The next in my series of 'Labour could' videos is the one I published this morning. In it, I suggest that Labour stop charging interest on student loans. Since total annual student loan repayments are way less than the interest supposedly charged on these loans, such charges make no sense at present. Labour should scrap them and give graduates a chance in life instead.
The audio version of this video is here:
The transcript is:
I am discussing things that Labour could do at no cost to the government, but which would significantly change the quality of life for maybe millions of people in the UK. So, let me suggest something that most people would not expect to come into this category. And that is, they should stop charging interest on student loans.
I can hear the immediate reaction, “but surely that is bound to cost the government a fortune?” I have to tell you, it won't. And the reason why is simply because of the maths involved.
The average student now leaves university in the UK with a loan of around £45,000. On average, at this point of time, they're being charged, depending on which plan they're on, between 6 and nearly 8 percent interest a year. Let's call it 7%.
That means that the interest charge on this will be around £3,000 plus a year, and the average student is repaying in England and Wales, a little over £1,000 a year in student loan. The total repayments in the last year for which I can get data from HM Revenue and Customs, who actually collect student loan repayments, is about £4 billion in a year.
The total interest charge on the £200bn outstanding in student loans was at around that 6 - 7 per cent figure. - well, you can work it out for yourself, £12 - £14bn. In other words, the interest being charged is never being repaid by the students who are borrowing this money, supposedly.
So, what is the point of charging this interest to students when we know that over 30 percent of all student loans will never be repaid? because people will reach the age where the cut off on repayment arrives well before their loan balance is settled out of their wages, and that's true even under the new schemes just being introduced.
My point is a simple one. This charging of interest on these loans is simply penal. It's unnecessary. So, let's stop it. Let's stop this onerous burden on top of the fact that students are already required to repay the loan balance, which is bad enough.
Come on, Labour, you could make this change. You could make life better for former students. And it would cost nothing, because you are never going to be repaid this money anyway. Just do it.
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The party should stop writing suicide notes too!
https://www.theguardian.com/society/article/2024/jul/11/wes-streeting-write-prescription-nhs-independent-investigation
Wrong transcript!
I find it encouraging so many people noticed. Corrected now.
Richard, you have the wrong transcript on this one!
Corrected, apologies
Surely time to bring in electronic voting. Just press a button and have done with it. Stop pointlessly eating into everybody’s time by traipsing them through two small corridors.
Rees-mogg has been run out of parliament, so why not throw the ludicrous antiquated stuff he loved so much (and maniacally brought back after covid) out with him?
When the Houses of Parliament are turned into a museum, Rees-Mogg would make an ideal tour guide.
Rees-Mogg could host (present) a reality show called “Britain’s Building Treasures”…….wait…….Rees-Mogg person is already doing a reality TV show and may be tied up with other filming.
We need to call Jeremy Clarkson or Jonathan Pie. Maybe Clarkson & Pie could do a “buddy” show????
WRONG TRANSCRIPT.
Apologies
Too much to do these mornings! I opened and copied the wroing file. Corrected now.
Fully agree with all that Richard, furthermore I think the new parliament building should not be in the capital.
This from the Graun letters
A 20-year project to build a new northern city of around half a million people could create not only a political and governmental powerhouse but an economic growth centre based on the new technologies – a new silicon valley of the north. The obvious location is somewhere in the “concealed” coalfield belt east of Leeds, Sheffield and Nottingham – on the M1 and linked motorways in attractive countryside – and with plenty of flat land for England’s new hub airport, which should not be in “London”.
https://www.theguardian.com/politics/2017/jul/18/the-case-for-and-against-moving-parliament-out-of-london
Does the interest on student loans go to the treasury or to a private finance organisation?
A mix, ultimately
It depends on whether the debt has been sold, or not
But candidly, most of it is never paid
One of the principles of good leadership is that you never give an order you know will not be obeyed. Surely it was known when the loan scheme was set up that in the vast majority of cases the interest would not be paid. So why require it?
To makes the loans look saleable, even if well under face value
The idea behind student loans was that the country could not afford so many students. Therefore the students would have to pay for themselves.
This is entirely false. It yet again demonstrates the very poor understanding of the way the economy works.
We Know the country could and can afford to pay for student because it did and does. We had and have the real resources to do so. Borrowing money for student loans does not magically make real resources available. You cannot “borrow from the future” (there is no time machine to bring real resources back from the future). Anything we can actually do today, we can afford.
Student loans are simply a pernicious way of increasing the marginal tax rate for part of our population.
The labour government could and should wipe out all student loans, as Biden has tried, and partially succeeded, in doing so the USA.
Labour could do this. I very much hope they will. But I very much doubt they will.
Neat
We agree