Tolerance prompted by the proposal to lower the repayment threshold for student loans | Student funding

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Students, unions and finance experts have warned against forcing graduates to start repaying their loans earlier, saying it will hit lower incomes harder and increase pressure on the Covid generation.

Ministers are considering lowering the threshold at which graduates start repaying their tuition and maintenance loans from just over £ 27,000 to £ 23,000.

But the proposal, which is part of a student funding overhaul designed to save billions from the treasury, has sparked an uproar.

The National Student Union called it “just amazing” and a leading conservative warned against putting the “cart before the horse” by asking students to pay more before they attack. the disruptions caused by the pandemic.

The alleged change in the repayment threshold, first reported by the Financial Times, would mean graduates would pay an additional £ 400 per year.

This is among the measures recommended by the Augar Higher Education Review in 2019, which also suggested reducing tuition fees from £ 9,250 to £ 7,500 and extending the payback period from 30 to 40 years. .

Robert Halfon, Tory MP for Harlow and chairman of the House of Commons education committee, said if the government intends to lower the threshold, it should also consider cutting interest rates on student loans.

“In the short term, if they want to do that, they have to lower the interest rates students have to pay. Interest rates are the things that really kill, ”he said.

After students’ experiences during Covid, when learning moved online and many were confined to their rooms, Halfon said there needs to be a new student guarantee to ensure they get quality education they are entitled to expect before changing the threshold for extending loan repayments.

“I’m afraid the cart is put before the horse,” he told The Guardian. “There has to be a good contract between the students and the universities. We should also try to wean students off from just taking out loans and having them do degree apprenticeships where they earn as they learn and get a suitable skilled job in the end. “

Another prominent Conservative, former universities minister Chris Skidmore, favored lowering the repayment threshold, but echoed concerns about interest rates.

“Even though it often doesn’t matter when it comes to long-term repayments, I find it morally unacceptable that the interest rate charged on loans goes up to 6% when we have interest rates at 0. , 1%, “he said.

Martin Lewis, the consumer credit champion, warned that the change would “dramatically” increase what graduates pay – especially low wages. This would end up benefiting the higher earners who pay off their loans quickly and pay less in total, he said.

The founder of Moneysavingexpert.com also warned ministers against any attempt to retrospectively impose changes on those with existing loans. “If the government decides to do it, it should only be done openly and in advance … so that potential students and their parents can examine the real cost to them of going to college and decide if it is worth it. sadness. “

Hillary Gyebi-Ababio, NUS vice president for higher education, said: “We would be totally against any plans to reduce the salary threshold for student loans.

“Like the government’s decision to increase national insurance premiums, this burden targets low-income people. After 18 months of such hardship, and with looming energy price hikes expected to hit millions of the most vulnerable this winter, the injustice is nothing short of staggering.

Jo Grady, the general secretary of the Union of Universities and Colleges, also opposed the decision. “Loading more debt on students is not the way to deal with the failure of the commodification of higher education. This is a regressive move that will hit low-income people the hardest, as they will see the largest relative increases in their payments. “

Chancellor Rishi Sunak is reportedly keen to revise student funding in his spending review ahead of next month’s budget, and is considering his options.

A spokesperson for the Department of Education said the student loan system was designed to ensure that anyone with the talent and desire to pursue higher education can do so, while ensuring that the cost is fairly distributed. between graduates and the taxpayer.

“We continue to carefully review the recommendations made by the Augar panel, while improving the quality of standards and excellence in education and ensuring a sustainable and flexible student funding system,” the spokesperson said. .

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