Student loans new repayment tool ‘irresponsible’

Changes to the Student Loans Company’s website are “irresponsible and dangerous”, the consumer finance expert Martin Lewis has claimed.

Mr Lewis says a new “quick repayment” tool gives UK graduates a “damaging, demoralising” picture of their debts.

He says the tool exaggerates the status of their outstanding loans.

The SLC says its online repayment service gives the most up to date student loan account information that has ever been made available.

The company’s website has been moved from the site SLC.co.uk to the Gov.uk site.

But Mr Lewis, founder of the website Moneysavingexpert.com, says that “far from taking on board widespread concerns that student loans information is misleading and promotes financially poor decisions by graduates, the SLC has in some places doubled down on the opposite”.

“The first thing university leavers see when they log in, in a large font, is the amount of ‘debt’ they owe.

“This is demoralising, damaging and dangerous,” he said.

“Owing £30,000, £300,000 or £3m makes no difference to your annual repayments, which are set at 9% of everything you earn over a threshold (currently £26,575 per year).

“The only impact the amount of debt has is whether you clear it or not within the 30 years before it wipes; and it’s predicted the vast majority, 83%, of university leavers won’t be earning enough that their repayments clear it in full.

“They’ll keep repaying it for the whole 30 years, like an additional tax – so the debt amount for them is pretty irrelevant.”

The SLC says the online repayment service is designed “to make it easier for graduates to access their account, manage their student loan and to avoid over repayment”.

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