by UKParliament
    Let's look at another example. I take out a mortgage and the bank decide to change the T&Cs mid-term, without any notice to me and without my consent, with no option to switch supplier. Would that be allowed? Of course not. The regulator wouldn't be happy and parliament would likely be hauling bank executives in front of a committee to explain themselves.

    Why should student loans be any different?

    • Ed-1
    • By Ed-1 20th Jul 16, 9:32 PM
    • 2,587 Posts
    • 1,383 Thanks
    Ed-1
    Why should student loans be any different?
    Originally posted by glider3560
    Quite simply because they are about as far away from a commercial loan as you can get that they are barely a loan at all, even in legislation.

    We are talking about income-contingent student loans, or in other words a graduate contribution scheme/tax. These are completely different to the mortgage-style student loans made before 1998 which were regulated loans.

    1. ICR loans available since 1998 are not regulated by the Consumer Credit Act so amongst many things aren't written off in bankruptcy, don't go on credit files etc. etc. The Act that they are made under says they are not regulated loans.

    2. They are heavily subsidised and many will not be repaid in full (which loans can you find where not repaying in full means anything other than defaulting?).

    3. Governments are free to change taxes for everyone as we go along so why should the graduate contribution scheme not be the same just because it shares the language of 'loans' with commercial regulated financial products that are a completely different kettle of fish to student loans?

    And in any case this whole decision to brand this decision 'freezing the threshold' has been misrepresented as the terms and conditions in this case aren't being changed - they are being left as they are. It's just the previous Government's intention that is not being implemented into the terms. It's a non-event in terms of legislation.
    Last edited by Ed-1; 20-07-2016 at 9:35 PM.
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