I've got 2 starting uni next month , my first did a year at Essex hated it and dropped out after a year , after having a year out, she has decided to go back and start a different course to become a primary school teacher, the other has just turned 18 and going Bath Spa to study Drama, gonna have to help both , how ? Fuck knows
Your have to knock the football on the head north stand
Good luck Andy. Everything I read about Uni now gets on my nerves. Seems like everyone gets hammered, students and parents unless you are very well off
pretty sure that is the entire point of going to uni
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
On 1. above, not so sure the 'tax' is avoided - just paid in a different way by the parent i.e. When my daughter goes to Uni next year, if I fund it in it's entirety that's say £50k that I would otherwise have still invested and be returning 7.5%+ on per annum. Over the next 25 years with 7.5% growth per annum the £50k would have risen to over £300k compounded - does that mean my daughters University education would have cost me £300k and therefore would have paid for it a few times over?
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
On 1. above, not so sure the 'tax' is avoided - just paid in a different way by the parent i.e. When my daughter goes to Uni next year, if I fund it in it's entirety that's say £50k that I would otherwise have still invested and be returning 7.5%+ on per annum. Over the next 25 years with 7.5% growth per annum the £50k would have risen to over £300k compounded - does that mean my daughters University education would have cost me £300k and therefore would have paid for it a few times over?
You can look at it that way and that's not wrong. But it's the parents losing out rather than the student. So compare me to some of the people I met at uni. Their parents funded them fully through uni. Probably to around the figure you suggest. From my point of view that's the parents choice but it's a choice most don't have. That student could get the same job as me and no matter how hard I work they will get more take home pay than me. They will find it easier to get on the housing ladder.
Side point - whilst your student loan isn't treated as a loan for mortgage purposes the repayments are taken off your earnings
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
1) so many people do this. I met loads of them. Whether it's rational or not didn't matter. It happens and they have an advantage.
Equally there are far far more people in group 2 than you would imagine. People go to uni for a good time and to get away from home for 4 years. Some have no care about their degree and just want to do enough to spend another year in that environment. Many don't want to get a graduate job are happy to go back home and work for a low salary and never pay it off. That's their choice but why should I fund their 3 years of fun.
I agree there should be an interest rate but 6.4% is mad. On my loan that's over a fiver a day.
I agree. My isn't isn't with it being a tax. My issue is that they pretend it's not a tax and allow either those with rich parents or the lazy (not everyone earning below th threshold is lazy) to be exempt from the tax.
It is a tax. So call it a tax and apply it to all graduates. Make it progressive with bands much like income tax.
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Fuck no... Why should the people working there arse off to get to 100k+ pay for everyone else's degree? My loan repayments are big enough to piss me off already, I'd be seething if they got to a level high enough to pay for everyone else. University is a state-sponsored piss up for the majority (myself included) but it is a state-sponsored piss up that has got me to where I am today. Everyone should pay it, however, the current interest and repayment rates are absolutely appalling
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Fuck no... Why should the people working there arse off to get to 100k+ pay for everyone else's degree? My loan repayments are big enough to piss me off already, I'd be seething if they got to a level high enough to pay for everyone else. University is a state-sponsored piss up for the majority (myself included) but it is a state-sponsored piss up that has got me to where I am today. Everyone should pay it, however, the current interest and repayment rates are absolutely appalling
That's how tax works unfortunately - using income tax as an example, the 300k earners in the UK above the 45% threshold pay nearly as much tax as the 25million earners paying only basic tax rates.
Yet all of us have the same access to and benefit from the same public services....
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Fuck no... Why should the people working there arse off to get to 100k+ pay for everyone else's degree? My loan repayments are big enough to piss me off already, I'd be seething if they got to a level high enough to pay for everyone else. University is a state-sponsored piss up for the majority (myself included) but it is a state-sponsored piss up that has got me to where I am today. Everyone should pay it, however, the current interest and repayment rates are absolutely appalling
That's how tax works unfortunately - using income tax as an example, the 300k earners in the UK above the 45% threshold pay nearly as much tax as the 25million earners paying only basic tax rates.
Yet all of us have the same access to and benefit from the same public services....
Yes but then as I said above they should be open about it call it a tax charge it to every graduate have rising bands and be done with the issue. Don't give some the opportunity to avoid it.
