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Reacting to the repayment terms of rUK tuition loans

ByBruna Mondlane

Oct 20, 2015
Graduation 2014 NBS

Separating the problem from the polemic in economic news always gets a little tricky. So when browsing the news on BuzzFeed, I came across the headline ‘The Government Wants You To Repay More on Your Student Loan” with a picture of our beloved Chancellor looking sly, I raised an eyebrow; is there, in fact, a problem and what is it really?

After all the aim of the government, after it realized or perhaps simply accepted that, at the current rate, it would see no serious return on its investments on the first cohort of the 2012 deal, is to recoup more money borrowed, meaning more money back into the Treasury, and also less debt for the borrower.

The focus here is on Student Finance England issued loans.  A concept that has been with us for about three years is about to get redefined rather discreetly: the government has been in consultations over a restructuring of fee repayments and up until Wednesday 15 October last week, public opinion on the subject was officially consulted, but how well signposted this issue has been is another matter. The story is small.

As these plans this follows the government’s scrap of maintenance grants for low-income students, complaints of yet another betrayal can hardly, perhaps, be criticized. Is the government really reshaping a fitter, more sustainable financial support system, or is education turning into a survival of the ‘fittest’ game? A reminder of where things stand: graduates earning from £21,000 and above will be expected to pay 9% of their earnings, and crucially this threshold will be increasing together with average earnings, keeping the actual sum being reimbursed proportional. The government wants to freeze the threshold at £21,000 pounds. Inflation is no longer being taken into account to help ease pressure, and the pressure will get rather heavier, rather faster.

So there is your first apparent problem. SFE borrowers will find themselves paying more, and still not necessarily meet a finish line. That in itself however, does not constitute a problem, the problem is that in an economically insecure and tough (to say the least) environment, more of your much-needed cash will be systematically taken away from your pocket. And it may not even be worth it. Again.

Whether one sides with the government’s latest more stick-than-carrot measure and its potential effects, or not, there remains the issue of plain old trust. Where is the legality in changing the terms of an already signed contract? The problem stands even if the plans are only applied to newcomers, for the simple reason that they may well come in so quick. The rug will be pulled from under many feet. And after that, what will a generation of students, i.e. future taxpayers, have to stand on? No money, smaller ambitions, and no trust either.

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