Labour warn the government faces a student loans timebomb
Labour has warned the government that it may face a student loans repayment timebomb, which could prove to be damaging for the Liberal Democrats’ election chances.
“What this is is a student loan time bomb that is actually already exploding under the government.”
Liberal Democrat MP and treasury minister Danny Alexander responded to the claims, saying the figures (for increasing tuition fees) were based on projections of graduate incomes in 35 years’ time, “so these numbers do move around a lot”.
He added: “The figure that we are most pleased with is that we are seeing more people from disadvantaged backgrounds going into higher education than ever before.”
Graduates are not required to repay tuition fee loans until they are earning more than £21,000 a year.
In response to calls for this threshold to be reduced, universities minister David Willetts said we “do not have to take those types of decisions”.
“I think this is a sustainable system,” he told Channel 4 News. “It is a far more sustainable system than any alternative.
“The exact forecasts will bounce around depending on exactly what people are forecasting for earnings 35 years out… I can envisage in the future. If graduate earnings pick up and rise more than forecast, that the amount we are going to collect back will improve.”
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