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Fuck no... Why should the people working there arse off to get to 100k+ pay for everyone else's degree? My loan repayments are big enough to piss me off already, I'd be seething if they got to a level high enough to pay for everyone else. University is a state-sponsored piss up for the majority (myself included) but it is a state-sponsored piss up that has got me to where I am today. Everyone should pay it, however, the current interest and repayment rates are absolutely appalling
That's how tax works unfortunately - using income tax as an example, the 300k earners in the UK above the 45% threshold pay nearly as much tax as the 25million earners paying only basic tax rates.
Yet all of us have the same access to and benefit from the same public services....
Yes but then as I said above they should be open about it call it a tax charge it to every graduate have rising bands and be done with the issue. Don't give some the opportunity to avoid it.
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Fuck no... Why should the people working there arse off to get to 100k+ pay for everyone else's degree? My loan repayments are big enough to piss me off already, I'd be seething if they got to a level high enough to pay for everyone else. University is a state-sponsored piss up for the majority (myself included) but it is a state-sponsored piss up that has got me to where I am today. Everyone should pay it, however, the current interest and repayment rates are absolutely appalling
That's how tax works unfortunately - using income tax as an example, the 300k earners in the UK above the 45% threshold pay nearly as much tax as the 25million earners paying only basic tax rates.
Yet all of us have the same access to and benefit from the same public services....
Maybe I read it wrong? Read it as if you were suggesting only graduates earning above 100k pay x% tax, the rest pay nothing
My daughter is going to uni next year, every since she was born, I've put money away each month towards it. When I started I thought it would pay for all of it, now it's looking like half of it, if it's £50k.
My daughter is going to uni next year, every since she was born, I've put money away each month towards it. When I started I thought it would pay for all of it, now it's looking like half of it, if it's £50k.
Borrow as much as you can, tear up/ don't open the statements. It's not really a loan at all, so don't think of it as debt. Definitely don't attempt to pay any of it up front, unless you're rich enough to just pay the whole lot.
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Fuck no... Why should the people working there arse off to get to 100k+ pay for everyone else's degree? My loan repayments are big enough to piss me off already, I'd be seething if they got to a level high enough to pay for everyone else. University is a state-sponsored piss up for the majority (myself included) but it is a state-sponsored piss up that has got me to where I am today. Everyone should pay it, however, the current interest and repayment rates are absolutely appalling
That's how tax works unfortunately - using income tax as an example, the 300k earners in the UK above the 45% threshold pay nearly as much tax as the 25million earners paying only basic tax rates.
Yet all of us have the same access to and benefit from the same public services....
Yes but then as I said above they should be open about it call it a tax charge it to every graduate have rising bands and be done with the issue. Don't give some the opportunity to avoid it.
Borrow as much as you can, tear up/ don't open the statements. It's not really a loan at all, so don't think of it as debt. Definitely don't attempt to pay any of it up front, unless you're rich enough to just pay the whole lot.
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Fuck no... Why should the people working there arse off to get to 100k+ pay for everyone else's degree? My loan repayments are big enough to piss me off already, I'd be seething if they got to a level high enough to pay for everyone else. University is a state-sponsored piss up for the majority (myself included) but it is a state-sponsored piss up that has got me to where I am today. Everyone should pay it, however, the current interest and repayment rates are absolutely appalling
That's how tax works unfortunately - using income tax as an example, the 300k earners in the UK above the 45% threshold pay nearly as much tax as the 25million earners paying only basic tax rates.
Yet all of us have the same access to and benefit from the same public services....
Maybe I read it wrong? Read it as if you were suggesting only graduates earning above 100k pay x% tax, the rest pay nothing
Yes that's right - plucked the £100k figure out of thin air though.
Bear in mind millions of people in the UK work yet pay zero income tax. The difference with university funding is that in many fields there is a clear correlation between the degree and earnings prospects.
For example in my opinion is that if you end up as a city lawyer on £1m pa and your law degree got you started, then you should be paying every year for many more graduates whose degrees were valuable to society (teachers, musicians, curators, social workers etc) but not financially valuable to them individually.
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Fuck no... Why should the people working there arse off to get to 100k+ pay for everyone else's degree? My loan repayments are big enough to piss me off already, I'd be seething if they got to a level high enough to pay for everyone else. University is a state-sponsored piss up for the majority (myself included) but it is a state-sponsored piss up that has got me to where I am today. Everyone should pay it, however, the current interest and repayment rates are absolutely appalling
That's how tax works unfortunately - using income tax as an example, the 300k earners in the UK above the 45% threshold pay nearly as much tax as the 25million earners paying only basic tax rates.
