Raise interest rates on old student loans, secret report proposes.

[dipsydoodle]

A confidential report commissioned by the government has proposed redrawing the terms of student loans taken out over the past 15 years, that would make them more expensive to pay back for 3.6 million borrowers in England alone.

The proposal to increase the interest rates on the £40bn worth of loans is the most controversial of a series of options contained in a Whitehall-commissioned study examining how the coalition could privatise the entire stock of student loans issued since 1998.

Increasing the amount that students would be forced to pay back would make the loans more attractive to buyers.

The document, prepared by Rothschild investment bank, was submitted to the business department in November 2011, but is understood to still be under active review. It has never been made public, or been seen by higher education professionals.

http://www.guardian.co.uk/money/2013/jun/13/raise-interest-rate-student-loans-secret-report

[LeftishBrit]

1. Isn't it illegal to change such terms retroactively?

And if they do wish to do so, start with themselves. Cameron, Osborne et al went to university for free - let them show their sincerity by each giving to the Treasury the 27,000 that they would have had to pay nowadays.

And since when have investment banks dictated our education policy? (Rhetorical question.)

[dipsydoodle]

2. I can only assume

it relates in some way to the terms and conditions of the original contract for the loan. I don't see how those could be changed retrospectively and I would assume the expression " the RPI measure of inflation or banks' base rate plus 1%, whichever is lower" was actually written in somewhere albeit there seems to a side letter stating "that governments reserve the right to change the terms of the loans and that is a text that has always been there for students". Side letters to the best of my knowledge never have any bearing on the terms of contacts. I've no doubt this will be fought in court.

It would seem the Rothchilds have merely been consulted as to the likely outcome of such a sale. I don't undertstand the signific ance of 1998 unless that's when these loans first came into being.

[Cirque du So-What]

3. 2013 - 1998 = 25 years

Policy changes of this sort typically involve nice, round numbers - chosen arbitrarily and capriciously.

25 years or longer? You're golden!
Less than 25 years? Drop dead!

[dipsydoodle]

4. I think you might find that's 15 years.

Last edited Fri Jun 14, 2013, 08:36 AM - Edit history (1)

But yes I take your point.

[Cirque du So-What]

5. I plead guilty but mentally impaired

I hadn't even finished my first cup when I made that post

[muriel_volestrangler]

6. "the blacking-out (90%) was light enough that virtually the entire report can be read"

"The report was obtained by the False Economy website through a freedom of information request. Although over 90% of it was redacted, the blacking-out was light enough that virtually the entire report can be read. It was analysed for the Guardian by higher education analyst Andrew McGettigan."

So we're either dealing with the gang that can't shoot straight, or an obliging leaker who thought the truth should get out.