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At the recent Conservative Party Conference, Martin Lewis pushed his campaign for students to stop thinking of student finance as loans. I fully support this. What other loan will just stop taking payments the moment your salary drops below a threshold; in which the repayments vary in direct proportion to salary and, if you haven’t paid the loan back in 35 years then what remains is written off, no questions asked.

If this type of loan were offered by a bank, they would very soon be out of business. Lewis’ proposal is to change the name to “Graduate Contribution”. Laudable – but politically inert, as we have been here before. Community Charge became poll tax, Spare Room Subsidy became bedroom tax. The name can change, but the narrative is a far more stubborn stain to remove.

The practical offer to students by the Government is to increase the threshold of salary at which repayment begins from £21,000 to £25,000. This is welcome, but will do little to stop the narrative that students are ‘saddled with crippling debt’. We will continue to hear that they are stuck with a debt burden, and the move could even be spun by the left into convincing students that it just delays payment, so you will be burdened with the terrifying spectre of debt for longer. Raising the threshold for repayment is a positive move, but leaves the door open for critics to say it favours the richer students that land plum jobs and can start reducing the debt earlier, leaving the others beleaguered for many more years.

Clearly, we need a bolder move to change the narrative. Like any rebrand, there has to be a multi-faceted approach to give its launch even half a chance of success, and with something so politically critical no effort should be spared to make this work. The narrative of the loan system being a debt burden has cut through very deeply, the opposition know it – and they will try anything to keep it going. Anything said by Government to change the narrative will be ignored or dismissed as spin. True, there are students out there who speak very positively about the student loan scheme, but they don’t fill a big enough cohort to be any more than a niche, and will nearly always be dismissed by vocal opponents as Tory apologists.

But student loans don’t offer an open goal for Labour either. Contrary to what is perceived, the party’s announcement during the general election that they woukd scrap tuitions fees was not well received by all students. A look at the Twitter chatter around the time of the announcement shows that there was a begrudging welcome of this policy, but what students really wanted was for their debt to be cancelled. The Green Party had already announced this in their manifesto days before, and this would not have been missed by Labour’s election team. With their own manifesto ‘only’ offering a scrapping of the fees, they knew they had missed the boat in convincing students to vote for them. So, three days after Angela Rayner pledged to scrap tuition fees, Jeremy Corbyn made that coded announcement to ‘deal with’ student debt. This was interpreted by students as a cancelling of their ‘debt’, which motivated them to switch to Labour in vast numbers.

The truth is that there is already a plan to cancel student debt. After 35 years anything, outstanding is written off. The obvious problem with it is that 35 years is longer than most new graduates have been alive. This is such a distant horizon that the conditon is meaningless. Along with the measures already announced, were write-off threshold reduced we could go some way to creating a cohort of graduates who can speak for themselves that the debt is not like any other debt.

Currently, there are no students who have had their loan written off. Take the Plan 1 scheme as a starting point, which covers loans taken from 2006 to 2012 and which has a 25 year writ- off threshold. We will have to wait until 2031 until we even start to get graduates who can say their debt has been reduced to zero and a typical graduate will be aged 46 – hardly a contemporary role model for new students.

We need to look at the write-off threshold more than the repayment threshold or bottom line fees to make a difference that young graduates can relate to and get enthused enough to know that we ‘get it’. Plan 1 students are now over 10 years into paying off their loans, but Plan 2 students who took loans from 2012, have the full 35 year write off threshold and will not be debt-free until they typically 56 years old.

We need to be bold. By reducing the write-off threshold to 20 years after graduation for both plans 1 and 2 we will have students, currently being convinced they are burdened with debt, able to see the light shining brightly at the end of the tunnel. This makes the narrative of burden, millstone and ‘saddled with debt’ much less likely to stick. Yes, it will cost – but with Plan 1 loans at a lower level and over ten years in, this could be managed. Plan 2 loans, on a 20 year write off, will appear on the exchequer books in 2032, enough time to prepare.

Being bold will hasten the pace towards having large cohorts of graduates debt free and able to spread the message to new students that this isn’t a debt at all. It also makes a rebrand to ‘Graduate Contribution’ or ‘Charge on account’ more likely to succeed where Spare Room Subsidy faltered and Community Charge comprehensively failed.

66 comments for: Richard Short: Student loans – change the title, change the narrative

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