Student Loan 2015 Discussion

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Comments

  • wdyw
    wdyw Posts: 962 Forumite
    Your article mentions how Foundation Years and Access courses will be affected, but not how the new regs will affect those on Foundation Degrees wishing to top up to Honours after completing.

    The answer is - the government haven't decided yet!....so in the section on NHS bursaries, you may want to also add the foundation degree uncertainty.
  • tog22
    tog22 Posts: 33 Forumite
    First Anniversary Combo Breaker
    catinthehat wrote: »
    What about parents who DO help out - at what level/time can they make the most impact?

    I'm just looking at the 35-40K earners in the table and feeling quite faint at the ENORMOUS totals wasted on interest rollups
    Surely it would make sense to get a bit of parental cash in there to reduce it - OK, it potentially reduces the ultimate inheritance to the child - but £107k repayment for a £39K loan is staggering

    That's what you'd expect from inflation though - your money might grow more in a good savings/investment account, so (though I'm no expert) you should check that won't ultimately benefit your sprog more...

    HTH,
    Tom
  • catinthehat
    catinthehat Posts: 8 Forumite
    hmm not sure about that Tom :) WIthout breaking out the contents of the spreadsheet underlying Martin's graph, I'm assuming that it would be quite a feat to beat those levels of interest (OK - and inflation) rollups. AN early transfer from parents would cut it off at the pass and could reduce IHT exposure ultimately.

    Crumbs, I would rather lend a chunk to the child, take the same interest payment off them, and what I didn't spend they would get on my demise! Just hate the thought of interest like that going into a black hole if I had the cashflow available to prevent it. Parents often help out with mortgages similarly - investing in the next generation.

    I would still like to see an additional analysis of when and to what extent a family contribution could avert the worst of these added costs in a later version of the (excellent, timely and thought provoking) report.
  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    edited 15 June 2011 at 12:40PM
    MSE_Martin wrote: »
    No its based on a mid-point a £7,500 fee.

    Martin can you show me evidence (other than the government's assertions) that the mid point fee is £7,500? As far as I'm aware the majority of Unis are charging £9k.

    Even if your assertion is true most financial advisors would look at the "worst case scenario" when taking a loan out. £7.5k is way too optimistic!

    Maybe you could show 2 tables, one with fees at £9k and one with fees at £7.5k?
  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    catinthehat wrote: »
    but £107k repayment for a £39K loan is staggering

    and that may well be the "best case" scenario....
  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    tog22 wrote: »
    That's what you'd expect from inflation though - your money might grow more in a good savings/investment account, so (though I'm no expert) you should check that won't ultimately benefit your sprog more...

    HTH,
    Tom

    Tom direct me to a savings account paying RPI + 3% and I will be your best friend forever :smileyhea
  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    MSE_Martin wrote: »
    Hi - we've gone with a long term average of RPI - which was deliberate as this is a long term repayment - so we didnt want to get pulled by today's current highs (also govt target is roughly 2.5% (roughly as its on CPI and we're talking RPI).

    Also in truth the actual level of RPI is relatively commutative throughout the assessment which is why we converted it into real prices too - which negates much of the effect of our RPI assumptions.

    Sadly this table is impossible without assumptions - we thought hard and discussed long what they'd be. In the long run we hope to build a calculator where people can change these assumptions but for launch we had to pluck something and I hope I sufficiently caveated the whole thing to make people realise its far more about scales of magnitude than the actual numbers.

    Ok over 30 years that seems a reasonable assumption. Maybe.

    But what'll you do if RPI is 5%+ or 6%+ in March next year when the loan rate is set for September 2012? Would this change your view of these loans?
  • setmefree2
    setmefree2 Posts: 9,072 Forumite
    Mortgage-free Glee!
    catinthehat wrote: »
    hmm not sure about that Tom :) WIthout breaking out the contents of the spreadsheet underlying Martin's graph, I'm assuming that it would be quite a feat to beat those levels of interest (OK - and inflation) rollups. AN early transfer from parents would cut it off at the pass and could reduce IHT exposure ultimately.

    Crumbs, I would rather lend a chunk to the child, take the same interest payment off them, and what I didn't spend they would get on my demise! Just hate the thought of interest like that going into a black hole if I had the cashflow available to prevent it. Parents often help out with mortgages similarly - investing in the next generation.

    I would still like to see an additional analysis of when and to what extent a family contribution could avert the worst of these added costs in a later version of the (excellent, timely and thought provoking) report.

    If RPI is 6% next March (when I believe the rate is set for the following September) then these loans will be attracting interest of 6% plus 3% = 9% in the first year.

    I know it's an IF but surely we can't ignore the possibility?
  • Lokolo
    Lokolo Posts: 20,861 Forumite
    First Post First Anniversary
    setmefree2 wrote: »
    Ok over 30 years that seems a reasonable assumption. Maybe.

    But what'll you do if RPI is 5%+ or 6%+ in March next year when the loan rate is set for September 2012? Would this change your view of these loans?
    setmefree2 wrote: »
    Tom direct me to a savings account paying RPI + 3% and I will be your best friend forever :smileyhea

    As pointed out by Martin and myself in the other thread 100000 times, there's no point looking at today's inflation. The loans are going to be paid back over 30 odd years, so you should be looking at the longterm inflation. I doubt Sir Alan Sugar was making a lot in the shorterm from his telephone box! Think longterm, not shorterm.

    Yes it's high today, yes you won't make any money at the moment, but it's not going to be like this for the next 30 years. And even when there is long term high inflation, it will raise interest rates sky high like it did in the 80s.
  • catinthehat
    catinthehat Posts: 8 Forumite
    property1925 wrote: »
    I work in a Univ admissions office and we are really in the dark about how the scheme will work in practice. E.g.

    1. Can you repay early or are you locked in for 30 years?

    2. May a student pay their own fees for (say) one year and then take out a loan for the remainder?

    We have, however, noticed a sharp increase in people telling us that they are not coming, or that it "is not worth it" because of the fees

    Would like to know the answers to these as well, as I really do think that early payment and contributions by family members may be a big deal
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