MSE News

Student Loans Company's new 'quick repayment' tool is dangerous and irresponsible, says Martin Lewis

Student Loans Company's new 'quick repayment' tool is dangerous and irresponsible, says Martin Lewis

MoneySavingExpert.com is today slamming "irresponsible and dangerous" changes made by the Student Loans Company to its website, which fly in the face of evidence and recommendations presented to both it and the Government.

Update 10 August 2020: The Student Loans Company (SLC) has now responded to our criticism. We accept the SLC may not have the authority to do what’s needed, but this does still need to be done, which is why we also wrote to the minister on this issue.

The Student Loans Company (SLC) has moved its site from SLC.co.uk to Gov.uk. Far from taking on board widespread concerns that student loans information is misleading and promotes financially poor decisions by graduates, the SLC has in some places "doubled down on the opposite", according to MSE founder Martin Lewis.

Last year Martin, MSE and the Russell Group of universities proposed a radical redesign of the student loan statement, backed up by a 91% success rate when tested for understanding. The proposed redesigned statement aimed to reflect the true cost of education, painting a more accurate picture of a graduate's lifetime repayments based on earnings, rather than a nominal 'debt' figure which bears only a loose resemblance to the real cost for most.

Along with the Russell Group, we called on the Government and SLC to use the new statement as the basis for redesigning the official version, and to rename the statement – and further, the system – as being about a "graduate contribution" instead.

However, the SLC has now launched its redesigned student loan repayment system, apparently disregarding these key proposals for the new statement and system, even though they were included in the recommendations of the independent, Government-commissioned Augar Review of Post-18 Education and Funding.

For more on how student loans work, and why they're different from other debts, see our Student Loan Repayment guide.

What's wrong with the new Student Loans Company website?

Most concerning and irresponsible is the ability to make 'quick repayments' – in part or in full – without logging in. For many graduates, making extra payments doesn't make any difference to what they have to repay in future and is therefore just flushing money away unnecessarily. Worse still, once voluntary overpayments are made, they cannot be undone.

This quick repayment system had been live for a week with no warnings for graduates of this danger, until MSE notified the SLC. On the back of this notification, the SLC thankfully did add some warning text, but it's still far from ideal.

Even when logged in, the new Gov.uk site still has the large overall 'debt' figure front and centre – continuing to focus on the damaging 'your balance' figure against expert recommendations, which could scare graduates into making repayments that aren't in their best interests.

While the logged-in site has, to a certain extent, added a few more explanations about how the system works, and has welcome information about how student loans differ from other forms of borrowing, the overall experience seems to be about promoting extra repayments. Yet whether the explainers will be seen and understood against the noise of the 'numbers' provided seems unlikely.

Martin: 'Young people are professionals at learning. If you want to break the cycle of debt, they’re the best place to start'

Marin Lewis said: "The pandemic has shown the lack of personal financial resilience and preparedness of the UK as a whole. Not all of that can be fixed by improving financial education, but a chunk of it can. Of course, we need to educate people of all ages, yet young people are professionals at learning, so if you want to break the cycle of debt and bad decisions, they’re the best place to start.

"I was one of those at the forefront of the campaign to get financial education on the national curriculum in 2014, and we celebrated then thinking the job was done. We were wrong. Schools have struggled with resources and there’s been little teacher training.

"Something else was needed to make it easy for schools and teachers. So even though I questioned whether it’s right that a private individual should fund a textbook, no one else would do it, so I put pragmatics over politics and did it in 2018. 

"I’m delighted that now we’ve proved the success of that book in England. The Money and Pensions Service has agreed to team up to provide this much-needed resource for the rest of the UK’s nations – adding a rightful sense of officialdom to the whole project.”

What does Young Money say?

Sharon Davies, CEO at Young Money and Young Enterprise said: “We are thrilled that Young Money is able to develop the Your Money Matters textbook for every UK nation. Financial education is critically important for all young people, and it is fantastic that the difference this has already made within England can now be extended to Northern Ireland, Scotland and Wales. We look forward to working with our partners in each of these nations over the next year.”

Sarah Porretta, Strategy and Insights Director at the Money and Pensions Service said:“We know that learning about money when we’re young can have a direct impact on the ability to manage money later in life. However, too many young people are entering adulthood without being prepared for the money-related challenges that lie ahead.

The launch of the Your Money Matters textbook in Northern Ireland, Wales and Scotland is a vital step towards more teachers having the confidence, skills and knowledge to teach financial education. As part of our UK Strategy for Financial Wellbeing, we want to see a further 2 million children and young people getting a meaningful financial education so that they become adults able to make the most of their money and pensions.”