Spending Review 2015: Government ‘betrays a generation of students’ by ‘secretly’ backtracking on a 2012 loan promise

Despite 95 per cent of respondents to a consultation opposing the move, Tories say it will 'make an important contribution to the Government’s debt reduction plan whilst also maintaining a fair balance between the taxpayer and learners'

Aftab Ali
Student Editor
Wednesday 25 November 2015 19:19 GMT
Chancellor of the Exchequer George Osborne prior to delivering his Autumn Statement today
Chancellor of the Exchequer George Osborne prior to delivering his Autumn Statement today (AFP PHOTO / ANDY RAIN / POOLANDY RAIN/AFP/Getty Images)

The Government has “betrayed a generation of students” after it “quietly put out” a report on one of the busiest days in UK politics in which it has backtracked on a promise it made to students in 2012 regarding their loans.

Students in England who started university in or after 2012 repay nine per cent of everything they earn above £21,000 (pre-tax salary) once they graduate. Yet, now, after launching a consultation, the team at MoneySavingExpert.com said the Conservatives have secretly put its conclusions out during the Autumn Statement, backtracking on this and, effectively, hiking costs retrospectively, despite an overwhelming 95 per cent of the consultaion’s respondents opposing the freeze.

The freeze in the threshold means graduates will now repay more of their cash each month towards the loans and - as many students won’t repay the full amount borrowed within the 30 years before the debt is wiped - also means they will pay more overall as well.

The freezing of the threshold means over two million graduates will end up paying £306 more each year by 2020/21 than they would have done without the change.

Read the Government’s full outcome and response:

MoneySavingExpert.com said, “disgracefully,” the move was not announced by George Osborne in today's speech and, instead, it was “buried on page 126 of the Autumn Statement.”

Despite acknowledging how the majority of those who responded to the consultation “did not support the freezing of the repayment threshold,” in its full outcome released today, the Government defended its U-turn and said the move would “make an important contribution to the Government’s debt reduction plan whilst also maintaining a fair balance between the taxpayer and learners.”

It also added: “The Government is committed to maintaining the UK’s world class education system while living within its means and reducing the national debt. Further and higher education will remain accessible to students who have the ability to benefit from it, ensuring that no-one needs to pay up-front.

“We know that higher education continues to be an excellent investment, with graduates earning considerably more on average than those with lower levels of qualification. To keep higher education on a sustainable footing, we must ask future graduates to meet more of the costs of their studies once they are earning.”

UK students face 'unprecedented debt'

‘Betrays a generation of students’

However, “deeply saddened” the Government has “chosen to act in this way,” Martin Lewis - founder of MoneySavingExpert.com and former head of the Independent Task Force on student finance information - blasted the Conservatives for not uprating the student loan repayment threshold each year in line with average earnings from 2017 as promised.

He said: “This is a disgraceful move and a breach of trust by the Government that betrays a generation of students. It has chosen to freeze the repayment threshold - even though 95 per cent of the consultation responses did not support the freeze. What was the point of a consultation if, when there’s huge objection, it does it anyway?”

Mr Lewis added that the Government is “risking fundamentally threatening any trust people have in the student finance system.” He said: “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.

“Even though it was warned of the huge dangers of doing this, it’s still blundering ahead, ignoring all right thinking concern.”

Blasting Chancellor George Osborne for not mentioning it in his Spending Review today - despite announcing part-time and postgraduate students will now be eligible for fee and maintenance support - Mr Lewis said: “The fact 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.”

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