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My student loan was mis-sold, says graduate | My student loan was mis-sold, says graduate |
(about 1 hour later) | |
An open letter from a graduate to his MP, showing how interest on his student loan has increased his debt by £1,800 in the year since he left university, has gone viral online. | An open letter from a graduate to his MP, showing how interest on his student loan has increased his debt by £1,800 in the year since he left university, has gone viral online. |
Simon Crowther was in the first wave of students faced with £9,000 tuition fees and says he did not understand what he was doing when he took the loan at 18. | Simon Crowther was in the first wave of students faced with £9,000 tuition fees and says he did not understand what he was doing when he took the loan at 18. |
His letter to Vernon Coaker MP has been shared 38,000 times on Facebook. | His letter to Vernon Coaker MP has been shared 38,000 times on Facebook. |
The Student Loans Company says the interest rates were clearly set out. | The Student Loans Company says the interest rates were clearly set out. |
Mr Crowther started a civil engineering degree at Nottingham University in 2012. | Mr Crowther started a civil engineering degree at Nottingham University in 2012. |
In the letter, also copied to the prime minister, he says that when he took out the loan he understood it would be at a very low interest rate of about 0.5%. | In the letter, also copied to the prime minister, he says that when he took out the loan he understood it would be at a very low interest rate of about 0.5%. |
'No experience' | 'No experience' |
"I was still in the sixth form at school when I agreed to the student loan. | "I was still in the sixth form at school when I agreed to the student loan. |
"I had no experience of loans, credit cards or mortgages. | "I had no experience of loans, credit cards or mortgages. |
"Like all the other thousands of students in the UK, we trusted the government that the interest rate would remain low." | "Like all the other thousands of students in the UK, we trusted the government that the interest rate would remain low." |
He says he graduated last year "with a huge debt". | He says he graduated last year "with a huge debt". |
And since he graduated it has accrued interest at the rate of inflation - which is currently 0.9% - plus 3%. | And since he graduated it has accrued interest at the rate of inflation - which is currently 0.9% - plus 3%. |
He says that in some months since then the interest has been more than £180, amounting to £1,828 in the year to March, with the total debt rising to £41,976. | He says that in some months since then the interest has been more than £180, amounting to £1,828 in the year to March, with the total debt rising to £41,976. |
"I feel we have been mis-sold the loan," he says in the letter. | "I feel we have been mis-sold the loan," he says in the letter. |
The letter says that he believes the interest rates were hiked after the loans were sold to a private company - though this turns out to be incorrect. | The letter says that he believes the interest rates were hiked after the loans were sold to a private company - though this turns out to be incorrect. |
It has attracted almost 50,000 Facebook "likes" since it was posted on Tuesday. | It has attracted almost 50,000 Facebook "likes" since it was posted on Tuesday. |
One graduate said she had "nearly passed out" when her statement came through. | One graduate said she had "nearly passed out" when her statement came through. |
One comment suggested the possibility of a class action on the issue in the courts. | One comment suggested the possibility of a class action on the issue in the courts. |
'Fair and sustainable' | 'Fair and sustainable' |
But the government and Student Loans Company say the variable rate of interest, of inflation plus up to 3%, was made clear when the students first took out their loans. | But the government and Student Loans Company say the variable rate of interest, of inflation plus up to 3%, was made clear when the students first took out their loans. |
"It is not the case that this individual's interest rate has increased or that their loan has been sold," said a Student Loans Company spokesman. | "It is not the case that this individual's interest rate has increased or that their loan has been sold," said a Student Loans Company spokesman. |
"The variable interest rates that would apply to his student loan are unchanged from those in force at the time of his application in 2012. | "The variable interest rates that would apply to his student loan are unchanged from those in force at the time of his application in 2012. |
"All students that take out a loan must sign a declaration confirming that they have read the terms and conditions of the loan before it will be paid. | "All students that take out a loan must sign a declaration confirming that they have read the terms and conditions of the loan before it will be paid. |
"These terms and conditions clearly set out the interest rates that the student will be charged, when they will start repaying and when interest starts accruing." | "These terms and conditions clearly set out the interest rates that the student will be charged, when they will start repaying and when interest starts accruing." |
Student loan repayment guide | |
The Department for Business, Innovation and Skills said the system was fair and sustainable "as the OECD has recognised". | The Department for Business, Innovation and Skills said the system was fair and sustainable "as the OECD has recognised". |
"It removes financial barriers for anyone hoping to study and is backed by the taxpayer, with outstanding debt written off after 30 years. | "It removes financial barriers for anyone hoping to study and is backed by the taxpayer, with outstanding debt written off after 30 years. |
"Graduates only pay back at 9% on earnings above £21,000 and enjoy a considerable wage premium of £9,500 per year over non-graduates," said the spokesman. | "Graduates only pay back at 9% on earnings above £21,000 and enjoy a considerable wage premium of £9,500 per year over non-graduates," said the spokesman. |
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