Student Loans Agreement

Debate between Lord Johnson of Marylebone and Liz McInnes

Monday 18th July 2016 Westminster Hall

[Joseph Johnson]

I reject the characterisation of our labour market as a failure. Clearly, when we look at the unemployment figures today, we cannot but be struck by the extent to which we have succeeded in getting many thousands more young people into work. The latest unemployment data from the ONS show 23.1 million people working full time, which is 300,000 more than even a year ago, let alone than in 2010. The percentage of young people out of work is now at a record low altogether.

[Liz McInnes]

While the Minister is quoting employment figures, will he tell us how many of those jobs are high-paid graduate jobs?

[Joseph Johnson]

Graduates from our universities do spectacularly well on the whole in moving into graduate employment. Obviously, we want variability across the system to even out and we want to ensure less patchiness in the system, but graduates do go into graduate employment on the whole.

The funding system put into place is also progressive. Interest rates after graduation increase with income, so that high earners repay more. For those earning £21,000 or less, the interest rate is set at RPI flat: the loan balance does not increase in real terms. For borrowers who earn more than that, the interest rate increases to a maximum of RPI plus 3%. It is only fair that borrowers who have benefited most from their education should repay the most back into the system.

Student loans are very different from a mortgage or credit card debt. Repayments are determined by income, not the amount borrowed. Borrowers are protected. If at any point their income drops, so do their repayments. Borrowers will repay only if they earn above the threshold and the loans are cancelled after 30 years, so many borrowers, as I said, will not repay the full amount. That is part of the taxpayers’ investment in our country’s skills base.

I recognise hon. Members’ concerns that students may not be fully aware of the terms and conditions of their loans at the time of application. The Student Loans Company does, however, provide students with a clear statement of the terms before the student completes their application for a loan. On page 3 of “Student loans—a guide to terms and conditions”, it states clearly—this is not hidden in some small footprint—that

“The regulations may change from time to time and this means the terms of your loan may also change. This guide will be updated to reflect any changes and it’s your responsibility to ensure you have the most up-to-date version.”

Furthermore, it is worth noting that the threshold freeze did not actually change the terms and conditions; it merely left them unchanged.

That information includes the way that interest will be applied and the repayment terms that will apply. Students are asked explicitly to confirm that they understand the information before they are granted the loan. All the information that the SLC provides to students is reviewed regularly to ensure that it is both accurate and accessible.

Oral Answers to Questions

Debate between Lord Johnson of Marylebone and Liz McInnes

Tuesday 3rd May 2016 Commons Chamber

[Joseph Johnson]

We have established the Careers & Enterprise Company to make sure that all young people know about the opportunities available to them through our higher education reforms. We are also giving students more information than ever before about their course choice, and we have introduced degree apprenticeships as a new route into the professions. We want to see universities playing their part too, which is why I have asked the director of fair access to continue to focus on access to the professions in his work with universities.

[Liz McInnes (Heywood and Middleton) (Lab)]

T5. A total of 11,000 BHS employees face an uncertain future over not just their jobs, but their pensions. Where will the Secretary of State place responsibility for filling the pension fund black hole? Will it be with the taxpayer or with the owners of the company, who paid themselves more than £400 million in dividends while the pension fund was driven into the ground?