David Cameron snubs my retrospective student loan hike open letter

Two weeks ago I sent the Prime Minister an open letter about the disgraceful retrospective hike in student loans. Those who started university since 2012 currently repay 9% of everything earned above £21,000 – this threshold was supposed to rise annually from 2017, but the Government has now frozen it.

The impact of this is substantial. It will leave millions, including many who’ve already now left university, paying £1,000s more for their loans than they were told when they signed up.

I have now received the Prime Minister’s reply, or more accurately, I have now received a response telling me he won’t be replying.

This isn’t just a financial and legal issue (though I have hired lawyers to investigate it), far more importantly it’s a moral one. This retrospective change is unfair, goes against all terms of good governance and risks damaging the trust young people have, not just in the student finance system, but in the entire political system.

That’s the reason I asked the Prime Minister to look, intervene and meet me to discuss how to mitigate the damage. The letter I sent has received widespread publicity, been massively shared on social media, raised much awareness of the issue and had huge support.

Yet the Prime Minister has simply snubbed my letter and, by proxy, potentially millions of students.

Instead of a reply from the Prime Minister, or even a member of the Cabinet, my letter is from Jo Johnson MP, the Minister of State for Universities. Not only that, but much of it is a simple cut and paste from the pro-forma response Tory MPs sent during the consultation – and of course its lack of specificity fails to address the vast majority of my concerns.

While Mr Johnson does invite me to meet him, he knows as well as I do, I have already done so – before the consultation, and I vociferously raised the concerns then. So while I will take up his offer and meet him again, I suspect I would have as much joy explaining the problems with this huge cost hike to a brick wall.

For reference a copy of my letter to the Prime Minister and the reply from Jo Johnson are below.

The Prime Minister
10 Downing Street
London, SW1A 2AA
12 January 2016

Dear Mr Cameron,

I feel compelled to write to you over the decision to retrospectively change the terms of student loans.

In 2011 I was appointed head of the Independent Taskforce on Student Finance Information. I worked with your ministers who said, unambiguously, that from April 2017 the £21,000 repayment threshold would start to rise annually with average earnings. This information was then communicated to students and formed a core part of the calculations about how much university would really cost them – including in student loan repayment calculators.

The decision to backtrack on this is hugely damaging. It means many lower- and middle-earning graduates will repay thousands more over the life of their loans.

However, even more important than the additional cost is the message this sends. The regulator would not allow any commercial lender to make a change to its terms this way. It is therefore surely wrong for the Government to do so – retrospective changes have always been seen as bad governance.

Of course there was a consultation before the change. I and many others responded to it. Yet only 5% of consultation responses were in favour of this change; 84% were against it – so I am confused why, despite such cross-society opposition, your Government pushed ahead with the retrospective change anyway?

As you may be aware, I have personally engaged lawyers who are currently looking at whether this change can be challenged legally. Yet this is just as much a moral issue as a legal one. A retrospective change will destroy any trust current and future generations can have in the student finance system, and perhaps, even
more widely, in the political system as a whole.

The repercussions of this loss of trust may be far-reaching. Although I had reservations about the student finance changes made in 2012, I always believed it was more important to explain the practical realities of the system so no student was wrongly put off due to misunderstandings. But how can anyone in good
conscience now explain student finance to young people when the system can be unilaterally changed, even after they’ve signed their loan contracts?

I ask you to take a personal interest in this decision and look at reviewing it. Present and future generations must be able to trust the Government to keep its word on student finance.

I would also ask to come and meet you to discuss this issue, and invite some affected students, graduates and their parents. That way we can explain why we think this is so important – and to see if there is a way the damage can be mitigated.

Yours sincerely,

Martin Lewis
Founder of MoneySavingExpert.com and former head of
the Independent Taskforce on Student Finance Information

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