There is little incentive to evade National Insurance contributions, since one's future benefits are involved. And graduates whose loans have to be written off entirely because they do not earn 20 per cent of average earnings in any single week throughout their entire working life will be increasingly rare. The scheme accords well with one of the key Beveridge principles. It reinforces the contributory principle and helps individuals to be self-supporting by enabling them to redistribute to themselves at different stages in their life cycle. This is what retirement pensions do.
Student loans are an up-front pension.
The scheme is flexible, cheap to run, easy to understand, administratively simple, politically attractive, efficient, fair and easily extensible' The scheme, in short, is flexible, cheap to run, easy to understand, administratively simple, politically attractive, efficient, fair and easily extensible. The government's scheme, in contrast, has combined effects of defaults, write-offs and administrative costs that wholly outweigh any public expenditure savings. It would be cheaper simply to give the students the money. The report came as a further blow to government plans for farming the scheme out to private sector banks. The Government has not answered why banks and building societies should want to handle such unpredictable loans, yet it is rushing privatisation through Parliament.