Student Loans: goalposts moved retrospectively and makes saving for a home even harder

“Students have reacted angrily to major changes to how England’s poorest graduates will need to repay their tuition fee loans, which were excluded from George Osborne’s Autumn Statement speech yesterday.

As part of a raft of unpopular measures that will hit young people, the government confirmed its plans to change student loan repayment conditions in the spending review, potentially costing students up to £6,000 more, according to IFS estimates.

Despite previously promising students in 2010 the £21,000 repayment threshold would be raised in line with average earnings, Osborne announced it would be frozen for five years, saving the government up to £680m.

Even graduates who took out loans in 2012 will be affected, as the threshold freeze is to be backdated four years.

Martin Lewis, founder of Money Saving Expert, accused Osborne of not having “the balls” to announce the changes in his Autumn Statement speech.

“It is one thing to set up a system that is unpopular but it is entirely different to make retrospective changes that mean you cannot even rely on what you were promised at the time you started to study. Even though it was warned of the huge dangers of doing this, it’s still blundering ahead, ignoring all right thinking concern.

“The fact that the Chancellor didn’t even have the balls to put it in his Autumn Statement speech shows that he knew how unpopular it would be. If a commercial company made retrospective changes to their loan terms in this way they’d be slapped hard by the regulator – the Government shouldn’t be allowed to get away with it either.

“I’m deeply saddened, it’s chosen to act in this way.”

The IFS estimated the changes will mean graduates on average salaries will pay back £3,000 extra, while disadvantaged students will be even worse off. Those earning close to the median income will be made to pay back £6,000 more.”

Source: Huffington Post online