‘Millions’ of student loans changed by Autumn Budget
The amount of money students will have to pay back is set to rise.
Yesterday a rise in the cost of student loan repayments was put in place, although George Osborne decided against mentioning it in his Autumn Budget statement.
It is now government policy that the £21,000 loan repayments threshold will be frozen. Previously, it would have risen at the same rate as average earnings.
In real terms, this could see graduates paying at least double what they would have been back each year. Before the changes, a graduate earning £25,000 with a threshold at £23,000 which was rising every year, would pay £180 a year.
Now, the threshold will be frozen at £21,000, so the same graduate would pay £360 a month.
Essentially, the government are changing the loan contract after they’ve been signed off.
The changes affect any student with a post-2012 loan, and critics warn that disadvantaged students will be even worse affected.
Martin Lewis, founder of Money Saving Expert and who chaired an independent panel on student finance information, told LBC: “This is a retrospective change to student loans, millions of people across the country will have to pay more each month. This is a change going backwards, it’s a change from what they said they would have done when people started going to university.
“It’s an absolute disgrace that breaks the fundamental bond of politics that you do not impose retrospective changes. Commercial companies would not have been allowed to do this. This was snuck in the back door, even though he mentioned student loans in the speech”
Labour MP Wes Streeting, the former NUS president, told the Guardian that the move “completely changed the financial conditions, retrospectively, that students signed up to in good faith.
“How can students now trust anything the government says about student loans they sign up to? If banks did this to customers, there would be an enormous outcry.”
The changes will supposedly allow for an extra £3.2 billion of student loan repayments to be paid back.
Harry, a third year Law student, said: “The fact that Osborne didn’t mention it in his statement shows how underhand the whole thing is. It’s Tories taking yet another cheap shot at young people.”
Poppy, a third year History student told us: “Paying the extra money will make it even harder for young people to save money to buy a house or for anything they may want. All our money will be going on just surviving, and this extra measure will make it even harder to save anything up.”