You are here
Home > Economics > Student loans: fight over ‘disgraceful’ freeze on income threshold

Student loans: fight over ‘disgraceful’ freeze on income threshold

Plea for action after government stopped repayment cut-off rising in line with average income – ‘no commercial lender would get away with this’. Calls have been made for the Treasury to unpick a controversial change to student loans from George Osborne’s final autumn statement, which critics including MoneySavingExpert’s Martin Lewis have called a mis-selling of loans to thousands of young people.

Lewis has led the charge to oppose the changes made in 2015: a five-year freeze on the £21,000 income threshold at which borrowings must be paid back, despite a pledge when the scheme was launched that the £21,000 figure would be raised each year in line with average earnings.

The consumer expert said he hoped the Labour frontbench would take up the fight if the autumn statement did not reverse the freeze.

“It is absolutely disgraceful, because change going forward is a change of policy but change going backwards is about honesty,” he said. “This is about honesty.”

The change, vociferously opposed by Lewis and the Labour MP Wes Streeting, a former NUS president, will mean that on average a former student will pay £306 a year more in 2020-21 compared with 2016-17.

Lewis told the Guardian he had lobbied both the Treasury and the universities minister Jo Johnson to reverse the freeze in this week’s autumn statement.

“I have tried everything – hiring lawyers, speaking to senior people in No 10, putting in submissions to the autumn statement, debates in parliament, but this is totemic to me,” he said.

“This is about how young people can trust politics, when people can retroactively change a contract, if they are lied to in contract? It is an absolute disgrace.”

Lewis said he had hoped to see more vocal opposition to the freeze from the Labour party frontbench.

“I feel slightly disappointed that I’ve been the official opposition on this,” he said. “I hope they’ll join the fight, and put aside what I think has been the idea, that the whole system is the problem, and that they can now play the current ball rather than the future game.”

On Monday night Streeting tabled two amendments to the higher education and research bill, firstly to bar the government from making retroactive changes to student finance without it being looked at by an independent panel, and secondly to bring student loans under regulation of the Financial Conduct Authority.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.