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Campaigners for fair student finance have reacted furiously to George Osborne’s Spending Review, saying the freeze on the current loan repayment threshold is a “breach of trust”.
The move, which is tucked away on page 93 of the Chancellor’s Blue Book, amounts to a retrospective hike that will see 2 million graduates paying £306 more a year by 2021.
Mr Osborne had previously pledged to uprate the student loan repayment threshold each year in line with average earnings from 2017.
The u turn, which affects students in England who started university in or after 2012, was strongly criticised by Martin Lewis of Moneysavingexpert.com.
He said: “It has chosen to freeze the repayment threshold even though 95% 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?”
The Money Charity, which specialised in highlighting student debt issues, said a combination of rent rises and a move from grants to loans will see lower and middle income students paying more in the long-term.
Michelle Highman, chief executive officer of The Money Charity, said: “We object to freezing the student loan repayment threshold because it is a breach of trust that will affect low and middle-income graduates the most. Together with scrapping grants, this policy means graduates will have to pay more for longer. This would be one thing if it meant that loans covered the full cost of university up-front, but if rent rises are allowed to continue, they will get less to live on as students too.
“Ultimately, whether it is by controlled costs or increasing support, students and families must have enough support and guidance to make the financial challenge of university a game that can be won. Without this we will undermine studies and damage the long-term financial capability of students and graduates” In its 36 page response to consultation published this week, the Department for Business Innovation and Skills said that maintaining the previous system would “not contribute to debt reduction and will not help meet the current fiscal pressures”.
More to follow…
