Student loan five year payment holiday blog discussion

Will it only be available to students starting after 2008. In other words will it be available to my daughter, starting in 2009, but NOT to my son who has just finished his first year at university? I need clarification!

so not only are new grants being introduced, but a handy 5 year break too. i graduated in 2004 and can't help but think we were the 3-5 year generation that immediately lost out on the initial grants 2 years after they were abolished, then miss out on some grants as they were reintroduced in 2006, then miss out again on these new changes. we've been shafted, and i'm furious :mad:

where's my 5 year payment break?

Well, in the end no-one got given the option of a repayment holiday as it was retrospectively dropped in 2010 even for post-2008 borrowers who they were originally promised to. The repayment holidays option was on page 14 of the 2008/09 and 2009/10 SLC guides to terms and conditions. It changed from 5 years to 2 years on page 18 of the Labour version of the 2010/11 guide and disappeared altogether in the Coalition version of the 2010/11 guide, so as Labour never implemented it into the repayment terms (repayment holidays weren't due to be available until 2012) before they lost power in 2010, the policy was dropped on a change of Government.

There was no official announcement whatsoever that borrowers would no longer have this option to take a repayment holiday (presumably it was one of Labour's many 'unfunded' spending promises that George Osborne said the Coalition inherited in the 2010 Emergency Budget); the best notification I can find is in an NUS policy briefing here which confirms “the planned student loan repayment holidays have now been scrapped altogether (having been reduced from five years to two years previously)”.

Although it wasn't a retrospective change to terms and conditions as it was dropped before being implemented into the repayment regulations (although of course well after 2008 and 2009 starters had taken loans out and after several 2010 starters had also had loans approved expecting to be able to take a repayment holiday when their loan entered repayment), it just shows how easily terms can be varied for these income-contingent student loans, with what you are promised when you sign up to the loans open to being changed in the future, regardless of whether the terms promised actually end up being implemented into the legal regulations.

I've raised this old blog post now as it is interesting that Martin commented on this retrospective change in 2009 when it was announced by the new Department for Business, Innovation and Skills (BIS) (which is also now closed and HE is now part of the Department for Education) after the Department for Innovation, Universities and Skills (DIUS) was closed (who originally announced the policy), that post-2008 starters would be given a 2 year instead of a 5 year holiday (before it was axed altogether...) here where Martin Lewis is quoted as saying “while a two-year repayment holiday is a good addition, it is no way as good as a five-year break, which allows students to buy a property or sort out their other debts” and “it will be disappointing for many students, but it is interesting that yet again, the Government seems to be chipping away at [the student loan system] piece by piece.” He also said “the move was likely to hit poorer students.”

It's interesting that he never challenged this as two retrospective changes to what was promised to 2008 starters when they took their first loan (5 years to 2 years holiday) and one/two retrospective change(s) to what was promised to 2009 and 2010 starters depending on when they took their first loan (2 years to 0 years holiday), now that he keeps banging on about the frozen repayment threshold for post-2012 starters (e.g. here) affecting low income graduates as well. I don't know why Martin originally was arguing that negative retrospective changes to policy intentions promised to borrowers had never happened before (e.g. here and in MSE's official submission to the Government consultation), an argument he told students to copy and paste in a campaign (clearly many submissions based on misinformation have less weight than a few submissions based on purely factual evidence), when clearly he knew at least about the change from a 5 year to a 2 year repayment holiday (maybe he just forgot). I don't blame him for not knowing about the change from a 2 year to no repayment holiday whatsoever as it was dropped so quietly I don't think anyone noticed!

Even Nick Hillman (now head of the Higher Education Policy Institute) who was involved in higher education policy as special adviser to the former HE minister David Willetts doesn't mention the negative retrospective changes to the option of repayment holidays promised to post-2008 starters in his factual HEPI piece entitled "Why the MoneySavingExpert is wrong" which gives examples of previous retrospective changes.