This week the Parliament debated the UK government’s decision to retrospectively change the terms of student loan repayments.
Martin Lewis OBE, founder of MoneySavingExpert.com, urged students, graduates and parents to get in touch with their MP to ask them to attend and show their opposition to the retrospective changes. As he and many MPs have pointed out, a commercial firm would not be able make such alterations to a financial product. See a sunny post-debate video from Martin, here.
First time undergraduates in England who started university after September 2012 repay student loans at a rate of 9% of everything earned above £21,000 a year after they leave – and instead of rising with inflation the threshold has been frozen. According to the Government’s own figures this will leave more than two million graduates paying £306 more each year by 2020-21 if they earn over £21,000.
“Our financial education charity believes such a move damages efforts to teach young people how to manage money and make informed decisions.
In Sixth Form classrooms across the UK, we told young people the terms of repayment and this played a role in their eventual choice to take a student loan.
We do not blame or point fingers, we teach young people how to navigate the system and the government has done great work by making money lessons compulsory in the secondary national curriculum. But by changing the terms, it makes our job harder, harms trust and could dissuade many from engaging with products and contracts, i.e. cause financial exclusion.
It is a retrograde step at a time when the financial industry is trying to rebuild trust in products and the state offers welcome new initiatives like auto-enrolment and NISAs. These mixed messages are not what young people need to make informed choices. ”
Guy Rigden, CEO MyBnk.
MyBnk’s specialised financial education programme, Uni Dosh, shows Sixth Formers how to afford university life and has armed thousands with money skills to prevent debt, and dropout – covering tuition fees, bursaries, independent living and banking. We also look at why young people want to go, the motivations, pay offs and pitfalls.
Student finance and the like is not compulsory on the National Curriculum and many teachers lack the expertise to teach it. A lot of the young people we meet are even unsure if university is for them and costs and confusion on fees are abound. Through our work, stories and outcomes like this happen.