Uni professor says students should be due compensation over ‘scam’ student loans
Retired Goldsmith’s lecturer speaks out about ‘scam' student loan interest rates – says he believes the current loans really were ‘mis-sold' to students.
Dr. Clive Seale, a retired uni professor and dad of three graduates, told The Guardian that despite originally supporting the government’s choice to raise tuition fees to £9,000 in 2012, he now thinks the loans were ‘mis-sold’ and that students should be due some sort of compensation.
This comes just weeks after engineering graduate Simon Crowther wrote to his MP criticising the government’s ‘underhanded’ student loan terms (the letter went viral, but was factually incorrect – we explain all here!).
Prof. Seale's story
Credit: The Wellcome Collection
Seale, who has three daughters who have all studied under different loan terms, admits that he initially supported the coalition government's decision to raise tuition fees back in 2012.
Despite getting serious stick from his family for siding with the government on this one, as a uni professor he believed that increased tuition would go towards massively expanding the university education system.
As far as he could see, although the fees had increased, the low interest rates of student loans would prevent repayments from being too much of a burden for his daughter. He told The Guardian:
I was a supporter of the student loan system, as I figured it was not like a real debt, being written off after 30 years and only payable on a sliding scale of earnings.
However, it wasn’t until his youngest daughter finished her first term as a 2012 loan student that he was alerted to what the payable interest rate actually is on the £9,000 per year loan (he doesn’t state exactly how this was brought to his attention, but it certainly says something that even a uni professor with a daughter in the loans system wasn’t even aware of the loan terms!).
He claimed he was “appalled” when he realised that his daughter would be accruing interest of RPI +3% on her loan whilst studying, and after that a rate of RPI plus more depending how much she went on to earn.
Why he believes the loans were mis-sold
Seale states two reasons why he believes the loans were mis-sold:
- That after some media research, he concluded that “99%” of media coverage focusses on the £9,000 per year rise, with almost no mention of the interest rates whatsoever
- That no effort was made on the part of the government to ensure that young people understood the complex loans system they were signing up to.
As Seale rightly points out:
Normally, financial institutions are obliged to provide customers with illustrative quotations indicating the impact of interest payments, presented in ways that are easy for people to understand. Not only was this not done, but the publicity given to the interest rate was clearly inadequate to reach people who ought to have known about it, and were advising school students.
It's worth pointing out that legally it would be hard to argue that the loans were ‘mis-sold’ since details of interest rates were available since 2010 (although it's true that students had to look for the details themselves).
The real issue here is that quite simply: student loans are complicated, and anyone committing to one should be completely aware of what they’re signing up to before they make any decisions.
Seale states that he believes that some kind of compensation scheme for those affected by the lack of clarity should be set up. Let's not hold our breath on that one!
Our take on this…
Our student finance expert, Jake says:
Although Prof. Seale has highlighted some really important points, it's worth clarifying that no matter what the interest is on your student loan, you'll still pay back 9% of anything above £21,000 earnings.
We've been working hard over the years to make the terms of these loans clear to students, and nothing has really changed (except for the government's decision to retrospectively freeze the £21k threshold which we think is appalling).
The real problem here was the poor communication of the facts. As this points out, it seems that even some people in trusted positions like this professor were confused!
Make sure you're armed with the facts regarding your student loan, by checking out our complete guide to student finance.