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Scrapping the Early Repayment Penalty Is Good News for Students and the Long-Term Future of Universities, Says Perspective(March 13, 2012)
LONDON, UNITED KINGDOM -- (Marketwire) -- 03/13/12 -- The government's decision to scrap the early repayment penalties on student loans will not only be welcome news for hundreds of thousands of students but is also likely to be good news for the long-term future of universities as they struggle to attract new students amid the rise in tuition fees, says Perspective, a leading provider of education tracking software.
Ministers were considering levying annual charges of about 5% on excess payments to prevent students escaping interest charges on 30-year repayment plans, but with tuition fees rising to a maximum of GBP 9,000 per annum, which has already caused a drop in applications, universities could have deterred students even further.
Paul Davis, managing director of Student management system provider, Perspective, commented: "If the early repayment penalty had been approved and implemented it would just have given potential students an extra reason to look at alternative further education routes than that of university. With tuition fee's already rising before the end of the year the number of applications has dropped and, to put off students further could have meant trouble for many institutions in the long-term.
"I can see the reasoning behind the penalty as universities need to obviously make money to survive, but it just wouldn't have been practical, especially in the current economic climate where everyone, including students, is wary about spending money and getting into debt. I'm sure the scrapping of it will be received gratefully."
From September, students will be able to take out loans to cover their annual tuition fees bill of up to GBP 9,000, as well as their living costs. They will begin to repay the loans once they earn more than GBP 21,000 a year, and any outstanding balance will be written off after 30 years.
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