Currently, English and Welsh students who started their studies in or after 2012 and are receiving so-called ‘Plan 2 loans’ will pay back 9% of their total income over £ 27,295 / year once they leave university. They repay the same 9% until the loan is repaid in full, or up to 30 years after which they stop repaying.
But a report in the Financial Times (FT) The newspaper suggests that ministers consider lowering the graduate loan repayment threshold to £ 23,000. If repayments continued to stay at 9% of income, it would mean students would have to pay around £ 400 / year more; This means that the graduates with the lowest incomes would end up paying more and longer.
Martin said, “My concern here is that there is no indication of whether or not this change can be retroactive and whether this change would affect those who have already signed contracts – and remember, Student Loan is a contract that is to be repaid.
“From my point of view, it would be an absolute violation of natural justice to subsequently change the terms of the contract that have been signed by people, and I would certainly raise my voice very loudly again. We cannot allow a retroactive treaty change.”
In 2015, Martin hired lawyers to investigate a judicial review aimed at preventing the government from freezing the student loan repayment threshold. Augar’s 2019 Student Loans Report also agreed with Martin’s view not to make any retrospective changes to the system.
MoneySavingExpert.com submitted the FT’s report to the Department of Education and we will update this story when we receive a response.