Students have reacted angrily to major changes to how England's poorest graduates will need to repay their tuition fee loans, which were excluded from George Osborne's Autumn Statement speech yesterday.
As part of a raft of unpopular measures that will hit young people, the government confirmed its plans to change student loan repayment conditions in the spending review, potentially costing students up to £6,000 more, according to IFS estimates.
Despite previously promising students in 2010 the £21,000 repayment threshold would be raised in line with average earnings, Osborne announced it would be frozen for five years, saving the government up to £680m.
Even graduates who took out loans in 2012 will be affected, as the threshold freeze is to be backdated four years.
Martin Lewis, founder of Money Saving Expert, accused Osborne of not having "the balls" to announce the changes in his Autumn Statement speech.
"It is one thing to set up a system that is unpopular but it is entirely different to make retrospective changes that mean you cannot even rely on what you were promised at the time you started to study. Even though it was warned of the huge dangers of doing this, it’s still blundering ahead, ignoring all right thinking concern.
“The fact that the Chancellor didn’t even have the balls to put it in his Autumn Statement speech shows that he knew how unpopular it would be. If a commercial company made retrospective changes to their loan terms in this way they’d be slapped hard by the regulator – the Government shouldn’t be allowed to get away with it either.
“I’m deeply saddened it’s chosen to act in this way."
The IFS estimated the changes will mean graduates on average salaries will pay back £3,000 extra, while disadvantaged students will be even worse off. Those earning close to the median income will be made to pay back £6,000 more.
The student opportunity fund, which provides financial support to university students from disadvantaged backgrounds, was also slashed in half, with universities expected to plug the near-on £193bn deficit.
Labour MP Ian Austin accused Osborne of "burying" the news the fund would be reduced.
"As usual, the small print of the government’s documents reveals the truth," he said. "George Osborne said he was investing in Britain’s future and prioritising investment in education, but is slashing funding for the academy schools programme and halving the fund for disabled and disadvantaged university students.
“Everyone knows savings have to be made, but these decisions will hit schools and Britain’s poorest students when the government should be making education our number one priority.”
According to the National Campaign Against Fees and Cuts (NCAFC) group, a government-run consultation, which garnered responses from student unions, universities and higher education analysts, found 410 of 489 respondents did not agree with the changes.
Hope Worsdale, who sits on NCAFC's national committee, said: “This shows that the government is intent on waging ever more unjust attacks on borrowers and the low waged. Our opposition must be as unflinching as their attacks.”
Labour has said the government was guilty of misselling, and could be legally challenged over its new policy.
Speaking to The Independent, shadow minister for further education Gordon Marsden, said: "It’s no surprise that they’ve sneaked this out today because it illustrates the panicked situation that they’re in with the gaping big hole in terms of repayments. But this is going to do little in the short-term to address that.
“This is actually equivalent to misselling because after all people signed up on this agreement in 2012.
“Now the government wants to basically reinvent the wheel.
“I’m not even sure what the legal position would be if anybody wanted to take a judicial review on it.”
Callum Cant, a recent graduate and member of NCAFC, added: "Millions of graduates are being cheated by the government. This move shows the utter contempt and lack of respect that they hold for us - in no other contract would you think so lowly of the other partners that you feel free to remorselessly worsen the terms half way through."
A spokesman for the Department for Business said: “When the £21,000 threshold was set in 2010, assumptions had to be made about earnings growth between 2010 and 2016.
“While the economic recovery is underway, it is not yet fully reflected in earnings, so the threshold is higher in real terms than originally intended.
“Making this change helps contribute to the current government’s debt reduction targets.”