Student loans are an unpleasant reality for UK tertiary students. The size of their loan, increases due to inflation and budgeting for repayments all add up to a real burden for many ex-students.
To make matters worse, the Student Loans Company to whom they owe their debts is frankly an embarrassment to the UK’s reputation as a centre of world finance.
The latest excuse for the poor administrative systems of the SLC is that it’s all the fault of a computer problem at HM Revenues and Customs (HMRC). More than 25,000 students cannot obtain accurate details of the status of their loan – many have overpaid their debt, but can’t get confirmation of this from the SLC.
The scheme to repay loans is simple (in theory), with students’ employers making a 9% salary deduction via the PAYE system; this goes to HMRC and thence to the SLC. Eons away from the complexities of things like Credit Rate Swaps, Lookbacks and Quanto options which are traded in London everyday and have made it the financial capital of the world.
The SLC is also creating headaches for retail banks who provide credit to ex-students. Aside from the fact that many are struggling to save a deposit to get on the housing market, there are at least 60,000 who are in default on their SLC loans – to the tune of around £200m! Unless they admit this - and who would when applying for a credit card or mortgage - then the banks are in the dark as the SLC is unable to tell them or credit reference agencies about these defaulters. Banks therefore apply a tougher approach to credit scoring for customers with student loans, penalising innocent and financially responsible ex-students.
It is hard to see any redeeming features about the SLC. Without its monopoly it would not survive long in the real world of competitive international banking. To add insult to injury, the Higher Education Minister Bill Rammell said last July that the new systems at the SLC would provide, ‘Clearer information, faster decisions, timely payments, and accurate repayments’. Having almost 1000 SLC staff based in Glasgow responsible for the maladministration of loans owed by English students is something that will come to haunt Gordon Brown, MP for Kirkcaldy and Cowdenbeath who claims that, ‘English votes for English laws would pull the Union apart’. Maybe, but the resentment building against politicians like Brown and Mohammad Sawar (MP for Glasgow Central), both of whom strongly supported student fees for UK students, which don’t apply to their own constituents, undermines support for the Act of Union and will eventually become a political issue that may force the SLC to be either privatised, or moved to England.
