Reeves On Course to Rake In £40 Billion From Student Loan Interest
Rachel Reeves stands to rake in almost £40 billion from interest on student loans before the end of this Parliament, official forecasts have revealed. The Telegraph has the story.
Between this financial year and 2029-30, accrued interest on student loans will total £39.9 billion, according to the Office for Budget Responsibility. This is counted as a current receipt for the Government, contributing to the £1.2 trillion of revenues flowing into the Exchequer this year.
The size of the interest payments – close to double the Chancellor’s fiscal headroom of £22 billion – underlines the major challenges that Reeves would face if she caved in to demands to cut back graduates’ repayments.
The revelation follows intense pressure on the Government from the Left wing of the Labour Party for action on student loans, with the party’s poor performance in the Gorton and Denton by-election expected to fuel fresh calls.
The Green Party won the Parliamentary seat by a convincing margin, with Labour coming in third place.
Zack Polanski, the Green leader, has called for an end to tuition fees, a return to grants and “a conversation about debt forgiveness”.
Outstanding student debt in England currently totals more than a quarter of a trillion pounds.
Polanski’s demands for student loan changes have been echoed across the political spectrum over growing fears that the level of debt and the rate at which interest adds to the pile have become unsustainable.
Kemi Badenoch, the Conservative Party Leader, said this week that “student loans have become a debt trap”.
Sir Keir Starmer has acknowledged the need for reforms, saying Labour had “inherited their broken student loans system”.
He added: “We’ve already introduced maintenance grants to improve the situation, which [the Conservatives had] scrapped, and we will look at ways to make it fairer.”
Opposition parties and campaigners have urged Reeves to find ways to lower the burden on graduates, arguing the system is unfair.
The interest rate on loans is typically calculated as inflation plus 3% using the outdated retail price index (RPI), which tends to overstate price rises. On top of that, the Government will freeze the earnings threshold at which graduates start to repay their debt, effectively changing the terms of the loan.
Reeves has described the reform as “fair and reasonable”.
However, Lucy Powell, Labour’s deputy leader, said the interest rate is “egregious” as graduates often make years of payments only to see their total debt keep on rising.
Speaking on LBC radio, she said the rate felt “unfair”. She added: “It feels endless.”
Worth reading in full.
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How about we go waaaay back and only send the top 5% school leavers to university. Tuition could once again be ‘free’ and means tested maintenance grants given.
Some of the surplus staff and ex-universities could convert back to Technical Colleges and Arts Schools.
Perhaps some large campus University could be converted to a new Houses of Parliament (while the old one is refurbished) alongside student flats converted to lodgings for MPs.
That’s far too a good an idea for the political moochers to consider.
The change from the system that worked to one that doesn’t by that ace operative Blair, was entirely political flummery.
Be fair, Blair got the young people off the unemployment list for 3 years and – here’s the clever bit – he got them to pay for it.
Leave academia to the academics. The rest should just get a job.
But who would then produce these PhDs?
Queer Whores: Embodied Knowledge and Performance Practices in Sex Work
Cruising the cut: Lesbian histories of mobility and queer futures of boat-dwelling on the UK’s canals
Animals as builders: Exploring animal buildings as sites of agency, rights, and politics
“Lesbian?”… “She no Lebanese. She Punjabi!”: Tracing the experiences of working-class, queer British South Asian women, 1970s to 1990s
rub rub rub rub rub rub brush brush quiver oh hello, you: Queer Captioning as Material
Curating a Diasporic Archive in the Elsewhere: A Critical and Creative Exploration of Recovering, Dismantling, and Re-Imagining the Diasporic Space
‘Cleaving’ Queer Aesthetics: Contemporary Indian Performance at the Intersections of Caste, Gender and Sexual Politics.
Echoes in the Anthropocene: ecological sound art and ecosocialist activism in Brazil
“Non-vegetarian” food: Mapping contestations over the consumption of meat, fish and eggs in the culinary cultures of Ahmedabad, India
Fragmented Bodies, Fragmented Stories: Exploring Endometriosis Through Multidisciplinary Creative Practice to Challenge Cultural Narratives of Women’s Pain
How can it be fair to relieve some students of debts whereas others have already repaid.
You have been distracted by the ‘fairness’ argument often used by the left. Life will never be perfectly ‘fair’ although it may sometimes be made less crushingly unfair by well intentioned people.
Whenever there’s a social problem the first thing we should do is stop making it worse. So clamp down on illegal immigration before we consider what to do with those already here. Clamp down on the debt producing funding of University courses then consider what to do with the existing debts. Clamp down on the creation of QUANGOs, new NGOs, and the taxation status of new Charities. Then sort out the existing ones.
I am praying that you have made these up. If not, the whole higher education system needs closing down and rebooting to something approaching proper scholarship.
If you repay quickly due to having a high salary, then you will pay back less overall.
When I went to uni, annual fees were £4K and interest rates were low. I got my £12k debt out of the way in around 8 years.
Now at around £27k for a 3 year batchelor degree and much higher interest, the likely overall costs are prohibitive. On a lowish salary this could take a lifetime to pay back. Good luck getting a mortgage on top.
There are too many rubbish degrees and the loans on the majority are not going to be paid.
Two possibilities occur to me:
I like your Option 2 – don’t think the Unis would be too keen!
Surely she does not have £40m if there are £250billion of loans . Surely this should pay off the bad debts first before it is used to spend more on Labour rubbish?
If she stopped spending like a drunken whore then she would not need the money.
i would imagine that at least 10-15 billion has already been put aside for our guests.
Do you mean the new colonising arrivals? I see that the break in the match at Leeds for Rama-Lama-Ding-Dong was met with boos which upset the lefties.
Broken, unfair…
Yes, broken because lots of these “loans” won’t ever get repaid and the taxpayer foots the bill for elective university education for people who don’t contribute enough economically to have to repay them.
So let’s make it fairer by making the taxpayer pay for ALL of it. Great. Free stuff for everyone, forever!
So Josh Simons has resigned. Looks like a good day to bury bad advisors.
Well it was the war criminal Bliar that made everyone go to university so it’s no good whinging now that it will never be repaid and freezing the threshold to make up for it.
lets face it, being unemployed is almost classed as work nowadays. Soon it will be taxed and insured like any other “job”.
since the lanyard class do nothing but hold meetings and make elaborate structural plans that don’t ever translate into actual work, you could say it already has.
i wish they would stop putting pictures of that woman in the media. Her smug ignorant little face is making me feel quite sick!
Here’s a thought to send chills down your spine – what if ‘that woman’ became the next Prime Minister as a compromise to semi-satisfy all the different factions within the Labour Party?