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[slapntickle]

This is a very apposite and interesting thread. The loans issue is indeed a crisis waiting to happen. I just received this in my mailbox this morning:

Higher loan repayments to hit English graduates and students

Students who have already graduated from English universities face higher loan repayments after Chancellor of the Exchequer George Osborne announced that the earnings threshold is to be frozen at £21,000 (US$31,700) a year until 2021.

The change also affects all current and future students. It will be applied retrospectively to students who began their studies since 2012, the first year that tuition fees at English universities were increased to £9,000.

The government estimates that an additional 9% of students will start to repay their loans as a result of the move, compared with the impact of the former coalition government’s policy, announced in 2012, that the repayment rate would rise in line with average earnings.

Ministers also intend to press ahead with the sale of the Student Loans Company, which manages repayments, to the private sector, with completion due in 2016-17.

The National Union of Students, or NUS, has claimed that the freezing of the threshold was a breach of an undertaking given by ministers in the last government that the repayment terms of existing borrowers would not be affected.

NUS President Megan Dunn wrote for the Huffington Post: “The generation of students that I represent now find themselves facing a crisis in the cost of studying and living. A crisis which means learners in colleges and undergraduates at university are having to choose between putting food on the table and paying the electricity bill.

“The 'choices' the government are so proud of creating for students have become about heating or eating. This is a crisis that we have to tackle.”

The Department for Business, Innovation and Skills, or BIS, estimates that by 2020 there will be around 2.1 million students with loans. Of these, an extra 190,000 are expected to move above the threshold and be liable to begin repayments a year after graduation.

It hopes the freeze will increase repayments by £3.2 billion over the lifetime of the loans of existing borrowers.

By definition, the move will affect graduates at the lower end of the earnings scale, who will now be drawn into repayment earlier, while better paid graduates will be less directly affected. This change will see lower to middle graduate earners repaying an additional £6,000 in net present value terms over the lifetime of their loan, BIS says.

Ministers claim that the freeze restores the threshold to the level relative to average earnings equivalent to its 2012 figure, while graduate earnings have not increased as steeply as anticipated.

But Andrew McGettigan wrote on the WonkHE blog site that the English higher education sector was probably sighing with relief that their incomes would not be too badly affected by the Chancellor’s autumn statement.

“But it has a more fundamental issue to deal with – its sustainability depends on goodwill and a well-functioning student support system. That system needs to be fair, progressive, affordable for graduates and adequate to costs of student life. It is not clear now that our current system will still meet any of those requirements by 2020.”

Other key announcements include:

Postgraduate loans to be introduced with new loans available to all under 60 from 2016-17. Repayment is 6% of income over £21,000 (compared with the standard 9%). No repayments will be due before April 2019 and loans will be written off after 30 years.

Part-time maintenance loans to be introduced from 2018-19 to support the cost of living while studying.

The £1.4 billion teaching grant distributed by the Higher Education Funding Council for England, or HEFCE, will be cut by £120 million in cash terms by 2019-20, but high cost subjects to be protected in real terms.

The Student Opportunity Fund – HEFCE’s main tool in widening participation could be halved and will be re-targeted in line with effectiveness.

Grants for student nurses replaced with loans with an estimated 10,000 additional places in prospect.

A new university to be created in Hereford, focusing on engineering.

Government to review the Research Excellence Framework “in order to examine how to simplify and strengthen funding on the basis of excellence”.

http://www.universityworldnews.com/article.php?story=20151126174943650

There are two things to worry about here: First, the government is quite willing to shift the goalposts at anytime to get their money back which means that contracts are not written in stone. Second, handing over the SLC to the private sector can only mean that the terms and conditions of loan repayments are going to be driven by the market and that students will be squeezed harder in the future. All I can say is that I'm glad I'm not a student today. The game just isn't worth the candle.