Student Loans: ‘We Have Effectively Been Kicked In The Teeth’

Flashback to four years ago when I was an excitable and naïve 18-year-old ready to experience university life and new levels of intoxication at fresher’s week, I checked my bank balance and had never felt like such a baller. Back then – to me and I’m sure many others – student loans were just those mythical money fairies, who turned up once a term to deposit our tri-annual spending allowances into our bank account. Just enough to cover rent and a few nights out (providing entry was free and double vodka-lemonade-and-limes weren’t more than £3). Back then I didn’t really understand this whole concept of repayment. Do I really have to pay it all back? When? How much and to who?


Fast forward four years down the line and one year abroad later, involving larger loans, grants and bursaries (arghhh more money related terms and agreements I don’t fully understand) and the reality of actually having to think about paying back student loans has hit. But I’m still actually none-the-wiser about how it all works.

A lot of this is to do with being the first intake of £9000 per annum fees. The sums of money I have to consider repaying are too gargantuan to want to think about. Secondly, as you might have seen in the news, the terms of the agreement we entered into when we signed with The Student Loans Company appear to have changed and us students – past and present – are not too happy about it.

Back in 2010, when the government announced that from 2012 university fees would increase from £3000 to £9000 per year, they also promised that the £21,000 threshold would rise in accordance with average earnings in 2017. However, in November 2015 the news came that the current threshold would be frozen retrospectively until at least April 2015. The government’s small token of goodwill for what, in 2010, felt like a brutal attack on our rights to higher education has seen a complete U-turn.

Several weeks ago, in the midst of his finals at Durham, Alex True started a petition to reverse these changes. But, despite True’s petition being eligible for debate with over 120,000 signatures and resonating with students and recent graduates across England, the government rejected the petition.

