Student loans: a new “irresponsible” repayment tool

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Martin Lewis says new website promotes bad financial decisions by graduates


Changes to the Student Loans Company website are “irresponsible and dangerous,” said consumer finance expert Martin Lewis.

Lewis says a new “quick repayment” tool gives UK graduates a “damaging and demoralizing” picture of their debts.

He says the tool is exaggerating the status of their current loans.

SLC says its online repayment service provides the most recent student loan account information ever available.

The company’s website has been moved from SLC.co.uk to Gov.uk.

But Mr Lewis, founder of the Moneysavingexpert.com website, says that “far from addressing widespread concerns that student loan information is misleading and promotes bad decisions financially by graduates, the SLC has in some places doubled the opposite “.

“The first thing college graduates see when they log in to a large policy is the amount of” debt “they owe.

“It is demoralizing, damaging and dangerous,” he said.

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“With £ 30,000, £ 300,000 or £ 3million that doesn’t change your annual repayments, which are set at 9% of whatever you earn above a threshold (currently £ 26,575 per year) .

“The only impact of the amount of debt is whether or not you erase it in the 30 years preceding its erasure; and it is predicted that the vast majority, 83%, of college leavers will not earn enough for their repayments to wipe it out in full. .

“They will continue to pay it off for 30 years as an additional tax – so the amount of debt for them is irrelevant. ”

The SLC says the online repayment service is designed “to make it easier for graduates to access their accounts, manage their student loans, and avoid excessive repayments.”

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The company added, “The service was extensively researched and tested before launch, and the feedback from our customers was that they wanted to be able to quickly and easily access their loan balances online.

“Balance information is particularly important to customers in the later stages of reimbursement, as it helps them determine when to pass their reimbursements to direct debits. ”

The SLC said the site made it clear that customers should carefully consider their situation before making any additional voluntary repayments and that any outstanding balances are written off at the end of the loan.

“In the coming months, we will be reaching out to customers to remind them that regardless of the loan balance, they can only be required to pay 9% of income above the repayment threshold, and that they should review their situation carefully before doing any voluntary act. refunds. ”

But Mr Lewis says the new site majors on a “frightening, but often irrelevant number” of debt owed.

“It makes a lot of people think that they should pay too much like normal debt.

“Yet, unless you make huge overpayments, most of the people who overpay don’t bother – you will continue to pay back 9% of anything over the threshold for 30 years,” he said. -he declares.

“Paying too much is a total waste of money.

“So I was stunned to see that they put in place a“ quick refund ”system, without detailed warnings, cautions and explanations.

“It is irresponsible and dangerous beyond belief. This doubles the damage. ”

Mr Lewis says he will write to SLC and Universities Minister Michelle Donelan to call for the immediate removal of the quick repayment facility and a complete overhaul of the government’s new website.

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