The Universities Minister Jo Johnson has finally agreed that student loans should be called ‘graduate contributions’, after being challenged on the point by MoneySavingExpert.com founder Martin Lewis.
At a Conservative party conference fringe event today, organised by MoneySavingExpert and titled ‘Are student loans broken?’, Martin and Mr Johnson debated how the current system could be fixed if we stick with it. The debate followed the announcement at the weekend that the student loan repayment threshold will be raised to £25,000.
The key concession came over the framing of student loans. Martin has campaigned to rename student loans since 2012, arguing that the word ‘debt’ puts people off higher education – when in reality for most it works like a tax and you repay 9% above the threshold for 30 years.
Speaking at today’s event in Manchester, Martin said: “The language of debt is psychologically damaging, it should not be called a debt.
“For over 20 years we have educated our youth into what we call a debt, and we have never educated them about debt properly. We’ve inured an entire generation into borrowing, because if we say you’ve got to get a debt to go to university, they get their credit cards and their payday loans. It’s been tremendously damaging.
“The language of debt is misleading. I can’t explain the system because everyone says ‘but I’m going to have this debt hanging over that I’m going to have to repay’ – no, this is a contribution system in proportion to your financial success after university. ”
“Call it a contribution system. Lock it in, give people respect so they know exactly what they’ll sign up to. People might understand it better, might respect it better, and might start to understand your argument a little bit better, that it’s shared between the individual and the taxpayer. Right now the system’s broken – because it ain’t a loan, and we call it one.”
Do you agree? Please tell us your thoughts in comments or via Twitter ~ Tamsin
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