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MSE News: PM pledges to raise student loan repayment threshold
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Indeed - plus that "23%" is probably way too many now - it was 23% with the £21k threshold so with a higher payment threshold and earnings indexation it'll likely be well under 23%. I'll wait for the IFS to do the maths... Or Martin?
That's why this is another complete own goal by the government. It's an expensive money loser for them, but is difficult for people to understand why it is such a benefit to those affected. And furthermore, it gives the opposition more ammunition to beat them with - now they can cry '90% of people will never their loans, it's a crisis!' rather than the current 77% figure, completely twisting the logic of how the student finance system is funded, but still making it sound like the government has failed the student AND the taxpayer.
They'd have been better off cutting fees to £8k (backdated for existing recipients) and making the interest rate RPI flat rather than RPI+3%. Changes that sound more generous, changes that people (think they) understand, but changes that wouldn't affect the student loan recovery amount anywhere near as much.
I'm a Tory, but like their dementia tax balls up, why do they have to be so bloody daft and naive sometimes???0 -
Yes I think this is sad but true. People really are that stupid. Policies need to be simple enough to understand to be popular, it's like the benefits cap or the child benefit withdrawal for those on high income. Technically, they're stupid, but politically, they're brilliant because even Sun readers can understand them.That's why this is another complete own goal by the government. It's an expensive money loser for them, but is difficult for people to understand why it is such a benefit to those affected. And furthermore, it gives the opposition more ammunition to beat them with - now they can cry '90% of people will never their loans, it's a crisis!' rather than the current 77% figure, completely twisting the logic of how the student finance system is funded, but still making it sound like the government has failed the student AND the taxpayer.
They'd have been better off cutting fees to £8k (backdated for existing recipients) and making the interest rate RPI flat rather than RPI+3%. Changes that sound more generous, changes that people (think they) understand, but changes that wouldn't affect the student loan recovery amount anywhere near as much.
I'm a Tory, but like their dementia tax balls up, why do they have to be so bloody daft and naive sometimes???
Lower fees - easy to understand.
Increase repayment threshold - what does that mean?0 -
:rotfl:Who do you expect this "competant government" to be?But it's not a case of earn £25k and you've got to repay the full whack. It's a case of earn over £25k and you contribute 9% of your salary over the threshold. It's a tax cut. Expect the threshold to come down sharpish once a competent government get in as it can't be sustained at these levels of write offs.0 -
The changes also give an indication that the pre-2012 group will have their threshold unchanged in the future. Sure they have a much lower total loan (around 20k for those who had tuition fees around 3k, rather than ~40k for those on 9k) but on lower incomes their threshold remaining at 15k for the foreseeable future means they will feel the pinch. I'm reading the message as this group are not as important as the more recent and future students.
It's interesting isn't it.
For example, if there are two siblings one with pre-2012 and one with post-2012 SLs, both earning £25k, the pre-2012 will be paying £650 student contribution annually, the post 2012 sibling nothing.
If they both stayed earning equivalent sorts of amounts the pre-2012 would end up contributing £16,250 in 25 years and the post-2012 student zero in 30 years.
Could it be that some people are now significantly better off under the post-2012 system? And these people would be those on medium sized incomes?0 -
The pre-2012 threshold increases with RPI, not earnings.
Whilst ML's article says "After that increase it will then be uprated annually "in line with the annual average earnings growth"."
Darn it. Why do they have to make everything so complicated. It should be the same under both systems.
It's as if they want to make it as complicated as possible so nobody has any idea wth is going on.0 -
Merlin's_Beard wrote: »Obviously if you're a pre-2012 graduate the government thinks you have less need of money compared to a post-2012 graduate on the same salary as you!
It's because most people don't understand the SL system and all the uproar is around the post-2012 system....I even heard Jeremy Corbyn say that he would help students by extending the amount of time students have to repay ! WTH that would cost students more.
Read more at http://www.nme.com/news/jeremy-corbyn-will-deal-already-burdened-student-debt-2082478#WIaV5wFHpZsXiZfQ.99Yes, there is a block of those that currently have a massive debt, and I’m looking at ways that we could reduce that, ameliorate that, lengthen the period of paying it off, or some other means of reducing that debt burden.”0 -
Pre-2012 students are more likely to be able to clear all their loan as their loans were for a far lower amount. Therefore the calculation is different as interest added will make a significant element of the loan. So lower initial repayments, by raising thresholds, will actually cost them more in greater interest that will be repaid.
41% of pre-2012 students won't pay of their loans.Under the new system, 77.4 per cent of graduates will never fully repay their debts, compared to 41.5 per cent of graduates under the previous system, according to the IFS.
http://www.telegraph.co.uk/education/2017/07/05/almost-eight-ten-graduates-will-never-pay-back-full-student1/
If you never pay off your loan - surely you are better off under post-2012 system?0 -
But it's not a case of earn £25k and you've got to repay the full whack. It's a case of earn over £25k and you contribute 9% of your salary over the threshold. It's a tax cut. Expect the threshold to come down sharpish once a competent government get in as it can't be sustained at these levels of write offs.
From a tax receiving pov - wouldn't the government have got more if they had just kept to the old system with the lower thresholds?
Granted - they got to reduce the deficit by pretending they would get the money back and universities consequently weren't subjected to austerity....0 -
That's why this is another complete own goal by the government. It's an expensive money loser for them, but is difficult for people to understand why it is such a benefit to those affected. And furthermore, it gives the opposition more ammunition to beat them with - now they can cry '90% of people will never their loans, it's a crisis!' rather than the current 77% figure, completely twisting the logic of how the student finance system is funded, but still making it sound like the government has failed the student AND the taxpayer.
They'd have been better off cutting fees to £8k (backdated for existing recipients) and making the interest rate RPI flat rather than RPI+3%. Changes that sound more generous, changes that people (think they) understand, but changes that wouldn't affect the student loan recovery amount anywhere near as much.
I'm a Tory, but like their dementia tax balls up, why do they have to be so bloody daft and naive sometimes???
Too many people don't understand the SL system, for that reason they should probably move to a graduate tax.0 -
setmefree2 wrote: »It's interesting isn't it.
For example, if there are two siblings one with pre-2012 and one with post-2012 SLs, both earning £25k, the pre-2012 will be paying £650 student contribution annually, the post 2012 sibling nothing.
If they both stayed earning equivalent sorts of amounts the pre-2012 would end up contributing £16,250 in 25 years and the post-2012 student zero in 30 years.
Could it be that some people are now significantly better off under the post-2012 system? And these people would be those on medium sized incomes?
40% now better off under post-2012 loans than under pre-2012 loans.
https://twitter.com/PJTheEconomist/status/915156484761190401/photo/1
There's no appetite to better the terms of pre-2012 loans as they're currently trying to sell them off...
Now we're back to square 1 as the post-2012 system now costs more than the pre-2012 system it replaced, a retrospective change which defeats the whole point of the reform (and the now overturned policy to freeze the £21k threshold for 5 years), and indeed the entire system will be reviewed according to the PM (which begs the question why announce major changes before the review).0
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