Student Loan Fraud.
 

The UK's student loan debt currently stands at £236.2bn.

https://www.bbc.co.uk/news/articles/cy87zjn97epo

Re: Student Loan Fraud.
 

Somebody might need to help me out here. 'x' student claims to live with family or friend while studying but is really at home. The claim is to fund the stay at family or friends homes.

Re: Student Loan Fraud.
 

The system is not designed to ensure these are paid off in the majority of cases. It’s called a student loan system, because what it actually is, is politically unsayable: it is, to all intents and purposes, a graduate tax.

However, it only works as a de facto graduate tax if graduates play along, and live and work in the UK and therefore begin to ‘pay off’ the ‘loan’. If fraudsters take it out and treat it as it’s styled, i.e. a loan, and then take advantage of the super-relaxed repayment regime (the part that gives the lie to it actually being a loan) then it starts to fall apart.

The only way to fix this is to return to a system of fully-financed student loans that are paid monthly during the academic year and then affect the tax code of those who have benefited from them. Payment of the funds must be linked to attendance and progression from one year of study to the next. That wouldn’t eliminate the problem but it would significantly reduce it.

Re: Student Loan Fraud.
 

I know a lot of people who are taking full advantage of this, £10k with no intention of being in the country long term enough to earn over the threshold to pay it back, ones well over 60 so what realistic prospect is there of getting a penny piece back before he buggers of back to Romania and there's loads of them, it's actually hard to find people to work mid week because their all at college :mad:

Re: Student Loan Fraud.
 

It's a loan that has to be repaid in instalments once the borrower starts to earn above a certain level. Hardly a tax.

But it is a freebie to those who don't use it for the purpose of further education, moving them into a career with a decent wage.

Re: Student Loan Fraud.
 

I think you missed the point of what I said.

It is framed as a loan; you apply for it as if it were a loan, and it has interest and repayment rules as if it were a loan. But …

… you only pay it back when your income is at a certain level, and if you don’t pay it back within a certain time frame it is automatically written off. And despite that time frame being built into the system, the repayments are never at any stage designed to ensure full repayment. I don’t know about you but I have never had any form of consumer credit plan designed that way.

It is framed as a loan because a ‘graduate tax’ has been politically impossible to discuss in the UK, much less deliver. But that is, in essence, what it actually is, because the experience of most graduates who have taken a loan is that they have a deduction from their payslip.

And that is why it is susceptible to the form of fraud under discussion. If it were a loan, the loan company would have your bank details and would immediately start taking repayments, and would have some sort of legally enforceable agreement in place ensuring they could get all their money back if you default. They would also have some sort of assessment procedure that would prevent loans being paid to people who were at high risk of deliberate default.

But because it is paid out as if it were a loan, but recovered as if it were a taxable benefit, there is a massive loophole in the middle of it which is being exploited by those who are able to position themselves to take advantage of the payout while avoiding the pay-back.

Re: Student Loan Fraud.
 

My understanding is that you pay back on anything you earn over £25,000.


Below that you pay nowt.

Re: Student Loan Fraud.
 

But it keeps earning interest on the debt, further inflating the figures…

Re: Student Loan Fraud.
 

But it gets cancelled after a certain age. American loans do not do that.

It is certainly a tax/loan hybrid. As loans go it is far too generous and as taxes go it is far too conditional.

It isn't really a bad deal - IF the tuition fees were reasonable, since you can bung any excess money into investments which normally outgrow the interest.

Re: Student Loan Fraud.
 

It’s a better deal in Scotland where the interest is lower ;)

However the point here isn’t really whether it’s a good deal. As policy it’s slightly dishonest, because it attempts to avoid a political shibboleth and, as we are now seeing, has created a loophole for those who can get the easy money and who have an easy route to avoid repaying it.

Re: Student Loan Fraud.
 

Seems a good incentive not to get a better job.

Re: Student Loan Fraud.
 

Yup

---------- Post added at 19:14 ---------- Previous post was at 19:11 ----------

Yes, unfortunately a graduate tax or an increase in VAT won't win elections. But student loans and hikes in employer NI contributions may. Is that the fault of the system, a fault of the political parties or a fault of the voters?

Re: Student Loan Fraud.
 

I’m not convinced that former students sit on 25k a year jobs to avoid paying 9% of earnings above the threshold, any more than people who could earn into the 40% tax bracket allow their careers to stagnate to avoid the marginal tax increases within it.

25k isn’t going to go very far starting out in 2025 Britain unless the bank of mummy and daddy are buying their home for them. Might buy the odd avocado and toast or a Netflix subscription but not Sky Sports.

