Posted on Wed 23 Nov 2016 at 12:23 by Lucy Gill
Students, we've been lied to on a monumental scale.
I've said it myself and I've heard many of my friends laugh about the 30-50k of debt that we have when leaving university. It's not funny, but you kind of can't do anything but laugh. I bet every single one of us has said or heard: “oh, but I'll probably never pay it back - it's written off in 30 years”.
I'm no financial manager but I do know that if you take out a loan in any other situation, you sign a contract and so does the lender. A contract that is to be stuck to by both parties and should either side break it, it's over. But the government are doing exactly that. They're breaking all of the promises on their side of the contact that they made with us in 2012.
They told us that the repayment threshold would be 21K and that our interest rate would be inflation plus 3%, clocking up from the moment the loans hits our accounts. That repayment threshold should now be £25,000 but the Government have frozen it - meaning that Graduates will now pay more each month because of it. On average, this means that all of us earning over that level will be paying an extra £360 a year.
Not only this, but lower and middle-earning graduates won’t clear what they owe within the 30 years before repayments are wiped. This sounds like a good thing as it will be wiped off, but actually we could end up repaying thousands more over the life of our loans as interest is added year on year. High-earning graduates, who clear them within that time limit or less, will see their total payments reduced, because repaying more means they clear them quicker, accruing less interest.
This is really not okay. Not only is this a financial issue, but it’s an issue of trust. No commercial lender could make a change in this way, and it’s wrong for our government to do so. It’s a shame 280 MPs who voted for this yesterday couldn’t see that.
You can read more about this from Martin Lewis, Money Expert, in the Financial Times here.