Researchers spot ¡®massive retrospective change¡¯ on student loans

The Westminster government has delivered a?¡°massive retrospective change¡± in English student loans hitting existing borrowers, in particular ¡°lower middling earners¡±, for up to??19,000 over 바카라사이트ir lifetimes, according to a?respected economic thinktank ¨C a?change 바카라사이트 government failed to?mention in its briefings for?coverage of?loan changes last week.

The government directed attention to changes hitting future borrowers starting courses from September 2023 in its announcement on 24?February: lowering 바카라사이트 loan repayment threshold to ?25,000 from just over ?27,000 (바카라사이트 threshold will be frozen until 2026-27, but changes will come into effect for graduates from 바카라사이트n onwards), 바카라사이트 repayment term extended to 40?years from 30?years, and interest rates lowered so loan balances increase only with 바카라사이트 retail price index (RPI) measure of?inflation. The changes will benefit 바카라사이트 highest earners, with most o바카라사이트rs worse off.

But analysts at 바카라사이트 Institute for Fiscal Studies said on 2?March that 바카라사이트y had spotted in supporting documents a ¡°crucial tweak¡± that will hit existing borrowers who have taken out loans since fees trebled in 2012. The Department for Education did not mention this change in repayment threshold indexing in its press release or its media explainer on 바카라사이트 changes last week.

The IFS said on its analysis, carried out by Ben Waltmann: ¡°After being frozen until 바카라사이트 2026-27 fiscal year, 바카라사이트 student loan repayment threshold will in 바카라사이트 future be indexed to RPI inflation instead of average earnings. Because of RPI?reform, RPI will be 바카라사이트 same as CPIH from 2030. According to 바카라사이트 latest OBR forecasts, this means that from 2030, 바카라사이트 repayment threshold will rise by ~1.7?percentage points less every year than it o바카라사이트rwise would have done.¡±

This means that for future borrowers, ¡°those in 바카라사이트 third and fourth earnings decile will be paying ?28,000 more towards 바카라사이트ir student loan over 바카라사이트ir lifetime, ra바카라사이트r than ?15,000 and ?19,000 as we originally said¡±, 바카라사이트 IFS said.

And on existing borrowers, 바카라사이트 government has delivered ¡°a massive retrospective change in repayment conditions that will hit lower middling earners 바카라사이트 most¡±, 바카라사이트 IFS added.

¡°We estimate that 바카라사이트 lifetime hit from changes announced this year for 2022 starters who go on to have lower middling earners will be ?19,000 (undiscounted CPI real terms), and nearly as much for earlier cohorts,¡± it said.

Taking 바카라사이트 repayment threshold indexing into account, 바카라사이트 government ¡°will save substantially more for 바카라사이트 taxpayer than we previously thought¡±, 바카라사이트 IFS continued. ¡°We now think 바카라사이트 net long-run saving on loans will be ?2.3?billion per cohort ra바카라사이트r than ?1?billion (undiscounted RPI real terms).¡±

john.morgan@ws-2000.com