Alex True is not the only student enraged by these changes, which have seemingly come into play without us even noticing. On top of frustration over the backtrack on promises, there has been outcry from graduates feeling [misled as they see their loan repayments increase by up to £180](/wp-admin/Flashback%20to%20four%20years%20ago,%20an%20excitable%20and%20naïve%2018-year-old%20ready%20to%20experience%20university%20life%20and%20new%20levels%20of%20intoxication%20at%20fresher’s%20week,%20I%20checked%20my%20bank%20balance%20and%20had%20never%20felt%20like%20such%20a%20baller.%20Back%20then%20–%20to%20me%20and%20I’m%20sure%20many%20others%20–%20student%20loans%20were%20just%20those%20mythical%20money%20fairies,%20who%20turned%20up%20once%20a%20term%20to%20deposit%20our%20tri-annual%20spending%20allowances%20into%20our%20bank%20account.%20Just%20enough%20to%20cover%20rent%20and%20a%20few%20nights%20out,%20providing%20entry%20was%20free%20and%20double%20vodka-lemonade-and-limes%20weren’t%20more%20than%20£3.%20Back%20then%20I%20didn’t%20really%20understand%20this%20whole%20concept%20of%20repayment.%20Do%20I%20really%20have%20to%20pay%20it%20all%20back?%20When?%20How%20much%20and%20to%20who?%20%20
Fast%20forward%20four%20years%20down%20the%20line%20and%20one%20year%20abroad%20later,%20involving%20larger%20loans,%20grants%20and%20bursaries%20(arghhh%20more%20money%20related%20terms%20and%20agreements%20I%20don’t%20fully%20understand)%20and%20the%20reality%20of%20actually%20having%20to%20think%20about%20paying%20back%20student%20loans%20has%20hit.%20But%20I’m%20still%20actually%20none-the-wiser%20about%20how%20it%20all%20works.%20%20%20Firstly%20-%20being%20the%20first%20intake%20of%20£9000%20per%20annum%20fees%20-%20because%20the%20sums%20of%20money%20I%20have%20to%20consider%20repaying%20are%20too%20gargantuan%20to%20want%20to%20think%20about.%20Secondly,%20as%20you%20might%20have%20seen%20in%20the%20news,%20the%20terms%20of%20the%20agreement%20we%20entered%20into%20when%20we%20signed%20with%20The%20Student%20Loans%20Company%20appear%20to%20have%20changed%20and%20us%20students%20–%20past%20and%20present%20–%20are%20not%20too%20happy%20about%20it.%20%20%20Back%20in%202010,%20when%20the%20government%20announced%20that%20from%202012%20university%20fees%20would%20increase%20from%20£3000%20to%20£9000%20per%20year,%20they%20also%20promised%20that%20the%20£21,%20000%20threshold%20would%20rise%20in%20accordance%20with%20average%20earnings%20in%202017.%20However,%20in%20November%202015%20the%20news%20came%20that%20the%20current%20threshold%20would%20be%20frozen%20retrospectively%20until%20at%20least%20April%202015.%20The%20government’s%20small%20token%20of%20goodwill%20for%20what,%20in%202010,%20felt%20like%20a%20brutal%20attack%20on%20our%20rights%20to%20higher%20education%20has%20seen%20a%20complete%20U-turn.%20%20%20%20Several%20weeks%20ago,%20in%20the%20midst%20of%20his%20finals%20at%20Durham,%20Alex%20True%20started%20a%20petition%20to%20reverse%20these%20changes.%20But,%20despite%20True’s%20petition%20gaining%20over%20120,000%20signatures%20and%20resonating%20with%20students%20and%20recent%20graduates%20across%20England,%20the%20government%20rejected%20the%20petition.%20%20Alex%20True%20is%20not%20the%20only%20student%20enraged%20by%20these%20changes,%20which%20have%20seemingly%20come%20into%20play%20without%20us%20even%20noticing.%20On%20top%20of%20frustration%20over%20the%20backtrack%20on%20promises,%20there%20has%20been%20outcry%20from%20graduates%20feeling%20misled%20as%20they%20see%20their%20loan%20repayments%20increase%20by%20up%20to%20£180%20because%20of%20fluctuating%20interest%20rates%20(currently%20at%203.9%%20–%20which%20we%20had%20understood%20would%20stay%20at%20around%200.5%.%20%20%20All%20this%20talk%20of%20broken%20promises%20and%20confusion%20over%20loan%20repayments,%20changing%20thresholds%20and%20fluctuating%20interest%20rates%20highlights%20the%20lack%20of%20clear%20information%20students%20actually%20receive%20about%20their%20loans%20and%20the%20potential%20for%20the%20contract%20we%20unwittingly%20entered%20into%20as%20a%20teenager%20to%20change.%20But%20what%20does%20this%20all%20mean%20in%20money%20terms?%20%20%20Martin%20Lewis%20of%20Money%20Saving%20Expert%20and%20head%20of%20the%20Independent%20Taskforce%20on%20Student%20Finance%20has%20written%20a%20mythbusting%20guide%20to%20student%20loans,%20outlining%20what%20this%20U-turn%20in%20government%20policy%20actually%20means.%20%20According%20to%20Lewis%20it’s%20not%20the%20total%20cost%20of%20university%20students%20should%20be%20worrying%20about,%20but%20how%20much%20students%20will%20be%20repaying%20as%20a%20result%20of%20these%20retrospective%20changes.%20%20%20“Once%20you%20leave%20university,%20you%20only%20repay%20when%20you're%20earning%20above%20£1,750%20a%20month%20(equivalent%20to%20£21,000%20a%20year)%20and%20then%20it's%20fixed%20at%209%%20of%20everything%20you%20earn%20above%20that.