Re: Student Loan Fraud.
 

£25K is borderline poverty in todays economy.

Re: Student Loan Fraud.
 

It's nowhere near as generous as the system a few decades ago; grants and nothing to pay back. Most of today's politicians benefited from that .
Another example of the generational divide and the crap deal/future young people have.

Re: Student Loan Fraud.
 

As is so often the case in this country there are class issues at play. Once upon a time you could only go to university if daddy could pay for it, which meant daddy was either landed gentry or a wealthy merchant. The student grant system was designed to allow poorer students access to degrees on the same terms as the wealthy ones, with the State paying them an allowance instead of their parents. All that quite predictably got unaffordable as the number of people going to university sky-rocketed in the 1980s. But the idea that funding higher education was a class issue poisoned the debate. I was at uni in the early 90s, just as grants were first being frozen and top-up loans offered (luckily, for the first 2-3 years the top-up loan was so small you could, just about, go without it if you wanted to), but well after the days when you got a full grant in term time and no-questions-asked unemployment benefit throughout the summer. Student Union rhetoric in the early to mid 90s was all about how education is a right, not a privilege. No useful debate about how the privilege was to be paid for, obviously.

The loan system has parked the debate rather than settled it. Many students won’t come anywhere near paying it off, especially in Englandshire where you have to get a loan to pay your fees as well. There are no tuition fees in the socialist republic of Scotland but as a consequence the universities are cash-strapped because the government, as the one paying all the fees, gets to say how much it’s prepared to pay, and it’s not nearly enough. The institutions here are therefore groaning at the seams with overseas students studying non-courses for which they pay a prince’s ransom, which at least some of them think is worth the cash just to get on the bottom rung of the immigration ladder.

Much as I hate to admit it I think the loan system is probably a good idea in principle because a university degree is elective and frankly not necessary for everyone. Sure it’s character building but why should everyone else pay for that? And, for that matter, a pay-back system that is linked to financial ability and stops making demands of you when you stop earning is also equitable. The problem of course is that that is not a loan, it is something else, more like, but not quite like, a tax, and politicians on both sides need to be honest about that. We need to stop, for example, screaming about how much debt students are in because the cash value of their debt is irrelevant in many ways, if they’re not going to pay it off anyway. And we need to tighten it up so overseas visitors can’t exploit it, although the size of student ‘debt’ I suspect is vastly, vastly caused by UK nationals and not Romanians.

Re: Student Loan Fraud.
 

It wasn’t student union rhetoric that made successive governments farm off hundreds of thousands of students to massage the unemployment figures. Much like 1990s incapacity benefit.

Re: Student Loan Fraud.
 

A 15% increase, plus the other changes that come with it (that reduce pay) are not "marginal". Are you borrowing a calculator from Old boy.

Re: Student Loan Fraud.
 

A loan is a loan, regardless. You should pay it back.

Why should a 16yr old, on an apprentice scheme, paying tax, fund a student peer to go to university?

Regardless of income, all student loans should be repaid, then maybe they might think on what degrees pa more!

I would enforce repayment of all loans, regardless of income.

Re: Student Loan Fraud.
 

Never quite understood the not having to pay it back bit.
If you dont have to repay it, ever, then its not a loan, its a gift (or grant).
The definition of a loan (borrowing) is you have to give back what you borrowed at some point.

Re: Student Loan Fraud.
 

The problem is, it is so expensive you are going to end up bankrupting people perhaps many years later, if the loan is construed as of the regular type that must be repaid in full. In fact there is no way anybody aged 18 with no assets or proof of income would ever be granted a loan of that size on those terms. Generous loan forgiveness terms are the only way it can work - you claw back what you can from who you can and write off the rest. That is how it’s designed but we’re being dishonest about it, leading to headlines about the size of ‘student loan debt’ as if it’s got out of control when it’s actually how the system as designed.

Re: Student Loan Fraud.
 

The answer , is that you either live with the system, or change the system

The system is not fair or sustainable, therefore we need to change it.

Re: Student Loan Fraud.
 

I think we need to stop pretending that that 200 billion or whatever it is, isn’t part of the national debt. But the fact that that number exists is simple proof that there is no way of financing higher education that involves taking significantly more money off students.

Re: Student Loan Fraud.
 

It only applies to the amount above the threshold which (in tax terms) is described as marginal tax. National insurance also lowers for income above the threshold (except in Scotland, where the two changes happen at different income levels).

It's one of the most frequently misrepresented aspects of tax because the implication as often presented is that it increases the rate of tax on all of a person's income not just the part above the threshold. The rate of NI dropping 10% is never mentioned.

