A petition against the Government’s decision to retrospectively change student loan agreements was debated by Parliament on 18th July.

The debate was prompted by the petition receiving over 10,000 signatures, however did not result in policy change.

In 2010 the Government promised that, in line with average earnings, the Student Loans repayment threshold of £21,000 would be increased each year. However last autumn, the government back-tracked, and the figure will now be frozen until at least April 2021.

The concerns around the changes to student loans interest rates were prompted by an open letter published by engineering graduate Simon Crowther. The letter was shared on Facebook more than 50,000 times and led to many people signing the petition despite some of the inaccuracies of his account.

The petition against this move, started by student Alex True, amassed over 132,000 signatures.

MP Helen Jones said that the reason behind the delay was that students had taken a while to realise the effect it would have, as the decision had been “buried on page 126 of the Budget papers”.

Many students are outraged that the Government’s retrospective decision places them in a new financial position that they hadn’t expected.

…if you can’t trust the government to uphold legally agreed terms then where does the trust actually begin?

The Government justified the change to the contract by claiming that universities could not remain well funded under the previous rules.

Joseph Johnson, Minister for Universities and Science, said in the debate: “We considered freezing the threshold because we needed to ensure that higher education funding remained sustainable. The choice was either to ask graduates who benefit from university to meet more of the costs of their studies or to ask taxpayers to contribute more.”

However opponents argued that, emerging from university, often without sufficient experience for a large spectrum of jobs, many graduates are side-lined into low-paid and low-skilled jobs. Graduates are not earning enough money to be fed back into the Government.

Helen Jones, the Labout MP for Warrington North, said that, ‘In fact, the Higher Education Statistics Agency pointed out last year that a third of graduates were working in low-skilled jobs six months after they graduated, and that more than 16,700 graduates were unemployed.’

MPs on the opposing side of the debate argued that the Government was at fault for an inefficient economic model to calculate student loans. The Government used insufficient information about the recipients of its loans to estimate the amount it would be repaid, something warned by the National Audit Office in 2013. In 2014, the Government itself estimated that 45% would not be repaid, which motivated the Government to continue the freeze, ensuring that they continued to collect more money.

The addition of interest to the loans is calculated at the rate of the Retail Prices Index (RPI) plus 3%. The RPI interest leaves students faced with an even larger debt than they had envisaged. A post on the Student Loans Company revealed that a student was paying a large amount of interest each month, even as much as £180.

…those promises probably had a fair influence on how many people decided to attend university in the first place

The continuation of the freeze means that those who earn just over the £21,000 threshold will suffer more than those earning substantially more. The amount that this lowest boundary need to pay back therefore makes up a higher proportion of their earnings.

Valerie Vaz, Labour MP for Walsall South said that, ‘According to the Government’s own figures, graduates on a salary between £21,000 and £30,000 will have to pay back £6,100, whereas those on a salary of £40,000 will pay only £400 extra. Those on an even higher salary pay even less.’

A recent graduate from UCL, Oliver Palethorpe, told The Panoptic: ‘I think that it’s despicable that the government would change the terms of a contract that has been agreed between two parties. They know there’s literally nothing we can do because we’ve already taken the loans out… It might not even be legal. A contract is a contract and if you can’t trust the government to uphold legally agreed terms then where does the trust actually begin?’

James Thetfort O’Brien, a recent graduate from Roehampton said that, ‘personally I think the entire thing’s a bit of a kick in the teeth to be honest. Essentially our government has made some bad decision, can’t deal with the repercussions of those decisions and are now making us foot the bill. You’d think that they’d at least try to keep the promises they made. Especially when you consider that those promises probably had a fair influence on how many people decided to attend university in the first place.’

Kath Walkling

Image: Parliament.tv

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