Student loan repayment

The government’s decision to freeze the student loan repayment threshold is unacceptable and unfair.

Existing students signed up in good faith to the loan repayment threshold rising with average earnings, but the government is going back on its word. Many students and parents are understandably worried by this.

The student loan repayment threshold was set at £21,000 for post-2012 borrowers. In November 2015 the government announced, following a consultation, that it would be freezing the loan repayment threshold for five years effective from April 2016. This is despite the government acknowledging that the majority of those who responded to the consultation did not support the freeze.

The change will, according to the government’s own impact assessment, hit middle earners hardest and have the greatest impact on women, ethnic minorities, people with disabilities and mature students. A ‘median borrower’ will repay around £300 more per year.

On Monday July 18, MPs debated the changes to the student loans agreement after a Parliamentary petition calling for the government to stop its retrospective changes had been signed by more than 132,000 people. During the debate, there was considerable opposition to the government’s retrospective freeze on payment thresholds. This retrospective change will undermine the faith of students in the political system. The government should now think carefully about its decision.

The government also plans to scrap maintenance grants replacing them with additional loans. This will mean that the poorest 40 per cent of students going to university in England will graduate with debts of up to £53,000 from a three-year course. In addition, the government also plans to increase tuition fees, meaning that by 2020 they are likely to have risen to £10,000 a year.

The impact of the scrapping of maintenance grants, increasing tuition fees and freezing the repayment threshold all point towards a very much more difficult environment for those thinking about going into higher education.

The government should be doing all it can to ensure that those from the poorest backgrounds reach their full potential. I am concerned that these changes would do the opposite, and could make poorer students think twice about going into higher education.