Quote:
Originally Posted by Taf
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.
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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.