University students and graduates who took out student loans after 2012 are facing increases in the cost of loan repayments due to a hidden change to the system in the Chancellor’s Autumn Statement.
When the current student loan system was launched in 2012, in order to mitigate the tripling of fees, the government increased the threshold above which income was taxed to service the loan from £15,000 to £21,000.
The government also pledged to ensure that the threshold rose with inflation, to ensure that as inflation drives up the price of food, rent, fuel and other necessities, graduates are still paying the same amount to service their loan in real terms.
However the Chancellor has backtracked on this pledge, freezing the threshold at £21,000. This amounts to an annual loss of £306 to the average student by 2021 if their earnings top £21,000.
“Millions of people across the country will have to pay more each month”
The change has led to controversy about the way in which it is an explicit reversal on the Chancellor’s pledge in 2012. Martin Lewis, founder of MoneySavingExpert insisted, “This is a retrospective change to student loans. Millions of people across the country will have to pay more each month”.
Martin also claimed that the Chancellor “didn’t even have the balls to put it in his speech”, as the decision only appeared on page 126 of the Autumn Statement.
Lewis suggested that this was because George Osborne “knew how unpopular” the decision would be with the general public.
“This government has already shown […] that it has no respect for what in my opinion should be a legally binding contract”
Kailin Brindle, a third year Philosophy student, whilst angered by the change, was not surprised: “This government has already shown with junior doctors and now with students, that it has no respect for what in my opinion should be a legally binding contract”.
He added: “This government seems to be able to go back on promises with an impunity that would be against the law in virtually any other walk of life”.
Image: mrgarethm via Flickr