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Another betrayal: why we must oppose a freeze in repayment threshold

Friday 28-08-2015 - 15:53

The contempt for students and young people held by the government has become ever more obvious in the last few weeks.

Already they are;

I wish I could say this was the limit of their ambitions but there’s no sign yet.

Now the latest item on the agenda is the student loan repayment threshold. As promised in the budget a consultation was launched recently on proposals to freeze the repayment threshold. This would be a freeze for students on the post-2012 system of student finance until 2020.

As things stand, graduates will start repaying their student loans from April 2016 if they earn over £21,000. When they brought in the system they promised that the threshold would then increase by average earnings each year after that. Yet now the government wants to freeze the threshold until at least 2020. They do not however plan on doing this only for new students. Instead the ‘preferred option’ is to do so for any student or graduate who started their course in 2012/13 or later. This would be a retrospective change to the terms and conditions hundreds of thousands of students were told they should expect.

This will have a real impact on the income of graduate and study leavers. It will mean that a graduate who starts on £21,000 in 2016 and whose salary rises with average earnings pays £6,000 more. The Institute for Fiscal Studies points out this affects the lowest and middle earning graduates most yet again.

This change will also affect further education students who have or will take out 24+ Advanced Learning Loans. There’s every chance it will affect Welsh students too given they have the same repayment system. This comes as average debts for English undergraduates are set to soar to £53,000. At the same time, big business will be enjoying a cut in corporation tax that will cost £6.6bn by 2020.

This is a regressive move that means students will have to pay more. Yet oddly, George Osborne found a whole lot of money to pay for an enormous tax cut for multi-nationals.

We will respond to the consultation – but it is vital students’ unions respond too and get students, graduates and parents to do so, rejecting this regressive change. But holding the government to their pledge to increase the repayment threshold will not alone make the system fair. Therefore we will also incorporate action against the proposals as part of our wider work on the #CutTheCosts campaign.

Martin Lewis from Money Saving Expert headed up the government’s Independent Taskforce on Student Finance Information in the last Parliament. He has pledged to organise opposition to the decision too.

These changes will yet again hurt many of the poorest graduates and study leavers most.

Together we will make it clear we will not let the government set a precedent of changing the rules when it suits them.

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