George Osborne froze the threshold at which graduates can start to repay their student loans. It is currently stuck at £21,000, and lecturers believe could greatly affect those who took the loan from 2012, as well as discourage students from applying for a university.
As reported by Daily Mail, George Osborne's decision to freeze the income level at which students can repay their loans could have great effect on students who took them from 2012 believing that it would rise along with the wages. Critics also stated that he might face legal action for such move.
Osborne's decision is expected to affect poor students, and those from lower financial background. According to Sally Hunt from the Universities and College Union, it could also affect the students' trust in the higher education funding system.
"This is deeply disingenuous and will severely undermine students' trust in the higher education funding system. It will be a real financial blow to lower-earning graduates and ... sends precisely the wrong message to students from disadvantaged backgrounds who are understandably concerned about the rising cost of university.", Hunt stated.
Graduates who took the loan in 2012 previously paid 9 percent of their income above £21,000 after graduations to their student loans. However, with the system change implemented by Osborne, Independent reported that more students will have to repay more from their salary and some could take 30 years before the loan gets cleared out.
Millions of graduates are also expected to pay £306 more each year by 2020 or 2021 compared to the amount they would have had to pay if the income level freeze. However, as reported by Belfast Telegraph reported that Money Saving Expert founder Martin Lewis revealed on his blog that he has hired lawyers to look on opposing Osborne's decision.
"In a personal capacity , I've engaged the solicitors Bindmans to investigate if there are grounds to judicial review this decision and to look at other legal grounds to challenge it (it may be people with student loans will need to agree to take cases - I doubt there'll be a shortage of volunteers).", Lewis stated in his blog.
Osborne indicated his decision in the Autumn Statement, and is predicted to benefit the Exchequer by £360 million after four years. He also stated that such decision was crafted in order to the reduce the government debt.
