Top Universities Call for Removal of ‘Deceptive’ Student Loan Statement
The current student loan statement is not fit for purpose and needs a radical overhaul, warns a new report released this week.
MoneySavingExpert.com (MSE) and the Russell University Group tore up the existing statement and launched their own version in February, which was tested by nearly 6,000 people.
The results were released this week in a detailed report and now MSE and the Russell Group are urgently calling on the government and the Student Loans Company (SLC) to consider using their new statement as a basis for rethinking the official version.
The goal is to produce a statement that informs people about their personal circumstances, but also uses that information to illustrate how short and long term student loan repayments actually work.
Real cost of education
This should help graduates see the true cost of their education, as the new statement focuses on repayments, more than debt.
For the majority of college graduates, their unpaid “debt” is a mostly meaningless number that bears only a vague resemblance to what they owe.
However, that figure, and the added interest, is the main data provided on the current statement – leaving many people needlessly frightened.
The graduate contribution statement was tested in an online survey of 5,796 students, alumni and parents, selected institutions (such as student unions) as well as in a series of student focus groups.
He found that 96% of those polled said the new information was clear, while 90% said the statement helped them understand the student funding system.
Written responses included, “It does a much better job than the current information we have access to through the Student Loans Company, which doesn’t even tell you what your contributions have been. Much clearer and easier to understand!
“I think it is very necessary! Currently, SLC communications are very complicated, time consuming and not at all clear about what you are paying, and more importantly WHY you are paying what you are.
The report will be presented to the government and to Philip Augar, who is leading the review of post-18 education and funding.
MSE, its founder Martin Lewis and the Russell Group are now urgently calling on the government and the SLC to act on its recommendations.
Martin Lewis, Founder of MoneySavingExpert.com, said: “The current student loan statement is a blunt and deceptive tool that is financially dangerous. It arouses often unnecessary fear and distress in some of the millions of people who receive it.
“And worse, since this is a bridging document, it ripples through society and therefore falsely risks deterring many from a future in higher education.
“Focusing on bad information can have damaging consequences for individuals. One woman told me how fear of growing interest in her statement led her to use an inheritance to pay thousands of dollars in excess.
“But since she was in a low-income profession, with little chance of earning much, her overpayment would have no impact on what she would pay back in the future – so she had just emptied the money.
“That’s why we started from scratch on the declaration. Fortunately, for a first attempt, the success rates were extraordinary. “
David Thompson, Senior Policy Analyst at The Russell Group, added: “I hope the Department of Education and the Student Loans Company can move quickly to adopt the best features of our proposed new statement.
“This would not only be in the obvious interest of graduates who are currently receiving transcripts, but could also help reassure current and prospective students about how student finances actually work. “