---------- Post added at 05:23 ---------- Previous post was at 05:14 ----------

Given that the idea of actually paying the national debt is a pretence in itself I'm not sure why this £200bn (some of which will be repaid) is viewed more robustly than the other £2.8 trillion that will only be paid with more government borrowing to kick the can down the road.

It's also artificially inflated by the exorbitant commercial interest rates applied to loans in England. If you were designing a system to make it a graduate tax instead of a loan it'd look exactly like ours. The problem for charging those on lower incomes is we already pay out a chunk in benefits to those on poverty wages through Universal Credit. It seems fundamentally flawed to push more people above the threshold below it simply to move money around the government spreadsheet.

Re: Student Loan Fraud.
 

I'm perfectly aware how it works, since I have to pay it.

Yes, by 6%, less than half the tax rise. In addition, NI isnt paid on all income, tax is. So the "saving" is even less.

Marginal .. yeah right. :rolleyes:
The definition of Marginal = minor and not important.
Just becasue they call it some dumb name, doesnt make it correct. :dozey:

Re: Student Loan Fraud.
 

The principle stands regardless of the objection to my use of "marginal" - it's certainty not minor or unimportant when they take it off me. I don't see huge swathes of people sitting on 25k a year to dodge student loan repayments any more than I see people sitting stagnating just below the higher tax threshold to avoid it. You see some slightly above it tinkering with pension contributions but that's about it.

The child benefit rules create a problem within a narrow window as does the removal of the personal allowance at 100k.

For the vast majority more money is a better bet in the long term. Even if the state takes a larger chunk of it above certain thresholds.

Re: Student Loan Fraud.
 

That is entirely true. It is also true that more people are going to university so that system would be unaffordable.

That said we should probably reduce the number of people going to university so if you want to go back to that system it is fine by me.

Re: Student Loan Fraud.
 

The answer would be much more state funding of universities. We're not going to go down the American route, but there isn't much public support for funding them like the Europeans do.

As Chris says the current system is just a bit of trickery, a stealth graduate tax, so those who start having a higher income pay more than those who didn't attend university.

No good can come from bankrupting people because they went to university as a kid and it didn't pan out to a much higher income.

Re: Student Loan Fraud.
 

Employers pay an apprentice levy across all their workforce to fund apprenticeships. Should this levy be cancelled and apprentices be made to take out student loans to make this fairer?

You don't link to evidence showing the current system is unsustainable, so that point has not been proved.

---------- Post added at 09:55 ---------- Previous post was at 09:49 ----------

The red brick universities have the research funding and property investments to keep them going. Newer ex-polytechnics don't and have been suffering all over the UK. UK students' fees just don't cover the average course cost of c£12k whilst overseas fees of c£16k generate a profit to make the university viable. Although UK and formerly EU students did enable courses to achieve economies of scale. However, with overseas student numbers down due to immigration being tightened up, UK student fees not rising until recently and costs shooting up post Covid, many universities are facing a squeeze.

Re: Student Loan Fraud.
 

Remember the days when only a couple of percent of population went to uni, a bigger block to polys and colleges but many straight into jobs. But that made our figures look lousy worldwide where loads of people went to university so you make all the polys and colleges universities, change all the qualifications to degrees and suddenly you can't afford it anymore so goodbye free first degree and grant, hello fees and loans.
But we can't go back because all the universities have expanded to accommodate the extra numbers and can't return to the old ways.

Re: Student Loan Fraud.
 

Businesses fund the levy through tax they pay, that they can then reclaim to fund the apprentice.

Back in the day, a business would just take on an apprentice and train him up. Either way, it's still Business that funds it, not the individual tax payer.
Currently £226 Billion increasing over 10% a year.........I think the point is clear.

Re: Student Loan Fraud.
 

“Student debt” is always going to go up - there’s more students able to borrow more each year. Comparing the total figure year on year is pointless. The commercial interest rate plays a part in artificially increasing the number - the state itself doesn’t pay this rate. The more important question is how much of that outstanding today is realistically going to be repaid and whether funding the university sector is worth the difference.

Forecasts (yes, guesswork) put the number of students repaying in full at 65% for those starting in 23/24, up from 27% for the 22/23 cohort due to a rule change.

Re: Student Loan Fraud.
 

Whilst business funds 90% of the apprenticeship costs, the government adds a 10% top-up which is funded by individual tax payers.

Re: Student Loan Fraud.
 

Which apprentices are.

Re: Student Loan Fraud.
 

The nation gets what it is prepared to pay for..and going by present attitudes we are in danger of going backwards and ending up with a higher number of poorly educated and poorly trained younger citizens.