The new regulations over student loan reform have created a number of challenges to both current and aspiring students. Many students were concerned over a new repayment plan that was proposed by Vince Cable, David Cameron’s Business Secretary. Cable’s plan called for a 5% penalty on all students attempting to repay their student loans before the end of the term of their loan. This idea was implemented with the intention of preventing wealthier students from escaping the interest payments they would otherwise be forced to make on 30-year loans.
That repayment scheme has since been killed. According to Guardian sources, Cameron has apparently negotiated a new arrangement with Cable whereby Cable will be able to decide who to appoint to be the University admissions tsar. However, it is also possible that the tens of thousands of people who protested the idea are also responsible for creating the support needed to strike down the bill.
Under the new plan, students will be eligible to receive £9,000 a year for tuition. They will also be given maintenance loans for housing, which will be higher for students living in London. Students coming from families earning less than £25,000 a year will also be eligible for a non-repayment grant of £2,906.
Students taking out loans between September 2012 and September 2016 will be charged 3% interest. However, they will not need to repay their loans until they have started to earn an annual salary of £21,000. After that point, students will be repaying their loans based on their salary.
Many parents are asking how to manage the finances most appropriately. They have been informed that it is best to apply for these loans first rather than taking out a personal loan for their children. The interest will be much lower on the student loans. Also, students are discouraged from investing their maintenance loans, because the interest they will be paying on them is likely more than what they will earn after putting that money into savings.
Most families are happy to hear that the repayment plan Cable proposed had been killed. Although Cable stated that the loan was intended to go after wealthier families, lower and middle class families were going to be hit hard by it as well.
However, it is unclear whether or not this arrangement worked out for the best, because Cameron will now give Cable the discretion to appoint Les Ebdon to the Office of Fair Access. Many people are concerned that Ebdon could be a serious liability to the country.