Freeze on Income Threshold Puts More Financial Pressure on Students

Posted by Richard Ward in , ,

Image courtesy of Flickr, Creative Commons

MoneySavingExpert's Martin Lewis has called upon the government to reverse controversial plans to freeze the income threshold at which university loans must be paid back.

Despite a pledge to increase the income threshold each year in line with average earnings, changes made in 2015 will see the level of income which students must earn before paying back their loans being frozen at £21,000.

Martin Lewis suggested it represented the mis-selling of loans to thousands of young people, which will result in the average student paying an additional £306 a year more in 2020-21 compared with 2016-17.

It's hoped the Labour party frontbench will more vocally oppose the freeze, with MP Wes Streeting saying: "If any commercial bank or pay day lender behaved like this there would be outrage and the FCA would be stepping in."

Streeting had tabled two amendments to the higher education and research bill in an attempt to bar the government from making retrospective changes to student finance without it being looked at by an independent panel, however Tory MPs defeated the amendments in the Commons last week.

Mr Streeting said: "There's a serious issue about trust here: if students are being promised the threshold will go up, and it doesn't, what's to stop current or future students finding suddenly the interest rates goes up, or debts aren't written off after 30 years like they were promised?"