Yet all of us have the same access to and benefit from the same public services....
Maybe I read it wrong? Read it as if you were suggesting only graduates earning above 100k pay x% tax, the rest pay nothing
Yes that's right - plucked the £100k figure out of thin air though.
Bear in mind millions of people in the UK work yet pay zero income tax. The difference with university funding is that in many fields there is a clear correlation between the degree and earnings prospects.
For example in my opinion is that if you end up as a city lawyer on £1m pa and your law degree got you started, then you should be paying every year for many more graduates whose degrees were valuable to society (teachers, musicians, curators, social workers etc) but not financially valuable to them individually.
So if we extend your logic, only graduates earning above a certain threshold should pay through taxation for future graduates? So non-graduates earning silly money shouldn't?
Education, all education, should be paid for through a progressive tax system as part of general taxation - the same as all public services. If graduates earn more throughout their lives then they will automatically pay more tax resulting in increased revenue for the exchequer. Or do you believe that if you, for example, never claim any state benefit you should get a tax rebate? Would save me a fortune!!
You may consider my view communism, I consider it collective social responsibility.
There seems to be an unshakeable idea that the purpose of Education is to get a job. The student loan system re-enforced that idea. Those who see the point of education as vocational have the wrong end of the stick in my view. My son shared his digs in the first year with a lad studying paleontology. Good. There probably isn't a lot of jobs in the Dinosaur market, but personally I think we are in a richer society because we have more understanding of paleontology out there, and not richer measured in money. The fee system is crippling and it does not make the world 'fairer', it does however seem to mitigate the moaning of those who calculate the price of everything but know the value of very little.
It was an article I read a while back on money saving expert. It was based on different earnings projections and paying 9% of all earnings iver 210000 for 30 years. There were various earnings scenarios the highest one (I didn't thibk was that outlandish) ended up with someone paying back 8 times the amount they borrowed but not clearing the balance so still owing after the 30 years. The lowest scenario assuming someone got a graduate job and had below average salary progression had someone paying back 3 times what they borrowed.
It's not just about the extortionate interest (currently 6.4%) but about how it's loaded. You are charged interest from the second you start your course. Your first few years of payments won't even cover the interest so the total amount still rises. By the time you earn enough to cover the interest you're a chunk of the way into the 30 years so there is little point repaying a lump sum even of you had it. Then if you continue paying the 9% you'll pay off small amounts so never clear the balance.
Basically think of it as a tax not a loan. They tax graduate earnings.
Of course the projections were inflation adjusted and so are slightly misleading. £35k in 30 years is worth significantly less than now. So earnings will be higher so repayments will be higher so in real terms thatv8 times will be less.
Still a scam in my eyes. It's loaded to be a tax so call it a tax.
Only seems possible with a combination of a very high earner and ludicrously high interest rates - moreover the high earner would likely choose to pay it off in advance in this scenario too.
Agree it's a tax and not a loan, but then the graduate should have benefited from the degree which they ought to contribute towards.
As I said. The interest is high but it's more about how it is loaded. The salary wasn't that far out there for someone who does well out of uni. The starting salary was less than I am on in my first year out of uni and it had progression to 130k in 30 years time. So a high earner yes but not crazy out there. The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice. 1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over. 2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 1), this would only be rational if you were absolutely confident that your child would have a lucrative career (and you thought it was you and not them that should pay for their education). If they decide post-university that their calling in life is actually working for an NGO in the Third World then it would have been money thrown down the drain as they would never pay back their student debt.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Fuck no... Why should the people working there arse off to get to 100k+ pay for everyone else's degree? My loan repayments are big enough to piss me off already, I'd be seething if they got to a level high enough to pay for everyone else. University is a state-sponsored piss up for the majority (myself included) but it is a state-sponsored piss up that has got me to where I am today. Everyone should pay it, however, the current interest and repayment rates are absolutely appalling
That's how tax works unfortunately - using income tax as an example, the 300k earners in the UK above the 45% threshold pay nearly as much tax as the 25million earners paying only basic tax rates.
Yet all of us have the same access to and benefit from the same public services....
Maybe I read it wrong? Read it as if you were suggesting only graduates earning above 100k pay x% tax, the rest pay nothing
Yes that's right - plucked the £100k figure out of thin air though.
Bear in mind millions of people in the UK work yet pay zero income tax. The difference with university funding is that in many fields there is a clear correlation between the degree and earnings prospects.
