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How are graduates who move abroad getting away with not paying off their student loans?

As the student loan repayment threshold falls, we speak to some of the estimated 14,000 students living abroad and defaulting on student loans.

As the government throws out a petition by UK students opposing a freeze on the student loan repayment threshold, some UK graduates are choosing to opt out of the repayment system entirely by moving abroad. The National Audit Office found in November 2013 that around 14,000 former students with debts of £100m were living overseas and behind on payment.  

In February this year, universities minister Jo Johnson vowed to take more action to chase up these non-payments, saying: “We will take stronger action to trace borrowers including those overseas, act to recover loan repayments where it is clear borrowers are seeking to avoid repayment, consider the use of sanctions against borrowers who breach loan repayment terms and, if necessary, prosecute.”

The Department for Business, Innovation and Skills confirmed that it has already prosecuted some UK students for failing to make repayments, although it said this was a last resort

But for the British students living overseas and ignoring repayment letters, the threat of prison seems a distant reality. Ella Hargreaves, 24, says: “It’s something I would have probably taken very seriously if it was in place whilst I was moving to Vietnam, but now I have lived here for so many years I find it hard to worry about.”

She moved years ago, and says: “I guess I didn’t really decide to not make repayments. It’s something that was automatically happening when I was working and living in England, but as soon as I moved away I wasn’t a tax payer any more.”

She adds: “I'll be honest, I didn’t try and figure out how to pay or how much I should pay whilst living and working overseas. My brother has lived here for six years and hasn't paid anything back, so I knew they wouldn't go out of their way to find me.”

Owen Paterson, 27, has a similar story. He moved to Europe immediately after graduating, then to Latin America and has never made a loan payment. He is now studying a masters at a UK university through distance learning. He says: “Funnily enough, I haven't received any communication from Student Loans, but I have entered the system and seen that the interest is taking effect big time.

One borrower told the New Statesman that she tried to make payments from abroad but almost gave up after suffering logistical problems. Lara Dickinson, 28, said: “I've tried to keep them updated but it is ridiculous as they don't accept faxes or emails and everything has to be done by post. I also sent some documents recorded delivery last year which got 'lost'. I had to send them again – and they refused to help with postal costs.”

Rosie Howarth, 26, says the same problems caused her to stop trying. She says: They don't use email so it was pretty impossible to organise anything when i was away. Since her return to the UK, she has been asked for £2,500 in arrears which she says she can't pay.

Until a couple of years ago, graduates who moved abroad were exempt from making payments on their student loans, but with more moving overseas this policy has changed. The Student Loans Company has now compiled a list of equivalent minimum salaries for every country in the world, which several of the people I spoke to said was calculated too harshly.

Lara says: “Here in Colombia, the earning threshold is a lot lower for repayments than at home, but then they would charge £150 in repayments each month  which is inaccessible and a ridiculous sum for many earners here.”

Zoe Davis, 29, who graduated in 2014 and lives in Germany, says she has never heard anything from student loans and with a young child to support, simply can’t afford to pay: “I'm a post-doctoral research scientist and I decided not to pay because I can't afford it. With childcare costs and everything else I'm barely scraping by as it is.”

She will have to begin payments on her loans soon, when she begins a secondment to a British university. She says this will leave her struggling to afford childcare.

As students back home say they were conned by a government promise to up the repayment threshold in line with inflation, for those who have already left there isn't much motivation to pay into what many believe is a faulty system.

Owen says: Moving away was a case of obligation if I wanted to go from university straight into something related to my studies. Back in the UK there would have been very limited opportunities, and I didn't want to go and work in a restaurant or something like that, like a lot of my graduate friends ended up doing.

Like many of the graduates, Ella now feels more at home in her adopted country: “I'm documented fully here. I pay tax to the Vietnam government, I pay fees, I pay for a lot of things. So this is my real life now, student debt feels a million miles away.”

Owen agrees, saying: “If I move back, I guess they would locate me and I would end up having to start making payment. However, I have no plans to move back in the near future.”

This may be the biggest problem for the education minister and his repayment strategy. For those graduates who have renounced Britain for good, it could prove difficult to provide the incentive to give back the estimated £367.5m missing from British coffers.

And with the UK repayment threshold going down in real terms and uncertainty over Britain’s future in the EU, we might see more graduates opting out of the system to build a life overseas.

*names have been changed

Photo: Getty
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I'm not going to be General Secretary, but the real fight to change Labour is only just beginning

If Labour gets serious about a new politics, imagine the possibilities.

For a second time, I was longlisted for the role of General Secretary of the Labour Party this week. For a second time, just as in 2011, I was eliminated in the first round. The final shortlist now consists of two veteran trade unionist women leaders, Jennie Formby of the Unite union and Christine Blower - formerly of the National Union of Teachers and the Socialist Party. I met them both yesterday at the interviews; I congratulate them, and look forward to hearing more about their ideas for Labour party renewal.

