Help stop the hike on student loan repayments

Friday 09-10-2015 - 17:00

We have one of the most harmful governments for students in the last quarter of a century - adopting measure after measure for introducing market forces in higher education, they say in order to drive ‘quality’ or improve ‘choice’. Yet cut after cut, the government refuses to properly fund our institutions and place the burden of cost onto students, saddling them with unprecedented levels of debt.

After tripling tuition fees in 2012, in July the Chancellor announced his intention to abolish maintenance grants and increase loans for English-domiciled students. However, an overlooked announcement in the Budget was the change to repayment terms for loans for students from 2012.

If those proposals take effect, a student on a 3-year undergraduate course who takes out a full maintenance loan would graduate with over £53,000 of debt, plus interest. This last measure constitutes a retrospective change to student loans in England, which means people who have taken out loans since 2012 will have to pay more back.

On the current system, a graduate pays 9 per cent of everything earned above £21,000 per year. When the 2012 system was launched, the government pledged that from April 2017, the £21,000 figure would be raised each year in line with average earnings. But now they intend to freeze this threshold at £21,000 instead until 2021 at the earliest.

What this means is that graduates would end up paying more each month than the loan scheme previously promised and publicised when students took out the loan. For example, if you earn £25,000 and the threshold is £23,000, you repay £180 a year. If the threshold is frozen at £21,000, you pay £360 a year.

This is yet another betrayal by the government and part of a long list of political measures that shows complete disdain to students and their futures. Freezing the repayment threshold won’t just affect new students but those who started studying from 2012/13, and will have a real impact on the income of graduates, particularly the most disadvantaged and those on lower earnings.

If the repayment threshold is frozen at £21,000 for five years from 2016, the typical borrower is estimated to repay an extra £2,800.

A recent Sutton Trust report showed the measure will disproportionately affect women graduates because while the overall average extra repayments are £2,800, the gender pay gap means that there are differences between men and women, with men’s at £2,300 and women’s £3,300.

The freeze will also affect low-income students the most when means-tested grants become means-tested loans in 2016 and their debt burden is increased.

Black students will also be disproportionately affected. HESA DLHE data shows that while the variance of non-black graduate salaries is larger than that of black graduates, there is more of a bunching effect for black graduates between £20,000 and £29,999, which is the salary range that will be most affected by the proposed changes. 51% of black 2013-14 graduates employed six months after graduation are in this salary band compared with 45 per cent of non-black graduates.

Our own research (Debt in the First Degree) shows that student debt is a huge concern, with 43 percent of £9000-a-year graduates believing their standard of living would be affected by the cost of repaying their student loan. It’s a regressive move that means students will have to pay more, and will have a huge impact on students from widening participation backgrounds.

NUS is opposing the freezing of the threshold and urges the government to #StopTheHike on the repayment of the loans.

We have pulled together our response to the consultation and a draft of it can be found here.  Please note this is subject to change before we submit it on Wednesday the 14th of Oct.

We encourage you to submit your response to the Government’s consultation and feel free to use ours for inspiration. We’d also be interested in any comments you have on our draft. The deadline is noon Wednesday the 14th of Oct.

Please spread the word on social media using the #StopTheHike hashtag and write to your MP.

This is yet another attack on social mobility when we should be focused on developing a publicly funded higher education that should not disadvantage some students simply because they are poor.

I urge you all to mobilise around all the recent attacks on our education and come to the National Demo for Free Education on the Wednesday 4 November. 



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