GRADUATES are being ripped off by changes to student loans, according to a report by a cross-party committee of MPs.
The Treasury select committee findings published on July 7 said that successive governments mis-sold student loans while shielding themselves from the consumer protection regime governing most financial products.
It told the Government that it could not continue to ignore a ‘broken’ system and had a ‘moral obligation’ to reverse the decision to freeze the threshold at which student loans are repaid.
West Worcestershire MP Dame Harriett Baldwin who sits on the committee said the conclusions were consistent with the feedback she had received from her constituents.
“It has been evident from my postbag for some time now that graduates have not been getting a fair deal out of their student loans.
“Local students and parents have contacted me to complain that the current model is loading our young people with a lifetime of debt they will likely never repay.
“The select committee report found that the Chancellor took the easy option of increasing the amount young people pay and that communications promoting the loans amounted to mis-selling.
“The average Plan 2 graduate needs to earn £66,000 a year just to keep pace with the interest according to Institute for Fiscal Studies estimates.
“The Opposition has proposed an alternative plan that would allow graduates to repay their loans much faster and save thousands,” Dame Harriett said.
The report was damning in its findings and called changes to the way loan interest is calculated, and better support offered to graduates.
Click here to read the full report from the Government website.
