Kate Hollern MP

Working Hard for Blackburn

Changes to student loan repayment threshold

Recently I have been contacted by many constituents, regarding the Government’s decision to freeze the student loan repayment threshold, the threshold is the amount of money someone has to earn before paying their loan back. Existing students signed up in good faith to the loan repayment threshold rising with average earnings every year, but now the Government is going back on its word. I know that many students and parents in Blackburn are understandably worried by this.

I firmly believe the changes are unacceptable and unfair and I oppose them completely.

The student loan repayment threshold was set at £21,000 for post-2012 borrowers. In November 2015 the Government announced, following a consultation, that it would be freezing the loan repayment threshold for five years effective from April 2016. This is despite the Government acknowledging that the majority – 84% - of those who responded to the consultation objected to the freeze, showing the government only wanted to give an impression of listening, but had already made up its mind.

The change will, according to the Government’s own impact assessment, hit middle earners hardest and have the greatest impact on women, ethnic minorities, people with disabilities and mature students. A “median borrower”, who earns between £21, 000 and £35, 000 will repay around £300 more per year and could pay an astonishing £6, 000 more over the lifetime of their loan repayment.

Earlier this month, MPs debated the changes to the student loans agreement after a Parliamentary petition calling for the Government to stop its retrospective changes had been signed by more than 132,000 people – a very large public outcry. I noted there was considerable opposition to the Government’s retrospective freeze on payment thresholds during the debate. I fear that this retrospective change will undermine the faith of students in the political system and I believe the Government must now think carefully about its decision.

I think it is a dangerous precedent for a government to start changing the terms of a loan contact after an agreement has been made.

In addition to this, the Government also plans to scrap maintenance grants replacing them with additional loans. This will mean that the poorest 40 per cent of students going to university in England will graduate with debts of up to £53,000 from a three-year course. In addition, the Government also plans to increase tuition fees, meaning that by 2020 they are likely to have risen to £10,000 a year.

The impact of the scrapping of maintenance grants, increasing tuition fees and freezing the repayment threshold all point towards a very much more difficult environment for those thinking about going into higher education.

The Government should be doing all it can to ensure that those from places like Blackburn reach their full potential. I am concerned that these changes would do the opposite, and could make potential students think twice about going into higher education – which would be a great tragedy. If you have concerns that you or a member of your family will be affected by these policies I’d be interested to hear your story. 

You can contact me here.

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