For example in my opinion is that if you end up as a city lawyer on £1m pa and your law degree got you started, then you should be paying every year for many more graduates whose degrees were valuable to society (teachers, musicians, curators, social workers etc) but not financially valuable to them individually.
So if we extend your logic, only graduates earning above a certain threshold should pay through taxation for future graduates? So non-graduates earning silly money shouldn't?
Education, all education, should be paid for through a progressive tax system as part of general taxation - the same as all public services. If graduates earn more throughout their lives then they will automatically pay more tax resulting in increased revenue for the exchequer. Or do you believe that if you, for example, never claim any state benefit you should get a tax rebate? Would save me a fortune!!
You may consider my view communism, I consider it collective social responsibility.
The rich may not use public services/welfare to a meaningful degree but they are available for them should their circumstances change and it's reasonable (as well as equitable) that they pay for them through a progressive tax system.
A significant part of the benefits of a degree accrue solely to the graduate (especially in high-earning fields which require a degree for entry) - those benefits are not and never will be available to a non-graduate and thus it's reasonable in my view to carve out a tax paid only by them.
A few of my son's friends are leaving school early (ie not completing the sixth form - it's sort of legal if you are just about eighteen). I wonder if they should get a rebate for not completing their education?
Maybe we should offer some sort of financial incentive to any kids who can find a job at 14 or 16 and thereby save the country from wasting money (£5000 a year) teaching them things that they don't need to know?
I don't agree with this but it does seem to be a logical progression if you believe that the only purpose of going to university is to be rewarded with a good job.
A few of my son's friends are leaving school early (ie not completing the sixth form - it's sort of legal if you are just about eighteen). I wonder if they should get a rebate for not completing their education?
Maybe we should offer some sort of financial incentive to any kids who can find a job at 14 or 16 and thereby save the country from wasting money (£5000 a year) teaching them things that they don't need to know?
I don't agree with this but it does seem to be a logical progression if you believe that the only purpose of going to university is to be rewarded with a good job.
Rebate? How much tax will a group of 17 year olds have paid?
And is it £5000 a year per child to teach them an A-Level? Pretty sure the teacher doesn't get paid any less for having one less child in their class and the admin costs are negligible.
A few of my son's friends are leaving school early (ie not completing the sixth form - it's sort of legal if you are just about eighteen). I wonder if they should get a rebate for not completing their education?
Maybe we should offer some sort of financial incentive to any kids who can find a job at 14 or 16 and thereby save the country from wasting money (£5000 a year) teaching them things that they don't need to know?
I don't agree with this but it does seem to be a logical progression if you believe that the only purpose of going to university is to be rewarded with a good job.
It's not 'sort of legal' 6th form is in no way compulsory.
I left university about 7 years ago, when the fees were ~£3000 a year - which I think is a fair amount.
I am also against a graduate tax. Graduates tend to earn more over the period of their lives, so will pay more income tax, and are likely to spend more, bringing in VAT etc. If it was me, I would scrap a lot of the vocational 'degrees' that have pretty much designed to get those who are not clever enough into university. That would also shut the colleges that describe themselves as universities - these degrees and universities are not worth the paper they are written on, let alone the £50k it cost the silly bugger that decided to enrol.
This may not be popular, but university should be for the more academically gifted, not for 50% of 18 year olds (thanks for this Tony!).
I respect @newyorkaddick 's arguments but he continues to ignore the elephant in the room, and there are many similar elephants roaming around Britain at the moment. Why does it all seem to cost so much to provide, and where does all that money go? Who is pursuing that question?. Only Andrew Adonis, of leading politicians. A man Labour has sidelined in the Lords.
As a reminder, £9,250 is supposed to be the maximum a Uni can charge. In practice they are all charging the same. Oxford Uni and Bedford Poly, or whatever name it masquerades under nowadays. Justify that, somebody.
Now Adonis has uncovered what we are paying for..ridiculously inflated Vice Chancellor salaries. And not just them, all the senior positions below them have been inflated in keeping. Gravy train, just like at the private utilities, where a similar set of private monopolies was created.
Get behind Adonis, he's the only one who's calling out this elephant. And he has also admitted that he got the whole fee thing wrong when in government.
