From: John Riseley, Harcourt Drive, Harrogate.
THE Government would be unconcerned, and might indeed be relieved, to learn that their line on student loan reform is the opposite of what I would have suggested. They propose increasing the threshold salary for stating repayments to £25,000 a year, while the interest rate payable goes up to 6.1 per cent.
What is iniquitous about debt is not that borrowers are required to repay the money they received, but the often greater sums they pay as interest. Higher interest rates reflect the cost to the lender of some borrowers defaulting. Yet it is those who do actually pay what they owe who also pay this interest. Bad borrowers are carried by good ones, with the burden falling most heavily on those who, because of their limited means, pay over a longer period.
I would cut the interest rate to below that of inflation while maximising the amount of the principle recovered. This could be done by drastically reducing the threshold for repayment, ending the 30 year cut-off and introducing joint liability for married or co-habiting couples.
The profound reluctance to do this stems from the perceived political need to keep the universities open to those whose attendance serves no economic purpose.