%20%20%20“As%20a%20simple%20explanation,%20if%20you%20earn%20£22,000%20with%20the%20threshold%20at%20£21,000%20you%20pay%20£90%20a%20year%20–%20if%20the%20threshold%20had%20gone%20up%20as%20expected,%20to%20£22,000%20for%20example,%20you'd%20repay%20nothing.”%20%20Essentially,%20those%20of%20us%20who%20were%20duped%20into%20thinking%20that%20we%20wouldn’t%20notice%20the%20increase%20in%20fees%20due%20to%20promised%20raised%20thresholds%20and%20low%20interest%20rates,%20have%20effectively%20been%20kicked%20in%20the%20teeth.%20My%20seventeen-year-old%20self,%20who%20marched%20on%20parliament%20in%20protest%20of%20the%20fee%20increase%20in%202010%20–%20and%20then%20went%20on%20a%20shopping%20spree%20in%20Topshop%20–%20would%20be%20all%20the%20more%20spurred%20on%20enter%20into%20a%20life%20of%20political%20activism%20and%20anarchy.%20%20%20%20In%20a%20letter%20to%20the%20government,%20Martin%20Lewis%20has%20also%20given%20his%20thoughts%20on%20the%20governments%20rejection%20of%20the%20petition:%20%20%20“The%20retrospective%20change%20to%20the%20student%20loan%20repayment%20threshold%20is%20a%20national%20disgrace.%20No%20commercial%20company%20would%20be%20allowed%20to%20change%20a%20loan%20contract%20in%20this%20way%20after%20people%20had%20signed%20it%20–%20and%20the%20Government%20shouldn’t%20be%20allowed%20to%20either. %20 %20“Yet%20don’t%20be%20surprised%20that%20in%20response%20to%20over%20120,000%20concerned%20students,%20parents%20and%20other%20members%20of%20the%20public%20signing%20a%20petition,%20the%20Government%20has%20just%20trotted%20out%20the%20same%20old%20trite%20excuses.%20After%20all,%20it%20consulted%20on%20this%20and%2084%%20of%20responses%20told%20them%20not%20to%20do%20it,%20but%20they%20ignored%20that%20and%20went%20ahead%20anyway. %20 %20“However,%20thankfully%20it’s%20not%20the%20Government%20who%20decides%20whether%20this%20will%20get%20a%20debate,%20that’s%20Parliament,%20and%20I’m%20hopeful%20on%2028%20June%20[when%20committees%20will%20discuss%20the%20petition]%20that%20there%20will%20be%20enough%20support%20from%20MPs%20for%20that%20to%20happen.%20The%20Government%20needs%20to%20know%20there%20are%20many%20of%20us%20who%20will%20ensure%20this%20campaign%20keeps%20going,%20until%20it’s%20embarrassed%20into%20changing%20its%20mind.”%20%20Unfortunately,%20the%20Student%20Loans%20Company,%20the%20ones%20who%20process%20our%20loan%20payments%20and%20oversee%20repayment,%20have%20not%20been%20able%20to%20shed%20light%20on%20the%20issue,%20claiming%20they%20cannot%20comment%20on%20government%20policy.%20Meanwhile,%20the%20Department%20for%20Business,%20Innovation%20and%20Skills%20–%20the%20ones%20responsible%20for%20further%20education%20policy,%20student%20finance%20and%20who%20own%20the%20SLC%20–%20posted%20the%20following%20statement%20on%20the%20petition%20site:%20%20“Freezing%20the%20repayment%20threshold%20ensures%20that%20the%20student%20support%20system%20remains%20affordable%20to%20the%20taxpayer%20and%20all%20students%20can%20access%20a%20university%20education,%20irrespective%20of%20their%20ability%20to%20pay.%20“This%20government%20is%20ensuring%20higher%20education%20is%20open%20to%20more%20people%20than%20ever%20before,%20and%20application%20rates%20from%20disadvantaged%20young%20people%20seeking%20to%20go%20to%20university%20are%20currently%20at%20record%20levels.%20But%20higher%20education%20and%20further%20education%20must%20remain%20affordable%20to%20the%20taxpayer.”%20They%20did%20not%20address%20the%20issue%20of%20backtracking%20on%20promises,%20or%20changing%20the%20terms%20of%20an%20agreement%20without%20the%20consent%20of%20both%20parties.%20The%20BIS%20have%20not%20commented%20since%20the%20petition%20was%20dismissed.%20%20So%20where%20does%20that%20leave%20us?%20As%20Martin%20Lewis%20mentioned,%20there%20is%20still%20a%20chance%20that%20Alex%20True’s%20petition%20can%20gain%20some%20ground.%20The%20final%20decision%20on%20whether%20or%20not the%20petition%20is%20debated%20in%20the%20House%20of%20Commons%20lies%20with%20the%20Petitions%20Committee,%20which%20will%20discuss%20this%20petition%20on%2028th%20June.%20%20%20In%20the%20meantime,%20I%20guess%20we’re%20supposed%20to%20seek%20comfort%20in%20the%20knowledge%20that%20are%20debts%20are%20cancelled%20after%2030%20years%20and%20full-time%20students%20only%20need%20to%20start%20repaying%20their%20loan%20in%20the%20April%20after%20they%20graduate,%20at%20the%20earliest,%20providing%20they%20have%20a%20job%20earning%20over%20£21,000.%20%20%20But%20the%20daunting%20prospect%20of%20having%20to%20pay%20back%20higher%20sums%20of%20money%20earlier%20than%20expected%20is%20quite%20rightly%20leaving%20a%20bitter%20taste%20in%20the%20mouths%20of%20students,%20past%20and%20present,%20across%20the%20country.%20) because of fluctuating interest rates (currently at 3.9%) – which we had understood would stay at around 0.5%.

