10 March 2008
We received a petition asking:
"We the undersigned petition the Prime to Write off student loan debts."
Details of Petition:
"The average student loan debt is £9000, in addition the overdrafts and credit card debts students are forced to run up just in order to live, and as is often the case to afford their tuition and top up fees. Many graduates leave university with an even greater burden than the average £9000; it is not unheard of to leave univeristy with debts of £30,000. When students do leave university and obtain a good job, it does enough for the country by adding to the GE per capita, the tax and NI contributions that the government obtain from our working contribution to society…let alone the tax we pay on everything we buy, and everything we save! Graduates add enough to society, and struggle enough as it is without having to pay the price for the education for the first 15 years of their lives! Education is a right, not a privilege, that our parents and grandparents have worked and paid their tax for. Write off all student loan debts!"
Read the Government’s response
Since 1997, this Government has invested heavily in higher education. Our spending has increased by 23% in real terms since we took office and we now spend more than £10 billion a year on Higher Education, with more to come in real terms in each of the next three years.
However, Government cannot and should not be the only funder of higher education. It has been right to move to a position where higher education costs and benefits are shared fairly between the state, graduates and employers. People with a higher education qualification earn, on average, considerably more over their working life than someone with ‘A’ levels who does not go on to university.
Following the abolition of up-front payment of tuition fees in 2006/07, together with the reintroduction of grants worth up to £2,765 a year in 2007/08 and generous bursaries offered by many universities and colleges, there should be less financial pressure on students with low incomes.
Furthermore, on 5th July 2007, the Secretary of State for Innovation, Universities and Skills, the Right Honourable John Denham MP, announced major changes to the support that full-time higher education students living in England from the academic year 2008/09. The minimum threshold (of family income) for a full maintenance grant will be extended from £17,500 a year to £25,000 a year; with a partial grant available up to an income threshold of £60,000. It is expected that around two-thirds of all eligible students in England entering higher education in the 2008/09 academic year will be entitled to a full or partial non-repayable Maintenance Grant. Once the system is fully up and running, this means that around 100,000 extra students per year will receive a grant. Students will generally need to find less cash to support themselves while they are studying.
We estimate the average student debt to be more than around £15,000 for students starting in 2006/07. Student loans from the Government are not like commercial loans. Interest paid is linked to the rate of inflation, so in real terms what is paid back is equivalent to what was borrowed. And repayments are based on earnings, not on what was borrowed. Repayments are at 9 per cent of earnings over the ‘earnings threshold’ - currently £15,000. This benefits low earners. The lower a graduate’s earnings, the higher is the Government subsidy.
Another of the changes announced last July was that students who become liable to repay their Student Loans from April 2012 will be offered the choice of putting their Student Loan repayments on hold for up to a total of five years. These repayment holidays will help students make flexible choices over their finances at key points in their lives and careers (for example, when buying a property or starting a family).
You ask for all student loans to be written off. You may be aware that for students taking out a student loan (for fees, or maintenance, or both) for the first time in 2006 or later, the Government will write off the amount of student loans which are left unpaid 25 years after the student leaves their course. For students who have previously taken out an income contingent loan in respect of their current period of study, any remaining loan debt (apart from arrears) will be cancelled when the student reaches age 65.
We hope from the above you will see that Government’s higher education student support package is excellent value for money and already includes provision to write off loans.