This coming Monday, politicians will debate a controversial government decision to retrospectively change the terms of student loans, leaving graduates paying back more than they were originally led to believe.
Last autumn, the Conservative government U-turned on its original promise to students who took out loans after 2012 by saying the repayment threshold would be frozen at £21,000 until at least 2021.
However, in 2010, when the government launched the new system, students were told that the repayment threshold would be raised in line with average earnings each year from April 2017.
The government backtracked on its promise without asking Parliament, to palpable opposition from students and graduates who believe they were sold a lie. More than two million graduates will now end up paying £306 more a year by 2020/21 if they earn over £21,000, according to government estimates cited by Money Saving Expert.
A petition opposing the change garnered more than 130,000 signatures, triggering Monday’s debate.
Martin Lewis, the consumer champion, financial expert and founder of MoneySavingExpert.com, has called the change a “national disgrace”. He has questioned its legality and is now campaigning for it to be reversed.
It’s pretty complicated to explain how the change would result in graduates paying back more than they would have otherwise, but Lewis does a good job. “If you earn £24,000 and the threshold had increased to £24,000, you’d have repaid nothing. But with it at £21,000, you repay £270 a year,” he outlines on his website.
Not only does the change go "against all the rules of good governance", Lewis says, it is also regressive. Figures from Labour MP Valerie Vaz, who helped to secure Monday’s debate, support this. In another debate on the subject last month, she said it will hurt poorer graduates more than the rich, outlining exactly how much more money those on lower incomes will be expected to repay.
She said: “Graduates earning £21,000 to £30,000 will have to pay £6,100 more, those earning over £40,000 will pay only £400 extra, and those on £50,000 will pay only £200,” reported Money Saving Expert.
In addition, because many – if not most – students won’t repay the loan within the 30 years before it is wiped, Lewis says it means they could end up repaying thousands more in total.
The change is also regressive in that it will affect women more than men. Speaking to Refinery29, Lewis said this was for two reasons: The first being the gender pay gap – women are more likely to be lower earners; and secondly, they are less likely to be working continually for 30 years because of childbearing responsibilities.
"All my calculations are predicated on the fact that you will work for 30 years but many women aren’t likely to work the whole 30 years because of maternity leave, so will be affected more," Lewis said. "Women who go on maternity leave will need to have a higher salary than the equivalent man to pay it off within 30 years."
Lewis said the government shouldn’t be allowed to get away with something a commercial company would never be allowed to do. "The fact the government can get away with it is abhorrent and wrong," he told Refinery29. "Once it can make one change, what’s to stop it from making others?"
He has urged students, graduates and parents to contact their MP in advance of Monday's debate to pressure them to attend. “We need as many MPs as possible to be at the debate and register their disapproval,” he said.
If you're outraged, let your MP know it’s an issue that you, their constituent, care about, said Lewis. “The debate in itself won’t be binding, but if we can show this is a widespread unpopular move that won’t go away, there is a chance of overturning it,” he added. Lewis has provided a template email on his website, which he advises people to send to their MP.
He has also advised people affected by the change to explain the situation to their parents and grandparents, and ask them to email on your behalf. “Speak to your parents – politicians are used to revolting students. Pun intended. Student protests don’t change politicians’ minds, but middle England changes politicians’ minds.
"Get your parents and grandparents to email politicians saying that as a parent, they’re disgusted by what’s going on. This government aren’t scared of losing student votes.”
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