Consumer rights campaigner and founder of MoneySavingExpert Martin Lewis has hired a team of lawyers to look into the government’s changes to student loan repayments.
The earnings threshold at which all students who pay the current rate of £9,000 a year will start to repay debt has been frozen at £21,000 for the next five years, despite the expectation among many that it would rise along with average graduate earnings after 2017.
Speaking to The Guardian, Lewis (who chaired an independent taskforce on student finance information) said he was ‘spitting teeth’ over the changes, which were overwhelmingly opposed in a recent government consultation on the issue. In a blog post he explained that the changes would have a larger impact on low to middle income earners:
Higher earners lose out in the short term too. But … as they clear the debt quicker, less interest will accrue, so they’ll repay less in total.
Law firm Bindmans will now investigate the possibility of a judicial review of the changes, although Lewis said some students and graduates may have to take their cases against the government to court individually and he would support some of them financially in order to do this.
In terms of financial planning, he added students should ‘hope that we win but plan for us to lose’, explaining:
There are nuances, because in the terms of the contract the government gave itself wiggle room to do this.
But, the rule under normal financial regulation says that if your primary marketing says one thing and the terms say another, then it is unfair for you not to follow what your primary marketing says. The argument here is that the government’s primary marketing said that the salary threshold would go up with average earnings.
That’s why I’m asking to lawyers to look into it. I do I think it’s plausible that there could be ways to challenge this
SUSU Vice President Education Shruti Verma told SUSUtv News about the union’s response to the changes. You can find out more by watching their report below.