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Petition to call on Govt to set fixed repayment terms on student loans

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Petition to call on Govt to set fixed repayment terms on student loans

Clauses currently written into Student Loan Agreements allow future governments to vary repayment terms over the thirty-year lifetime of the loans. Borrowers should not face such a potential liability. Such clauses should be removed and replaced with terms fixing repayment conditions at the time the agreements are made.

A threshold of repayments of £21,000, was argued for by Liberal Democrats as a condition of their support for the raising of tuition fees. However, this threshold can be lowered by any government and applied to existing loan agreements. Indeed, a leading think-tank, Demos, has already recommended lowering the threshold to enable increasing the number of student places without ‘burdening’ the loan support system. The Coalition government has sought to sell the new arrangements as fair because students will only pay if they earn a significant return on their education. However, the loans are, in truth, government-contingent, not income-contingent.

The petition calls on the government to provide student loans with the same protection as other loans. The full text of the petition statement is below. We would strongly urge you to sign it and circulate as appropriate.

Petition

Set fixed repayment terms in student loan agreements
Responsible department: Department for Business, Innovation and Skills

Clauses in Student Loan Agreements allow future governments to vary repayment terms over the thirty-year lifetime of the loans. Borrowers should not face such a potential liability. Those who now face much higher fees and much higher debts should get more contractual protection.

Page 8 of the 2012/13 guide to terms and conditions reads: “You must agree to repay your loan in line with the regulations that apply at the time the repayments are due and as they are amended. The regulations may be replaced by later regulations.”

This clause should be removed.

Agreements should fix the repayment terms for the lifetime of the loans using those with which the scheme was presented to Parliament (interest rate taper, annual income repayment threshold and percentage to be repaid over that threshold).

Without such protection, graduates face the risk that a future government may decide to extract higher levels of repayment than those currently intended.

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