Students to pay back an extra £3.2 billion

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“This is a disgraceful move and a breach of trust by the government that betrays a generation of students.”

Students are getting a raw deal from this Conservative Government, and matters got even worse last week in the Chancellor’s Spending Review and Autumn Statement. The Government announced further changes to student finance, and it means you will end up paying back more.

Despite not mentioning it in his oral statement, paperwork showed that Osborne will freeze the repayment threshold for student loans at £21,000. This is the wage you will need to earn before paying back any of your student loan. In 2012, the Government said this threshold would increase in line with wages and the economy, but this change means student will pay back more of their wage in real terms.

This change will affect every English-domiciled student who took out a loan after 2012, and therefore will even effect graduates who have already left university. It is not yet clear whether the terms will change for Welsh students.

Martin Lewis of MoneySavingExpert.com who chaired a taskforce to ensure students would not be put off by the 2012 changes of raising tuition fees, told Times Higher Education “If this proposal goes through, the government will have mis-sold student loans… Governments shouldn’t lie. And who can trust them when they make retrospective changes?”

In the Government’s own paperwork, this would affect 2.1 million people by 2020, recovering an extra £3.2 billion over the lifetime of the loans, compared to the terms originally proposed to students in 2012. The changes mean every student will pay back an estimated extra £306 a year than originally agreed.

Lewis told the Guardian last week, “This is a disgraceful move and a breach of trust by the government that betrays a generation of students.”

“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.

“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.”

The consultation report on the change admits, “Women, ethnic minorities, people with disabilities and mature students are more likely to fall into the range of income that is most affected.” Government recognises that these changes will be implemented disproportionately.

What is more, the Government launched a consultation to the changes before the summer, and 84 per cent of respondents were against the change, with many respondents objecting to the government making retrospective changes and would lead to a loss of trust in Government. One unnamed university showed concern, the changes would “place HEI [Higher Education Institutions] in an untenable position.”

However, many feel it is the principle of the matter that is significant. The government is changing the terms of a loan after someone has agreed to the original terms.

In response, the government defended itself, “All departments are required to support government’s efforts to reduce the national debt. With such large amounts of money being loaned the HE system in particular has an important role to play.”

Before the summer the government announced plans to scrap maintenance grants for students replacing them with loans. This has been extended now to include student nurses, that depend on the grants to study, but will now have to pay them back when they start working.

Labour MP for Ilford North and former NUS President Wes Streeting was also aggravated by the change. In a question to the Chancellor, he said, “Not only are changes to student finance being changed in a regressive way, they are being applied retrospectively. Not only do I regard this as a personal betrayal, how can any applicant trust the information they are given by government at the point of application? Furthermore, what message does he think he’s sending to the nursing profession and aspiring nurses, that they should pay for the privilege of a profession that they have to work incredibly hard, and not for particularly good pay? What an absolute outrage. The Chancellor should apologise to students and for nurses.” The Chancellor did not apologise, if you were wondering.

Cardiff students have reacted angrily to the change, with Jessica Hingston, an English Language student telling Gair Rhydd, “surely that’s not allowed” and another commenting, “it’s just not right.” Chloe Law, an optometry student concentrated on the fact it is a retrospective change, “It’s especially bad for those who have graduated, as you think you are out of the woods, and then the terms and conditions are changed.” Ancient History student Sophie Broad had a similar view, “this is definitely not a surprising move from a Tory government.”

Local Labour MP Jo Stevens said, “With these retrospective changes to student loan contracts, the Tory Government has cemented the betrayal of a generation that was started by the Lib Dems and has now been completed by the Tories. It’s not only unfair but deceitful to change the terms of student loans after they were taken out. Young people are already bearing the brunt of the Government’s swinging cuts on all sides with rocketing rents, stagnating wages, exemption from the national minimum wage increase and housing benefit cuts. During the last Parliament, cuts to ESA and increased tuition fees made it hard enough for young people to complete their education.

“In Wales, the Welsh Government have stood by young people keeping tuition fees paid by Welsh students at a lower level, and not changing borrowing terms, but for English students and recent graduates this is yet another a kick in the teeth from a Tory Government that has really got it in for looking out for young people.”

The NUS was also disappointed with the news. Cardiff Students’ Union President Claire Blakeway expressed her disappointment at the decision “and it is just one amongst several attacks being made to young people. It is exceptionally unfair that students will have to pay back more money, on top of what is already an extremely large loan to repay.

“Despite 84% of respondents to the consultation opposing the measure, the government are still proceeding. The Students’ Union will be working with the National Union of Students’ to oppose this change as well as all other cuts which are being made to young people.”

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