Last updated: 07/04/07
Pointless Petition

Un-necessary rallying amongst students and graduates has gathered thousands of online signatures for a pointless petition against falsely perceived methods of managing student loan repayments.

Chances are you’ve received an email recently that made you quite confused, or perhaps angry. You may have caught word of it via a Myspace bulletin, as I did. Or you could have heard about it through Facebook; there’s a number of groups running about it now and there’s loads of people signing up. One of the groups has over 12,000 members right now, and whilst it isn’t a rib-tickling group that could mean someone’s kid gets called Spiderman, it would certainly still seem a worthy cause to sign up to.

And sign up they did. No doubt the message you received, like mine, directed you to the petitions section of the Downing Street website where the protestations were already in full flow. As I write this, the signature list exceeds 45,000 names (with over 1,000 signed up in the last 24 hours), various forums contain mentions of a march being organised and there’s plenty of rallying afoot. In a way it is rather heart-warming, that even in this apathetic age there’s still a mass of students who are willing to stand up (or at least sit at a computer) and fight for what is right.
Unfortunately it’s wrong.

“We the undersigned petition the Prime Minister to change the current student loan interest repayment, to deduct payments monthly not annually.”

Naturally when The National Student heard the story, we set out to discover what was really going on and track down the truth. But let’s begin with the falsehood that was forwarded with such fury. What was all the fuss about?

The online petition puts it like this: “Currently student loan repayments are taken from your salery (sic) every month however they are not knocked off the balance of the loan until the end of the year. Therefore paying a full year of interest on the full balance which had gradually been paid off. This adds hundereds (sic) of pounds of unnecessary interest. The payment should be deducted monthly as it is paid.”

It’s hardly any surprise that emails, comments, messages, texts and all manner of communications rapidly ensued. Initially the news filtered amongst those hardy individuals that have gone before… the graduates on their starting salaries began to fret first, but word quickly spread to the incumbents.

“I just got sent the following and am quite shocked...” said one forum poster in Southampton.
“I've just received an email regarding this, it's fucking ridiculous…” wrote a Facebooker.
“Scum, sub human scum,” wrote another.

There’s nothing quite like a bit of furore to get the juices flowing. But alas, there is no great wrong to right, at least, not on this particular matter there isn’t.
As Ian McLaren Thomson of the SLC was only too happy to explain:
“The first point to be made is that HMRC (the Inland Revenue as was) does not actually send any money to the Student Loans Company - it merely notifies SLC of payments received.”

“HMRC is used for the collection of repayments because it is part of HM Treasury, which provides the funding for student loans and pays for the system which administers it (through grant-in-aid to the Student Loans Company and administrative payments to local education authorities for their part in assessing eligibility for loans).”

To elaborate; the SLC pays money out on behalf of the government to students and then administers their loan accounts. Employers deduct repayments via PAYE and forward them to HMRC, who inform the SLC of the repayments made so they can credit the money to a student’s account. The employer notifies HMRC as to how much each student has repaid at the end of each tax year via a document called a P14.

And here’s the second point; the seeming discrepancy between monthly deductions from the graduate’s salary, but the information regarding the value of the repayments only being gathered annually.

“The fact that we are informed after the end of the tax year of the repayments made during the year is what seems to have confused people,” Mr Thompson clarified. “If I give you an example, perhaps it will be clearer.”

“Mr. Smith earns £23,000 per annum. Therefore his employer makes deductions of £60 per month - £720 per year (9% of income in excess of £15000). After the end of the tax year, his employer notifies HMRC of the deductions made during the previous year and we then credit them to his account. Mr Smith’s account will be credited a payment of £60 in each month of the previous tax year retrospectively. The first £60 will be credited in April of the previous year and immediately reduce the balance on which interest is paid, the next in May and so on.”

“The petitioner is perhaps confused because although the credits are posted on the account after the end of the tax year they haven’t recognised that we give full credit for when the deductions were made by backdating these credits monthly over the previous tax year.”

Whilst the disgust shown by graduates and current students alike was loud, swift and strong… it was perhaps a little misplaced. The Chinese whispers of a generation who are so willing to feel put-upon, and the speed of information sharing proffered by the internet, combined to create quite a rumpus. But as the Facebook group’s membership slowly begins to dwindle, gradually a few people are finding the truth by (shock, horror) seeking out answers, doing some research, or even doing the maths themselves like Alasdair in London:
“I have done the calcs myself to ensure I was not being screwed over and the two last statements accurately matched my calcs.”

Bad news travels fast, good news tends to dawdle.

45,000 is a lot of angry people, but eventually everyone will hopefully get set straight.

But if you’d still like to sign the pointless petition go to:
http://petitions.pm.gov.uk/Student-loans/