Martin: Student loan costs may rise £400/yr
Martin Lewis has AGAIN warned the Government against possible retrospective changes to the terms and conditions of existing student loan contracts. In a new video, the MoneySavingExpert.com founder responds to reports of a possible shake-up to student loans, which could see the earnings threshold you start repaying at cut, costing many £400/yr more.
Currently, English and Welsh undergrads who started uni in or after 2012 and are on what's known as 'plan 2 loans', repay 9% of everything they earn above £27,295/yr once they leave university. They repay this same 9% until they the loan is repaid in full, or until 30 years, after which point they stop repaying.
But a report in the Financial Times (FT) newspaper suggests ministers are considering cutting the threshold at which graduates have to start repaying loans to £23,000. If repayments continue to remain at 9% of earnings, that would mean students having to pay around £400/yr more; meaning the lowest earning graduates would end up paying more, and for longer.
Martin said: "My concern here is there is no note on whether this change may or may not be retrospective and whether this change would hit those who have already signed contracts - and remember, the student loan is a contract, to repay.
"In my view, it would be an absolute breach of natural justice to retrospectively change the terms of a contract that people have signed and I would certainly raise my voice very loudly again. We cannot allow a reverse contractual change."
In 2015, Martin hired lawyers to investigate a judicial review looking at preventing the Government from freezing the student loans repayment threshold. The 2019 Augar report into student loans also agreed with Martin's view not to make retrospective changes to the system.
When we put the FT's report to the Government a spokesperson told us: “We do not comment on speculation in the run up to fiscal events.” The Treasury's next Budget is due on 27 October.
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