MP’s have accused governments have taken the politically convenient option of loading burdens on to younger generations, hoping that they will not notice until future years.
The Treasury Committee report on Student loans is calling on this government to honour the terms and conditions under which the loans were sold by reversing the 2025 Budget threshold freeze at its next Budget.
MP’s also said that the actions of the Department for Education (DfE) and the Student Loans Company (SLC) amount to mis-selling in three instances
The DfE has produced YouTube videos and slides that did not disclose that the government could vary the terms and conditions of loans retrospectively
The DfE produced promotional materials that emphasised a comparison between the monthly cost of student loan repayments and the monthly cost of a mobile phone or cinema tickets, which was inaccurate for higher earners
The SLC does not make it sufficiently clear in the loan application process that the government can retrospectively change the terms and conditions. This fact is disclosed in the guide to student loans but is not done with any additional emphasis, as would be expected were this to be a commercial contract
It’s the Committee’s belief that the Government should comply with consumer protection laws and financial services regulations, such as the Consumer Duty, even if it’s not bound by them, particularly when it comes to being clear with students that it is possible that future governments may change the terms of their loans.
Evidence submitted during the inquiry suggested that for people studying today, the funding balance for university education could be as much as 95% paid by the individual with 5% subsidised by the taxpayer.
Given the Committee’s belief that people going to university benefits not only individuals but the state and wider society, MPs recommend the Government moves towards an overall 50:50 funding balance in the long term.
The report also states the Committee’s continued belief that interest on student loans must be linked to the Consumer Prices Index (CPI), not the Retail Prices Index (RPI).
As part of the inquiry, the Committee invited people to fill out an online survey on their views about the student loans system. The survey received more than 52,000 responses, one of the highest response rates to a select committee inquiry ever.
