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Student Loan Early Repayment Penalty Proposal 'crazy'

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http://www.bbc.co.uk/news/education-14836202

Coalition proposals to charge graduates in England for repaying student loans early would be ineffective and costly, the think tank CentreForum says.

The government is currently consulting on a suggested plan to penalise early repayment, targeting either high earners, large repayments, or both.

It wants the penalties to make the system "more progressive" and says they should not hit those on modest incomes.

But CentreForum says most early payments are not made by high earners.

It's almost as if they don't want anyone to pay the money back.....

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It's almost as if they don't want anyone to pay the money back.....

By suggesting this, aren't they basically confirming that this is just another wealth-extraction mechanism for the bankers?

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By suggesting this, aren't they basically confirming that this is just another wealth-extraction mechanism for the bankers?

Preparing the way for the packaging of them into a nice, sexy and innovative CDO ;)

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Preparing the way for the packaging of them into a nice, sexy and innovative CDO ;)

If they can be repaid early they're not worth as much to the lender.

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It's almost as if they don't want anyone to pay the money back.....

Lifetime of servitude is what the elites seem to be shooting for.

I feel for the young of today as no matter how hard they try they seem to be completely snookered.

I seriously think with how FUBAR things now are the best answer is to produce kids, lots of kids, then let the state provide. Never thought I'd hear myself say that :(

Edited by MrFlibble

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By suggesting this, aren't they basically confirming that this is just another wealth-extraction mechanism for the bankers?

Agreed!

The sad thing is the public (less still the media!) wont be able to figure this blindingly obvious point out for themselves.

Successive governments lacked the intellectual ability and guts to work out how to tackle the problem of funding tertiary education itself and so, once again, took the easy option of 'contracting out' the job and cost to private finance - who in turn demanded all sorts of 'guarantees' to make it worth their while to do so. Examples being student debt not covered by bankruptcy laws, cruelly long repayment terms (debt lives till age 65), etc.

This latest 'idea' of repayment penalties merely confirms that the monied interests want to ensure the long term return on their loans - yet further ensuring the debtor students are effectively reduced to debt slaves.

Even though the issue of student debt doesnt affect me in any way whatsoever, I still find this proposal blood boilingly outrageous. MPs should hang their heads in shame if they ever allow such early repayment penalties to be foisted upon students.

Edited by anonguest

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Would this not be covered by contract law?

I can see how someone may lend say £100 and expect £200 back over the next 20 years. However if the student offers to repay the principle immediately, then the claim would be for loss of profit on the remainder of the time. Yet the damages to lender would not be £100 since they could re-lend the money at the same rate meaning there would be no loss to the lender (assuming variable rate). The lender would be in his rights to charge a small admin fee for the costs in having set up the loan only to have it repaid, yet this could be included as part of the loan when it is set up.

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Would this not be covered by contract law?

I can see how someone may lend say £100 and expect £200 back over the next 20 years. However if the student offers to repay the principle immediately, then the claim would be for loss of profit on the remainder of the time. Yet the damages to lender would not be £100 since they could re-lend the money at the same rate meaning there would be no loss to the lender (assuming variable rate). The lender would be in his rights to charge a small admin fee for the costs in having set up the loan only to have it repaid, yet this could be included as part of the loan when it is set up.

Assuming the money was real in the first place, which from what we've all seen this is quite obviously not the case.

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Would this not be covered by contract law?

I can see how someone may lend say £100 and expect £200 back over the next 20 years. However if the student offers to repay the principle immediately, then the claim would be for loss of profit on the remainder of the time. Yet the damages to lender would not be £100 since they could re-lend the money at the same rate meaning there would be no loss to the lender (assuming variable rate). The lender would be in his rights to charge a small admin fee for the costs in having set up the loan only to have it repaid, yet this could be included as part of the loan when it is set up.

That wouldn't apply to this case as the loan wasn't "for profit" (officially anyway". Student loans supposedly exist to help students fund courses they would otherwise be unable to afford.

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That wouldn't apply to this case as the loan wasn't "for profit" (officially anyway". Student loans supposedly exist to help students fund courses they would otherwise be unable to afford.

It is indeed very different when you are borrowing your own money.

;)

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Lifetime of servitude is what the elites seem to be shooting for.

I feel for the young of today as no matter how hard they try they seem to be completely snookered.

I seriously think with how FUBAR things now are the best answer is to produce kids, lots of kids, then let the state provide. Never thought I'd hear myself say that :(

What annoys me more than a bit is that no party ran with anything like this in their manifesto, and indeed many people voting Lib Dem were voting for the abolition of tuition fees.

Likewise with the attempt to privatise the NHS. Any party running with anything like the current proposals would be voted straight out.. and neither party had anything like it in their manifestos.

