Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
Students loans were introduced way back in 1990. In 2012 the average student loan was around £3,300 which has risen to £9,000 per year today.
The Office of National Statistics (ONS) stated that student loans would add over £10 billion to the UK deficit (2018 – 2019) taking public sector borrowing up to £34 billion from £24 billion. This figure may seem quite high, but it is less than the initial figures projected by the ONS of £12 billion.
The Office for Budget Responsibility (OBR) is expected to reveal it plans for changes to the provision of student loans in the UK. Although it is expected that this will further the debate into how the UK funds it students which are seen as an integral asset in the country’s future. Student loans help those from disadvantaged backgrounds gain access to world class education and help their future career prospects.
When analysing the accounting methods used by the ONS it is clear that the governments has a deficit target, and ONS figures will affect the deficit.
The main difference between a traditional commercial loan and a student loan is that repayments on the student loan are only made once the borrower earns more than £25,725 and are written off after 30 years if there is any outstanding loan amount. Although despite this difference student loans are accounted for in the same way as traditional commercial loans; in the sense that they are a financial asset from which the government can generate revenue.
The figure which is used to be factored into the overall net borrowing does not take into account the total cost for higher education tuition and maintenance loans. Only the interest that is created from these loans are taken into account. This make the government borrowing figures appear much lower than they actually are, this according to the OBR creates a “fiscal illusion”
Playing around with the numbers and effectively using accountancy “magic” makes the government deficit numbers better rather than showing the true numbers, this is damaging to the country’s economy as there’s not clear picture of the government true borrowing figures.
The OBR reform to this new accounting method for student loans means that the government would have to come up with other means to finance higher education and university placements.
This could open the doors to bringing back teaching grants along with reinstating support grants for students from disadvantaged backgrounds along with providing financial support for apprentices. The reform brings to the forefront the governments (taxpayer) subsidy for higher education to the nation’s attention.
Debt management agencies are regulated by The Financial Conduct Authority
Many people in the U.K struggle with debts and many do not know how to start to repay them speaking to a debt advisor is one of the best things you will do along with taking action yourself by speaking directly with your creditors.
https://www.nationaldebtline.org/ and https://www.moneyadviceservice.org.uk
You should always seek professional advice when handling debt problems. Cashute are not licensed debt advisers and any information contained in this article should not be taken as legal advice. It is your Responsibility to seek out correct legal advice