U-turn likely on charges for early student loan repayments
By Vivienne Russell | 16 February 2012
The
government is reported to be dropping its plan to levy extra charges on
graduates who pay off their student loans early.
Ministers
were considering introducing mortgage-style early-repayment penalties for the
new student finance regime. It was intended to discourage the wealthiest
graduates from buying themselves out of the system early.
But it is
understood this will be scrapped after consultations revealed that students of
modest means, as well as the wealthiest, would be keen to pay off their debts
as quickly as possible.
The
CentreForum think-tank, which last year called for the charging policy to be
shelved, welcomed the news.
Chief
economist Tim Leunig said: ‘This
is the right decision taken for the right reasons. Evidence shows that the
students who repay their loans early are not the wealthiest, but the most debt-averse.
‘Government
should not penalise those who want to get out of debt for whatever reason.’
But the
University and College Union said the government should be focusing on ensuring
poorer students can go to university rather than acting to ‘make life easier
for the wealthiest in our society’.
General
secretary Sally Hunt said: ‘While no one would condemn any family that sought
to pay off their children's debt as fast as possible, today’s move simply
exposes yet again what an inconsistent mess the higher education reforms are.’
A spokesman
for the Department for Business, Innovation and Skills said a formal
announcement on changes to repayment arrangements would be made next week.