Last week in both the New Statesman and LabourList, I explained why I thought we needed a General Secretary “for the many”. I set out a manifesto of ideas to turn Labour into a twenty-first century campaigning movement, building on my experience with the Bernie Sanders campaign, Momentum, Crowdpac, 38 Degrees and other networked movements and platforms.

I called for a million-member recruitment drive, and the adoption of the new “big organising” techniques which combine digital and face-to-face campaigns, and have been pioneered by the Sanders movement, Momentum, Macron and the National Nurses Union in America. I set out the case for opening up the party machine in a radical but even-handed way, and shared ideas for building a deeper party democracy.

I noted innovations like the Taiwanese government’s use of online deliberation systems for surfacing differences, building consensus and finding practical policy solutions. Finally, I emphasised the importance of keeping Labour as a broad church, fostering more constructive internal discussions, and turning to face outward to the country. I gladly offer these renewing ideas to the next General Secretary of the party, and would be more than happy to team up with them.

Today I am launching, a new digital democracy platform for the Labour movement. It is inspired by experience from Taiwan, from Barcelona and beyond. The platform invites anyone to respond to others’ views and to add their own; then it starts to paint a visual picture of the different groupings within the movement and the relationships between them.

We have begun by asking a couple of simple questions: “What do we feel about the Labour party and movement? What’s good, and what’s more difficult?” Try it for yourself: the process is swift, fun and fascinating. Within a few days, we should have identified which viewpoints command the greatest support in the movement. We will report back regularly on this to the media.

The Labour movement is over 570,000 members, thousands of elected representatives, a dozen affiliated unions and millions of Labour voters. We may disagree on some things; but hopefully, we agree on far more. Labour Democracy is a new, independent and trustworthy platform for all of us to explore our differences more constructively, build common ground, and share ideas for the future. I believe Labour should be the political wing of the British people, as close to the 99 per cent as possible – and it will ultimately only be what we make of it together.

Yesterday I spoke over Skype with Audrey Tang, the hacker and Sunflower Movement leader who is now Digital Minister of Taiwan. Audrey is a transparent politician, so she has since posted a video of our conversation on YouTube. I recommend watching it if you are at all interested in the future of politics. It concludes with her reflections on my favourite Daoist principle, that true leadership leaves the people knowing that they have made change themselves.  

This General Secretary recruitment process has been troubled by significant irregularities, which I hope the party learns from. The story is considerably more complex and difficult than is generally understood. I have spent considerable time in the last week trying to shine greater light on the process in the media and social media, and encouraging the national executive committee, unions and politicians to run a more open and transparent process. I even started a petition to the NEC Officers group, calling for live-streamed debates among the candidates for this crucial and controversial party management role. I very much hope that there is no legal challenge.

Most importantly, the last week has exposed a significant fault line in Labour between the new left and the old left. When Jon Lansman of Momentum entered the contest against the “coronation candidate” Jennie Formby, many people read this as a fight between two factions of the old left. But Jon’s intent was always to open up a more genuine contest, and to encourage other candidates – particularly women – to come forward. Having played the role only he could play, he eventually withdrew with dignity. His public statements through this process have been reflective of the best of the new politics. And despite our very different political journeys, he kindly agreed to be one of my referees.

There has been plenty of the old transactional machine politics going on behind closed doors in the last couple of weeks. But out in the open, the new left movements and platforms have shown their strength and relevance. Momentum emailed all its members encouraging them to apply for the role. On Facebook Live, YouTube and podcasts like All The Best, the Novara Media network has been thoughtfully anatomising the contest and what it means for the future of the left. Even the controversial Skwawkbox blog finally agreed to cover my candidacy, and we had a constructive row about the leaked memo I wrote for Corbyn’s office back in December about how to win the next election using data, organising and every new tool in the box.

I am worried about the old left, because I feel it is stuck in a bunker, trapped in a paradigm of hierarchical power and control. The new left by contrast understands the power of networks to transform conversations and win hearts and minds.

The old left yanks at levers, and brokers influence through a politics of fear and incentives. But this tired game is of decreasing relevance in this day and age. The new left has the energy, the reach, the culture and the ideas to build a new common sense in this country, and to win decisive victory for Labour and progressives in the next general election – if the old left will partner with it. 

I am keen to help. So are many others. I hope we can start to have a more constructive and equal conversation in Labour soon. Otherwise an exodus may begin before long; and no-one wants that.

Paul Hilder is an expert on new politics and social change. He is a co-founder of Crowdpac, 38 Degrees and openDemocracy. He has played leadership roles at, Avaaz and Oxfam, and was a candidate for general secretary of Labour in 2011.