The Government has rejected a petition about the retrospective hike in the cost of loans for more than two million students, despite it receiving more than 128,000 signatures – but it may still end up being debated in Parliament.  

The petition quotes MoneySavingExpert.com and was started by Alex True, a 22-year-old engineering student at Durham University. It relates to a Government U-turn on a promise to increase the threshold at which first-time undergraduates in England who started university in September 2012 and beyond repay student loans.

Rather than honouring its pledge, the Government now says it's freezing the threshold, meaning many students will pay back more. For example, if you earn £23,000 and the threshold had increased to £23,000, you'd have repaid nothing, but as it's stuck at £21,000, you repay £180 a year.

Martin Lewis, founder of MoneySavingExpert and former head of the Independent Taskforce on Student Finance Information, has been fiercely campaigning on this issue since a consultation on freezing the threshold first opened in July 2015 – meeting ministers, organising letter-writing and even hiring lawyers to investigate a legal challenge.

So what's the latest?

The Government's now issued a response to the petition (see below), reiterating its original stance on the situation.

But the final decision on whether or not the petition is debated in the House of Commons rests with the Petitions Committee (which presides over petitions that reach 100,000 signatures, which are considered for debate in Parliament). We understand the committee will decide whether to hold a debate at its next meeting on Tuesday 28 June, and announce its decision soon after.

What the petition says

"In 2010, the Government promised that from April 2017 the student loans repayment threshold of £21,000 would be upped each year with average earnings. The Government has now backtracked on this promise, freezing the threshold at £21,000. Graduates will now pay more on their student loans.

"According to MoneySavingExpert two million graduates will end up paying £306 more each year by 2020-21 if they earn over £21,000.

"By introducing retrospective changes it threatens any trust... in the student finance system. A commercial company would not be permitted to alter the terms of a loan agreement, so why should our Government? The Chancellor did not even mention these changes in his Autumn Statement, underlining the underhand nature of these changes."

You can sign the petition here.

How has the Government responded?

"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.

"Our approach is based on the fundamental principle that a borrower's contribution to the cost of their education should be linked to their ability to pay. Graduates generally benefit from higher earnings than those who do not go to university, and we must maintain a fair balance between taxpayers and graduates in the costs of higher education.

"Graduates don't have to repay their loans until they are earning above the annual threshold of £21,000. This threshold remains higher in real terms than that applicable to student loans taken out before 2012. Repayments are then made at a rate of 9% above this threshold. If a borrower earns less than the threshold then no repayments need to be made. Outstanding loans are written off 30 years after graduation."

Martin Lewis
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'The same old trite excuses'

Martin says: "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 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."

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