The UK's Chancellor of the Exchequer Philip Hammond, above, is open to new ideas that will ease the student loan debt burden.
Bright Blue, an influential conservative think tank in the United Kingdom, issued a warning against reducing the interest rates on student loans, a move being considered by Chancellor of the Exchequer Philip Hammond.
Bright Blue, who made their opinions public via an article on The Guardian, is urging Hammond to resist pleas from the Tory members of the government to cut interest rates. As Chancellor of the Exchequer (a role similar to the Secretary of the Treasury in the U.S.), Hammond must submit an autumn budget. Senior Tories are pushing Hammond to slash student loan interest rates as a way to appeal to younger British voters.
Bright Blue, backed by over 100 Conservative Members of Parliament (MPs), is arguing that cutting student loan interest rates would only serve to benefit the more financially secure in the UK.
The CEO of Bright Blue, Ryan Shorthouse, gave the following statement to The Guardian: “The Conservative government needs to and should make a big offer to young people. But reducing tuition fees or reducing the interest rate on student loans would only benefit high-paid graduates.”
Besides letting the UK government know what they should not do, Shorthouse had some suggestions of his own. The Bright Blue executive proposed raising the earnings threshold above the current level of £21,000. Currently, once a student loan borrower begins earning over £21,000 they must begin student loan repayment. Shorthouse wants that threshold increased, even though it is set to be frozen until 2020.
The think tank’s leader said that raising the earnings threshold would “effectively be a tax cut for graduates,” because they would be forfeiting a smaller percentage of their monthly salary.
In terms of what the UK government will do about student loan reform, that question remains unanswered. Hammond, who has made it clear that he wants to help young Britons hampered by student loan debt, has asked all MPs to submit 250-word proposals regarding how they would fix the student loan debt issue in the UK.
The student loan debt issue across the pond has become quite the story, and The Student Loan Report has been covering it as the situation unfolds. In mid-August, the UK government confirmed that they had no plans to renege on the 6.1 percent student loan interest rate that was recently implemented. Despite heavy opposition, the interest rate hike went through as expected on September 1st. Prominent organizations like the Russell Group, which represents 24 of the UK’s most prestigious universities, called on the UK government to reevaluate the 6.1 percent interest rate, in addition to the £21,000 income threshold.
In June, total student loan debt in the UK soared above £100 billion for the first time ever in the country’s history.
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