PhilTheForce Posted May 22, 2009 Share Posted May 22, 2009 Basically student loans have for years been guaranteed by the government to match only inflation and incur no interest. But wait! Inflation is now negative meaning student loans should be REDUCING. What do the Government do? Change their own rules after years, sneak a legislation through and screw the public once more. If any former students want to join me on the petition sign here: http://petitions.number10.gov.uk/Loansofstudents/ (I really thought I couldn't be anymore annoyed with this gov) Heres a summary: ------------- Govt fails to honour 2.5m student loan promises Interest rate drops but won’t follow deflation Last week, an announcement was snuck out meaning millions of graduates with outstanding student loans will soon pay no interest, though the change should've been bigger! * '98-onward loans dropped to 0%. The 2.5m with loans who started uni later will see their interest drop from 1.5% to 0% from Sept. * It's all about deflation. The student loan rate changes each year in Sept based on the RPI inflation rate in the prior March. This March's inflation was -0.4% (deflation) so the interest rate should drop to that for ALL loans, yet the government has used a technicality to prevent 98-onward loans matching deflation. * This breaks a binding principle. Student loans have always been set using inflation, so there's no "real cost" to them. While 0% loans sound cheap, it means former students' purchasing power is being eroded, as with deflation (prices dropping) loans costs should be shrinking too. This is the one thing that wasn't supposed to happen, while currently students with loans of £10,000 will only be £40 a year out of pocket, the worry is once any principle is broken it's very difficult to fix, and deflation's now -1.2%. There's been a petition at No. 10 started to ask the Prime Minister to rethink while there's still time. ---------- Quote Link to comment Share on other sites More sharing options...
Chesterfield Posted May 22, 2009 Share Posted May 22, 2009 So what you are saying is that because inflation has gone negative, you should be paying back less than you originally borrowed? Im sorry, but an interest free loan sounds good to me, and to expecting to pay back less than you originally borrowed is ludicrous. lets say there are 2.5M students with 10,000 loans, and you expect this to be reduced by 1.2% per annum in line with inflation. Thats £30 Million just wiped off the debt. Quote Link to comment Share on other sites More sharing options...
PhilTheForce Posted May 22, 2009 Author Share Posted May 22, 2009 Naturally a 0% Interest loan is good but for 2 problems in the current climate; 1. The government have broken their own binding rule on a whim and as such leaves them to do the same again in future on any number of issues. 2. Inflation is negative and as such prices are down but people like myself are forced to pay more back on a loan than reflects this countrywide reduction. I understand what you are saying but it is mostly the principal that annoys me. Quote Link to comment Share on other sites More sharing options...
CaptainSensible Posted May 22, 2009 Share Posted May 22, 2009 I'm afraid to say I agree with Chesterfield on this one. Plus it all depends on what measure of inflation you use. RPI is currently negative (-1.2%), but if you take RPIX (which strips out mortage repayments) inflation is still positive (+1.7%). The reason RPI is negative is because interest rates have fallen meaning that mortgage repayments have fallen, but they won't fall much more with interest rates today at just 0.5%. The price of most other things is rising, especially anything we import with the pound being trashed. In the real world we still have inflation. Quote Link to comment Share on other sites More sharing options...
PhilTheForce Posted May 22, 2009 Author Share Posted May 22, 2009 The problem is Student Loans are supposed to be linked to the Retail Price Index and as such this should not affect the cost of the loan but instead ensure Students pay back (in real terms) exactly what was borrowed. I.e No cost to students. AND this is EXACTLY what we signed a binding contract for. Now the RPI is negative, (albeit in unusual times) the gov refusing to match the RPI breaks a contract and effectively adds cost to the loan. Ok it's only about +0.4 % but it is no longer a no-cost loan in real terms. Again fundamentally changing something thousands had already signed up for. Quote Link to comment Share on other sites More sharing options...