And now I have come face to face with the disgraceful money tree mentality this whole thing has instilled. My niece has just completed her 1st year at Loughborough but is very disillusioned. When i sat down to talk it through with her, I discovered one reason. She had submitted a course module, on time, but she was expected to submit it electronically (fine) but via their arcane web based IT system (doubtless developed at huge expense from the fee revenue, by a second rate company who leapt on the uni's non existent procurement system.). Somehow, she failed to send the attachment in the right way. When that came to light they conceded that they could see that she had tried to send it. But no, she could not just send the file as an email attachment. And neither could she re-send that file through the system. No, she would have to spend the holiday re-doing her entire module work, and then send it again through their system. And here is the best bit. She must pay £200 for the privilege. Apparently this is standard. Not content with their 300% fee increase, they think that students who have to re submit or retake, should be punished financially. Even when, as in my niece's case, her 'failure' was only to be wrong footed by an arcane IT system.
Sod that. Loughborough is about to find out that my mild-mannered and diffident niece has the uncle from hell. If something like this has happened to your kids, I urge you to do the same. And let Andrew Adonis know about it.
PA, in short these lesser universities charge the maximum because there must be sufficient demand at that price point - maybe the fault lies with the students for not weighing up the value proposition before applying.
As others have implied, it's hard to imagine anyone's life chances will be transformed by a (particularly non vocational) degree from these institutions.
The case for fees has been well and truly debunked. That it continues to have any support at all is just evidence that there is a very strong and well-financed group of people who continue to push the total myth that fees are in the interests of anyone other than those directly profiting from what ought to be a public good, and that there are those gullible enough to believe them without actually doing the research themselves.
Should you pay the fees up front each year, if you can afford it to prevent interest of the loan or take the loan and hope that Labour get in and do away with the fees?
Should you pay the fees up front each year, if you can afford it to prevent interest of the loan or take the loan and hope that Labour get in and do away with the fees?
Pay it would be my advice. The interest is charged from the moment you take out the loan and is extortionate. Could be as high as 6.1%.
Labour may get in but there is no way they will just abolish fees. It's just not affordable in any way.
Comments
The projection was based on the assumption of paying the 9% every year and no more.
The point about paying it off early is an interesting one. Overpayments are essentially pointless unless you can clear the whole balance as the interest will soon bring it back to the previous level. And by the time someone has enough to pay a lump sum to clear the balance (after buying a house and travelling etc) the amount you owe will likely have doubled even though the total you have paid off is probably pretty similar to what you borrowed in the first place. By that point there is nothing to be gained by paying it off early you may as well continue with the tax.
Your final point about the graduate benefiting is a very good one in principal and I agree with it. However there are 2 problems with it in practice.
1) people with rich parents who will fund their education will pay for their education and avoid the tax. Those from normal backgrounds who do well will pay for their education a few times over.
2) People who go to uni for reasons other than getting a degree, have no ambition and aim to never pay back a penny of what they borrowed. You are effectively funding these people. Should they not pay for their education.
Re 2), I'm sure such students exist but it would be an odd way to spend 3-4 years (given there are plenty of costs in addition to tuition) and also odd if someone was ambitious enough to win a place at university yet confident enough at 18-years old that they intended to do nothing with their life career-wise. This is very different of course to someone who knowingly targets a low-paying (but fulfilling) career eg. nursing.
Unfortunately given the government cannot borrow at a zero interest rate, at least some rate has to be applied to reflect the time value of money.
Personally if I were designing the system, I would introduce a graduate tax of x% on all earnings in perpetuity (or until retirement age) above a very high threshold eg. £100k pa which would apply to every student, regardless of parental income, background etc.
In this case the vast majority of graduates would pay nothing back, there would be no debt stigma/burden, and the tax would be highly progressive (the richest pay the most).
Side point - whilst your student loan isn't treated as a loan for mortgage purposes the repayments are taken off your earnings
Equally there are far far more people in group 2 than you would imagine. People go to uni for a good time and to get away from home for 4 years. Some have no care about their degree and just want to do enough to spend another year in that environment. Many don't want to get a graduate job are happy to go back home and work for a low salary and never pay it off. That's their choice but why should I fund their 3 years of fun.
I agree there should be an interest rate but 6.4% is mad. On my loan that's over a fiver a day.
I agree. My isn't isn't with it being a tax. My issue is that they pretend it's not a tax and allow either those with rich parents or the lazy (not everyone earning below th threshold is lazy) to be exempt from the tax.
It is a tax. So call it a tax and apply it to all graduates. Make it progressive with bands much like income tax.