There always seems to be a disconnect between manifesto and reality, but the coalition seems to have taken the approach that the manifesto can simply be dropped in the shredder the moment power is obtained.. 'We had to say that to get elected but obviously we were going to do the opposite..'

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If they can be repaid early they're not worth as much to the lender.

of course - it is a transfer of wealth from the rich to the poor, that's the point

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If they can be repaid early they're not worth as much to the lender.

Except that this lender expects to write off a good portion of the loan.

Penalising someone for taking that risk away from you is utter nonsense.

tim

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What annoys me more than a bit is that no party ran with anything like this in their manifesto, and indeed many people voting Lib Dem were voting for the abolition of tuition fees.

Likewise with the attempt to privatise the NHS. Any party running with anything like the current proposals would be voted straight out.. and neither party had anything like it in their manifestos.

There always seems to be a disconnect between manifesto and reality, but the coalition seems to have taken the approach that the manifesto can simply be dropped in the shredder the moment power is obtained.. 'We had to say that to get elected but obviously we were going to do the opposite..'

I suppose one way to get round is, is to make a legally binding manifesto, however, I don't know how that would work when you have a coalition, or what the penalties would be if they don't preach what they say... <_<

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This latest 'idea' of repayment penalties merely confirms that the monied interests want to ensure the long term return on their loans - yet further ensuring the debtor students are effectively reduced to debt slaves.

Even though the issue of student debt doesnt affect me in any way whatsoever, I still find this proposal blood boilingly outrageous. MPs should hang their heads in shame if they ever allow such early repayment penalties to be foisted upon students.

Of course, many of those making these proposals will have been sending their kids to private school and hence be paying the fees for their kids up front, presumably. Which means their kids can go on to postgrad studies, internships, gap years, etc.. without having to think about a £40k debt accumulating interest at 8%.

Of course, if you want to do 3 year's X-factor studies followed by an exciting career in burger-flipping, you'll be fine. It's only if you are looking for a 'serious' career - i.e. private sector Science, Engineering, that sort of thing - that requires postgrad study, and has decent but not vast pay - say 30-50k - that you are going to get burnt. Professions like teaching, and nursing will be a problem as well.

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There always seems to be a disconnect between manifesto and reality, but the coalition seems to have taken the approach that the manifesto can simply be dropped in the shredder the moment power is obtained.. 'We had to say that to get elected but obviously we were going to do the opposite..'

I really did hate Blair, Brown and Labour but having seen the Cameron Regime in action I'm now even more worried for the future.

Cameron is too closely interlinked with the Bankster elites for my liking...

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There always seems to be a disconnect between manifesto and reality, but the coalition seems to have taken the approach that the manifesto can simply be dropped in the shredder the moment power is obtained.. 'We had to say that to get elected but obviously we were going to do the opposite..'

Yes. I would be surprised if all (or even any) of the three main parties are still around in twenty or thirty years. We are at a turning point where older capital-rich folk lose economic and political ground to younger wage-earners, and yet all three of these parties are fighting it with all their might. They are putting themselves on the wrong side of history, and they will either have to admit defeat and change their policies or be wiped from the political scene.

At the last election I was stupid enough to believe the Lib Dems on their tuition fees promise, but I consider that lesson thoroughly learned. There is no point in voting for parties run by people born in the 1940s-1960s. Expecting them to vote for lower asset prices and a significant cut in intergenerational buck passing is like expecting turkeys to vote for Christmas.

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Of course, if you want to do 3 year's X-factor studies followed by an exciting career in burger-flipping, you'll be fine. It's only if you are looking for a 'serious' career - i.e. private sector Science, Engineering, that sort of thing - that requires postgrad study, and has decent but not vast pay - say 30-50k - that you are going to get burnt. Professions like teaching, and nursing will be a problem as well.

Nicely summed up. So not only will the ones in this bracket not be earning enough to buy into the fantasy housing market but they'll also be lumbered with paying down the huge debt that got them a career that doesn't afford them a decent standard of living in society. What a mess. The young are being steered towards a lifetime of debt slavery, no two ways about it.

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Nicely summed up. So not only will the ones in this bracket not be earning enough to buy into the fantasy housing market but they'll also be lumbered with paying down the huge debt that got them a career that doesn't afford them a decent standard of living in society. What a mess. The young are being steered towards a lifetime of debt slavery, no two ways about it.

We'll see how that looks when a loaf is £40.

The great thing about student debt is it's linked to official inflation figures. :lol:

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Except that this lender expects to write off a good portion of the loan.

Penalising someone for taking that risk away from you is utter nonsense.

tim

There is virtually no risk when the debt can't be discharged in bankruptcy and the law backs your claim over anything else. No risk.

Early repayment reduce the value of loans to lenders / bondholders. That's a fact.

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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