From the Guardian · · 1m 30s
Students were sold a loan that could change
MPs called it mis-selling. The government's answer is clearer wording, not a reversal.
In brief
MPs called it mis-selling. The government's answer is clearer wording, not a reversal. The repayment threshold freeze stands. All new students get is a warning that the terms can be rewritten later. Originally reported by the Guardian.
A warning, finally
New university students will be told upfront that student loan terms and conditions can change after they sign. The government announced the rewrite on Sunday.
“clear and unambiguous”
Phone contracts and YouTube
A July report by MPs found government slideshows comparing loan repayments to a mobile phone contract, and videos that never mentioned terms could shift. They called it mis-selling.
The freeze that started it
Last November, then chancellor Rachel Reeves froze the plan 2 repayment threshold at £29,385 for three years from April 2027. Students had expected it to track inflation.
No contract, no promise
MPs asked for loans issued on a contractual basis so terms could not be altered later. The government refused, saying it needs room to adapt as the economy shifts.
“moral obligation”
Half of every pay rise
In August, 121 MPs and peers wrote to chancellor John Healey. Frozen thresholds plus inflation-linked interest leave many middle-income graduates keeping less than half of a raise.
“they see less than half of any hard-earned pay rise”
Too late for graduates
Treasury committee chair Meg Hillier welcomed the new guidance but said it does nothing for people already repaying. She wants the freeze revisited in the coming budget.
“it doesn't help graduates who are angry that they didn't receive the same service”
At a glance
The repayment threshold freeze stands. All new students get is a warning that the terms can be rewritten later.