Chesterfield Posted May 22, 2009 Share Posted May 22, 2009 I wonder how many of those same students that are moaning about the loan rates not being linked to inflation now, will still be moaning if they havent cleared their loans if we see a massive upsurge in 2011/12 and inflation were to start growing rapidly year on year. In previous economicaly challenging times, specifically looking at the 70's to early 80's we had inflation averaging 13% and peaking at over 20%. In the early 90's we saw it at over 10%. Given the rapid rate of decline, it is not unimaginable to see a massive bounce once things do start picking up we may see consumer spending jump out of the starting blocks rather than a slow and steady return. If every creditor were to follow this hairbrained stance that the students are petitioning for we would see massive wage cuts across the land (1.2% for every worker in the country), benefits reduced across the board by 1.2%, taxes reduced by 1.2% (because of course all public spending is reduced by 1.2%, including the wages of doctors, nurses, police and fire crews). Public spending would ground to a halt, consumer spending would grind to a halt as everyone decides whether they can afford that holiday/tv/loaf of bread, which means businesses would be making redundancies at an even greater rate, closing down overnight, and the country would simply start to shut down. If any of the students voting for this petition are studying economics, I suggest they drop out and go tree planting instead as they have failed. Miserably. Quote Link to comment Share on other sites More sharing options...
sl114 Posted May 22, 2009 Share Posted May 22, 2009 To be honest, i am more than happy to pay back my student loan as it currently stands, at the end of the day i borrowed the money so should expect to pay it all back. Quote Link to comment Share on other sites More sharing options...
PhilTheForce Posted May 22, 2009 Author Share Posted May 22, 2009 If you could find any other creditors offering rates matching RPI then I'd suggest you sign up immediately! However this isn't any other creditors. It's a state operated system ONLY available to students for the very reason there is no extra to pay on top of the original amount. This is purposely in place to encourage higher education and as such produce a more learned society. Anyway anyway... I'm not going to go-on anymore about it because it seems like a very divided subject. If people don't wish to sign up they don't have to but some might like to be aware of what's happening to their original loans. Thanks guys Quote Link to comment Share on other sites More sharing options...
rtbiscuit Posted May 22, 2009 Share Posted May 22, 2009 chesterfield i think you hit the nail on the head. students shouldn't have to pay the extra 0.4% as it changes the value of the loan. as you say what we could be able to save now we may end up paying extra in later years. and its not every loan just the government issued ones for students. last year i was clocking up more in interest charges than i was paying off, so its nice to see that i might be able to start reducing it a bit after september. Quote Link to comment Share on other sites More sharing options...
manc350z Posted May 22, 2009 Share Posted May 22, 2009 Sorry mate.. I think if you borrow xxk gbp you should repay at least xxk gbp, not less.. i am pretty sure the govt. aren't borrowing from the money markets at - 0.4%.. (especially now that our countries credit rating will potentially drop from AAA to AA) Also by reducing the 2+ million student loans below 0% would have a detrimental effect on our already fecked economy.... I agree with the "it should not fall below 0%" line which is, to me and probably every person without a student loan, perfectly sensible and acceptable. Not sure how my tax paying part of your student loan would be a valid use of my hard earned... i repaid my loan, all of it + correct interest rate at the time and am happy it was appropriate and necessary. Your "issue" would only lead to either - Increased govt. borrowing to make up the negative payment for 2.some million student loans = bad which in turn leads to more chance our UK credit rating will drop to AA.. so the countries cost to borrow money increases on the money markets.. which means we will ultimately have to pay higher tax and Ni to cover this.. The change to AA from AAA puts our whole debt burden up and increases UK PLC's yearly interest burden.. I think the above is not beyond the understanding of most students.... i would rather see the money used to pay for something useful.. like MP's expenses I agree.. the govt. bend us over quite regularly as did the previous flavour.. but.. sorry .. i don't think this is a bending over at all.. just sensible legislation. (for a change) Quote Link to comment Share on other sites More sharing options...