All this talk of broken promises and confusion over loan repayments, changing thresholds and fluctuating interest rates highlights the lack of clear information students actually receive about their loans and confirms that many of us had very little knowledge of what we were singing up to. For many of us, a student loan was the only way university would have been possible and the potential for this contract we unwittingly entered into as a teenager to change is unnerving. But what does this all mean in money terms?

Martin Lewis of Money Saving Expert and head of the Independent Taskforce on Student Finance has written a mythbusting guide to student loans, outlining what this U-turn in government policy actually means. According to Lewis, it is not the total cost of university students should be worrying about, but how much students will be repaying as a result of these retrospective changes.

'Once you leave university, you only repay when you're earning above £1,750 a month (equivalent to £21,000 a year) and then it's fixed at 9% of everything you earn above that.'

'As a simple explanation, if you earn £22,000 with the threshold at £21,000 you pay £90 a year – if the threshold had gone up as expected, to £22,000 for example, you'd repay nothing.'

Essentially, those of us paying higher fees who were duped into thinking that we wouldn’t notice the increase in fees, due to promised raised thresholds and low interest rates, have effectively been kicked in the teeth. My seventeen-year-old self, who innocently marched on parliament in protest of the fee increase in 2010 – and then went on a shopping spree in Topshop – would be all the more spurred on to enter into a life of political activism and anarchy. Maybe.

In a letter to the government, Martin Lewis has also given his thoughts on the governments rejection of the petition:

'The retrospective change to the student loan repayment threshold is a national disgrace. No commercial company would be allowed to change a loan contract in this way after people had signed it – and the Government shouldn’t be allowed to either.'

'Yet don’t be surprised that in response to over 120,000 concerned students, parents and other members of the public signing a petition, the Government has just trotted out the same old trite excuses. After all, it consulted on this and 84% of responses told them not to do it, but they ignored that and went ahead anyway.'

'However, thankfully it’s not the Government who decides whether this will get a debate, that’s Parliament, and I’m hopeful on 28 June [when committees will discuss the petition] that there will be enough support from MPs for that to happen. The Government needs to know there are many of us who will ensure this campaign keeps going, until it’s embarrassed into changing its mind.'

Unfortunately, the Student Loans Company, the ones who process our loan payments and oversee repayment, have not been able to shed light on the issue, claiming they cannot comment on government policy. Meanwhile, the Department for Business, Innovation and Skills – the ones responsible for further education policy, student finance and who own the SLC – posted the following statement on the petition site:

'Freezing the repayment threshold ensures that the student support system remains affordable to the taxpayer and all students can access a university education, irrespective of their ability to pay.

This government is ensuring higher education is open to more people than ever before, and application rates from disadvantaged young people seeking to go to university are currently at record levels. But higher education and further education must remain affordable to the taxpayer.'

They did not address the issue of backtracking on promises, or changing the terms of an agreement without the consent of both parties. The BIS have not commented since the petition was dismissed.

So where does that leave us? As Martin Lewis mentioned, there is still a chance that Alex True’s petition can gain some ground. The final decision on whether or not the petition is debated in the House of Commons lies with the Petitions Committee, which will discuss this on 28th June.

In the meantime, I guess we’re supposed to seek comfort in the knowledge that our debts are cancelled after 30 years and full-time students only need to start repaying their loan in the April after they graduate, at the earliest, providing they have a job earning over £21,000. But the daunting prospect of having to pay back higher sums of money earlier than expected is quite rightly leaving a bitter taste in the mouths of students, past and present, across the country.

**Like this? Then you might also be interested in: **

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Follow Ruby on Twitter @Roobzie

This article originally appeared on The Debrief.