Welsh students, represented by the National Union of Students in Wales, believe that they have overpaid loan repayments due to the pay-as-you-earn system in place to collect the debt. In some cases they have even started paying them back before they earn enough.
Ben Gray, president of the Welsh NUS, in a BBC interview said: “What we are seeing is a catalogue to bad administration.”
The government claims £600m a year from tuition fees that were originally introduced in 1998 but this has been subject to much amendment in the past 10 years. Students feel that having to pay loans directly to the Student Loans Company discourages people to take out private loans that are harder to arrange.
The Student Loans company claims however, that the reason for the lack of competition in the student loans market in the UK is due to the highly favourable rates of interests offered to students. They also do not have to pay their loans unless the earn over £15,000 per annum.
The United States has a vibrant student loan market, traditionally offering highly competitive rates to woo customers. However as in any open market, these conditions are open to change and with the credit crunch lenders are pulling out of the market altogether. The US government is also less keen to subsidise loans if lenders are at a risk of going bust. This removes the safety net on repayments for students while they study.
To improve its service the Student Loans Company in Britain has already pledged to introduce an online payment account to clear up any confusion over what is owed by students.