PhilTheForce Posted May 22, 2009 Author Share Posted May 22, 2009 chesterfield i think you hit the nail on the head. students shouldn't have to pay the extra 0.4% as it changes the value of the loan. as you say what we could be able to save now we may end up paying extra in later years. and its not every loan just the government issued ones for students. last year i was clocking up more in interest charges than i was paying off, so its nice to see that i might be able to start reducing it a bit after september. Eh? So you agree with me then not Chesterfield? Politics man, its an confusing game! Quote Link to comment Share on other sites More sharing options...
rtbiscuit Posted May 22, 2009 Share Posted May 22, 2009 chesterfield i think you hit the nail on the head. students shouldn't have to pay the extra 0.4% as it changes the value of the loan. as you say what we could be able to save now we may end up paying extra in later years. and its not every loan just the government issued ones for students. last year i was clocking up more in interest charges than i was paying off, so its nice to see that i might be able to start reducing it a bit after september. Eh? So you agree with me then not Chesterfield? Politics man, its an confusing game! not a great politics man i just don't like signing up for one thing and then having it changed without my permission. i saw it done with my dads pension, it was originally index linked with a lump sum pay out, then it was closed to new members, and then the index link and lump sum was removed. whats the point of agreeing to sign up to something that you've been promised and then paying into if people don't have to honour it. does that mean i can go to my bank and tell them that although i owe them a certain amount i'm not actually going to pay it back. or honour the agreement i signed. if i did they'd have me up in court and on fraud charges very quickly. what annoys me is that is only illegal if i do it. but if mp's or banks do it, then its perfectly fine and part of their remit. i can't trust politians as far a si can throw them, they are a bunch of criminals. i know there are good MP's out there, but the good that they do does not out way the damamge that the rest of them do. Quote Link to comment Share on other sites More sharing options...
Chesterfield Posted May 22, 2009 Share Posted May 22, 2009 If you could find any other creditors offering rates matching RPI then I'd suggest you sign up immediately! However this isn't any other creditors. It's a state operated system ONLY available to students for the very reason there is no extra to pay on top of the original amount. This is purposely in place to encourage higher education and as such produce a more learned society. It is in place to make higher education affordable and easier to access. It is not in place to give students a free lunch. If paying zero interest isnt good enough, perhaps the students should take that £10,000 - put it in an instant access account at 1.5% or a 50 day account at 2% and just pocket the difference that way? The answer is because that £10,000 has most probably already been spent on various items if not pi**ed up the wall, which means the £10,000 was spent before the economy deflated, so students are actually now asking for a reduction in their loan ammounts, or a retrospective devaluing of the goods they bought with the money before inflation went negative Thats some serious brass neck if you ask me. Quote Link to comment Share on other sites More sharing options...
Tim S Posted May 22, 2009 Share Posted May 22, 2009 1. The government have broken their own binding rule on a whim and as such leaves them to do the same again in future on any number of issues. Politicians lied and broke promises! Hold the front page! If you cast your mind back they took us to war in Iraq on the basis of a lie too, and servicemen died as a result which I feel is a bit more grave. Not that I want to take the discussion in that direction, just to put things in perspective. At the end of the day, as others have said if the loans are reduced ultimately I as a taxpayer will end up paying for the student loans of others which is a bit unfair as that's not what I agreed to. I do however disagree with making students take loans out for higher education in the first place. I was lucky, I did it on a grant in the days when there were still grants - I think today's students should have the same opportunity. It would also put a brake on universities trying to run themselves as businesses foremost with education far down the list of priorities. Quote Link to comment Share on other sites More sharing options...
Chesterfield Posted May 22, 2009 Share Posted May 22, 2009 The one positive out of this whole thing is that there are now at least 8000 plus angy students who will assist in voting out this shower of Sh*t. The problem being they will only be replaced with some other shower of sh*t of a differing shade. Quote Link to comment Share on other sites More sharing options...
Sarnie Posted May 22, 2009 Share Posted May 22, 2009 This is such a happy thread Quote Link to comment Share on other sites More sharing options...
rtbiscuit Posted May 22, 2009 Share Posted May 22, 2009 The one positive out of this whole thing is that there are now at least 8000 plus angy students who will assist in voting out this shower of Sh*t. The problem being they will only be replaced with some other shower of sh*t of a differing shade. oh how true you still get shafted, just the face of the person doing it changes, lets just hope the next person uses a smaller shafting stick, cos this ones really hurting now. Quote Link to comment Share on other sites More sharing options...
rich5259 Posted May 22, 2009 Share Posted May 22, 2009 I'm too old , they didn't have Student Loans when I went to Uni Quote Link to comment Share on other sites More sharing options...
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