Student loans are a 'national scandal' which are 'holding young people back,' former Scottish Tory tells LBC
Student loans are a "national scandal" and young people have been "done over twice", according to a former Scottish Tory boss.
Listen to this article
Baroness Ruth Davidson insisted youngsters are being shackled by student finance systems which is harming the economy and holding back a generation.
She is launching a new campaign calling on the Chancellor to rip up the student finance system and make it fit for purpose.
Alongside former Conservative Mayor, Andy Street, the Prosper UK group today say that graduate loans in their current form are a "tax on aspiration".
LBC has told how millions of students are stuck paying off just the interest on their loans, while their debt continues to rise.
Read more: Student loans system risks trapping Britain into 'intergenerational unfairness', MP tells LBC
Read more: Universities are still where British entrepreneurship is born
Students on some plans face changing terms of their loan, and face paying sky-high levels of money back thanks to inflation rising.
Baroness Davidson told LBC student loans are “acting as a break on aspiration for young people and it’s holding them back”.
The IFS estimates that the average plan 2 graduate has to earn a whopping £66,000 a year before they can start paying down their balance.
The Treasury admits that many tens of thousands of young people don’t ever pay their loans back in full.
She also said the scandal was "impacting on being able to buy a house and starting a family.
"It's not acting as a loan, it's acting as a tax. And it needs to change."
Earlier this year the Chancellor argued the system was fair, but Cabinet ministers have now admitted the system is ripe for reform.
The government’s said that they are looking at ways to change the system, and have already frozen some student loans’ interest rates in reaction to the war in Iran.
The campaign’s calling on student loans to be reformed to be realistically paid back, rewarding work, not punishing middle earners, and looking at making it in line with other loans.
Baroness Davidson said she had “huge sympathy with graduates who think they’ve been done over twice”… and “given a hard deal” with higher interest rates linked to RPI inflation, rather than the Government’s own used CPI inflation.
She said: "You know, it is more punitive. But also the fact that the goal posts changed once they'd signed up and there's nothing they can do about it.
"The government can change this with no recourse. So I do feel that it's difficult.
"But I would also say to people, you can push back, sign up to the Fair Fees campaign, show the strength of feeling.
"Make sure that the investigation the Treasury Select Committee is doing now is backed up by movement within the country for you as graduates, current students, your parents, your grandparents. People understand this is not fair."
She also encouraged the Chancellor to look at the levels of repayment thresholds, which will be frozen in line with income tax thresholds for the next two years.
"We do feel that changing the goalposts on students once they've signed up is not fair and it's one of the things that needs to be changed."