It has been reported that the government is planning to lower the threshold at which students repay their student loans from £27,295 a year to £22,000. This would significantly increase the debt repayments for millions of students in our country by between £200 and £475 a year. It is unfair and must be opposed.
UK students already face one of the highest levels of debt in the world because of the huge increase in tuition fees. The average student in our country leaves university with £50,000 of debt. This is an unacceptable barrier for working-class students taking the route through higher education. For many graduates the interest rate on their debt means they are hardly paying back any of their loans each month. This creates large costs for the Treasury later down the line.
The Conservative and Liberal Dem coalition government’s higher education reforms in 2010 created a system that simply doesn’t work. It is a ticking time bomb waiting to explode. Now, the Conservatives are trying to change the system yet again in an attempt to recoup more money from graduates, but this means changing the terms on which students agreed to the loans in the first place. This is a massive betrayal of our young people.
Young workers are already being hit the hardest by the Conservatives National Insurance tax hike. The government has created a situation where university leavers pay twice the amount of tax as pensioners earning double their salary. Their proposed changes to the repayment threshold is essentially a further tax hike on the young.
Labour must speak for these young people who are some of the most exploited people in our country. They face job insecurity, a lack of secure and affordable housing, high taxes and those who go to university are faced with colossal debts that will hang over them for most of their lives. If you are a working-class kid in our country today it is harder than ever to lay the foundations for a prosperous life.
At the last two general elections, graduates and their families rallied to Labour because of our policy of free education. We must respond to the Tories proposals by reiterating our support for this policy and for reducing the burden of existing debt on graduates.
We must also propose an alternative vision for higher education in our country. Universities are a vital public good that benefit the whole of society. They should be available for all those who want to attend, regardless of their class background. Just as apprenticeships should be available to all those who wish to pursue that path. There should not be a hierarchy between different forms of education. Our country could not function without historians, mathematicians and scientists, but it also wouldn’t last a day without plumbers, electricians and manufacturing workers.
The burden of costs for higher education should fall on the wealthiest in society. We need to transform our tax system to make sure the richest pay their fair share, rather than hiding their wealth from the tax man. I have brought forward several proposals for how a wealth tax can be achieved in the UK. The additional revenue that could be brought in by making our tax system fairer could fund free university education and apprenticeships for every young person who wants it.
I am calling on the government to scrap its proposal to lower the student loans repayment threshold and am asking MPs to demonstrate their opposition by signing the early day motion I have submitted to parliament.