Student Loan Fraud.

[Taf]

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

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

[thenry]

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.

Originally Posted by Taf

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

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

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.

[TheDaddy]

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

[Taf]

Originally Posted by Chris

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.

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.

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.

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.

[Hom3r]

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


Below that you pay nowt.

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

[downquark1]

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.

Originally Posted by downquark1

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.

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.

Originally Posted by Hom3r

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

Seems a good incentive not to get a better job.

[1andrew1]

Originally Posted by Paul

Seems a good incentive not to get a better job.

Yup

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

Originally Posted by Chris

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.

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?

[jfman]

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.

[Pierre]

£25K is borderline poverty in todays economy.

[Mr K]

Originally Posted by downquark1

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.

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.