Conservative thinktank urges Tories not to cut student loan rates
(ShareCast News) - In her most recent attempt to pry voters away from Labour leader Jeremy Corbyn, Prime Minister Theresa May was said to be looking at a scheme aimed at easing the burden of debt to British students.
After the Tories lost their majority in the House of Commons as a result of June's snap election, which saw opposition leader Jeremy Corbyn campaign on an anti-austerity platform, including a pledge to scrap tuition fees, Downing Street announced it was looking at changes proposed to the way in which many graduates pay interest rates at more than double the inflation rate.
With Downing Street's budget set to be released later in autumn, conservative thinktank Bright Blue warned Phillip Hammond on Sunday not to hand out interest rates cuts to high-paid graduates in an effort to win votes, saying that the proposed cuts would only benefit those already better off than others.
Ryan Shorthouse, chief executive of Bright Blue, said "The Conservative government needs to and should make a big offer to young people. But reducing tuition fees or reducing the interest rate on student loans would only benefit high-paid graduates."
Shorthouse proposed a raise to the earnings threshold at which graduates are required to commence repayment of their loans, currently set at £21,000 a year, and set to be frozen until 2020.
"This would mean all young people repaying student loans would pay a smaller amount from their salaries each month. It would effectively be a tax cut for graduates," he said.
Labour, on the other hand, has said it will continue to push for the outright abolition of the fees.
Angela Rayner, the shadow secretary for education, said: "burdening young people with a lifetime of debt is neither fair nor sustainable. We have long called for action to reduce the burden of debt faced by students, in particular, those from the most disadvantaged backgrounds, but time and again the Tories have refused to listen."
Nick Timothy, former chief of staff to the Prime Minister, called the current student loan system an "unsustainable Ponzi scheme," after studies undertaken at the Institute for Fiscal Studies suggested that three-quarters of graduates would be unable to pay off their loans in full, even if they continued making payments into their fifties.