Stop with the lies and pretences that its a loan.
Yet all of us have the same access to and benefit from the same public services....
Definitely don't attempt to pay any of it up front, unless you're rich enough to just pay the whole lot.
Bear in mind millions of people in the UK work yet pay zero income tax. The difference with university funding is that in many fields there is a clear correlation between the degree and earnings prospects.
For example in my opinion is that if you end up as a city lawyer on £1m pa and your law degree got you started, then you should be paying every year for many more graduates whose degrees were valuable to society (teachers, musicians, curators, social workers etc) but not financially valuable to them individually.
Education, all education, should be paid for through a progressive tax system as part of general taxation - the same as all public services. If graduates earn more throughout their lives then they will automatically pay more tax resulting in increased revenue for the exchequer. Or do you believe that if you, for example, never claim any state benefit you should get a tax rebate? Would save me a fortune!!
You may consider my view communism, I consider it collective social responsibility.
The student loan system re-enforced that idea.
Those who see the point of education as vocational have the wrong end of the stick in my view.
My son shared his digs in the first year with a lad studying paleontology. Good. There probably isn't a lot of jobs in the Dinosaur market, but personally I think we are in a richer society because we have more understanding of paleontology out there, and not richer measured in money.
The fee system is crippling and it does not make the world 'fairer', it does however seem to mitigate the moaning of those who calculate the price of everything but know the value of very little.
A significant part of the benefits of a degree accrue solely to the graduate (especially in high-earning fields which require a degree for entry) - those benefits are not and never will be available to a non-graduate and thus it's reasonable in my view to carve out a tax paid only by them.
Maybe we should offer some sort of financial incentive to any kids who can find a job at 14 or 16 and thereby save the country from wasting money (£5000 a year) teaching them things that they don't need to know?
I don't agree with this but it does seem to be a logical progression if you believe that the only purpose of going to university is to be rewarded with a good job.
And is it £5000 a year per child to teach them an A-Level? Pretty sure the teacher doesn't get paid any less for having one less child in their class and the admin costs are negligible.
I am also against a graduate tax. Graduates tend to earn more over the period of their lives, so will pay more income tax, and are likely to spend more, bringing in VAT etc. If it was me, I would scrap a lot of the vocational 'degrees' that have pretty much designed to get those who are not clever enough into university. That would also shut the colleges that describe themselves as universities - these degrees and universities are not worth the paper they are written on, let alone the £50k it cost the silly bugger that decided to enrol.
This may not be popular, but university should be for the more academically gifted, not for 50% of 18 year olds (thanks for this Tony!).
As a reminder, £9,250 is supposed to be the maximum a Uni can charge. In practice they are all charging the same. Oxford Uni and Bedford Poly, or whatever name it masquerades under nowadays. Justify that, somebody.
Now Adonis has uncovered what we are paying for..ridiculously inflated Vice Chancellor salaries. And not just them, all the senior positions below them have been inflated in keeping. Gravy train, just like at the private utilities, where a similar set of private monopolies was created.
Get behind Adonis, he's the only one who's calling out this elephant. And he has also admitted that he got the whole fee thing wrong when in government.
And now I have come face to face with the disgraceful money tree mentality this whole thing has instilled. My niece has just completed her 1st year at Loughborough but is very disillusioned. When i sat down to talk it through with her, I discovered one reason. She had submitted a course module, on time, but she was expected to submit it electronically (fine) but via their arcane web based IT system (doubtless developed at huge expense from the fee revenue, by a second rate company who leapt on the uni's non existent procurement system.). Somehow, she failed to send the attachment in the right way. When that came to light they conceded that they could see that she had tried to send it. But no, she could not just send the file as an email attachment. And neither could she re-send that file through the system. No, she would have to spend the holiday re-doing her entire module work, and then send it again through their system. And here is the best bit. She must pay £200 for the privilege. Apparently this is standard. Not content with their 300% fee increase, they think that students who have to re submit or retake, should be punished financially. Even when, as in my niece's case, her 'failure' was only to be wrong footed by an arcane IT system.
Sod that. Loughborough is about to find out that my mild-mannered and diffident niece has the uncle from hell. If something like this has happened to your kids, I urge you to do the same. And let Andrew Adonis know about it.
As others have implied, it's hard to imagine anyone's life chances will be transformed by a (particularly non vocational) degree from these institutions.
Labour may get in but there is no way they will just abolish fees. It's just not affordable in any way.