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New! Student Finance Calculator 2012

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  • hi,

    It would be really useful to have an option for a one year course as well - I am starting a PGCE in septmeber, and am trying to work out whether to take the maintenance loan as well as the tuition fee loan, and as the course is only 1 year olng, it doesn't help much with this calculation.

    I'm a mature student, and will be getting the full maintenance grant, as well as a bursary from the TDA (as it's for secondary maths, which is a shortage subject) and won't need the money, but as we were planning on getting a loan to buy a new car anyway, we were trying to see if this is the cheapest way fo getting a loan.
  • nheather wrote: »
    WARNING!

    There appears to be a significant error in the way the calculator works out total to repay. I have worked out the value manually and for a £25k start salary and a 5% growth, the total to repay is £100.6k not £43.7k as reported by the calculator.

    Okay, Dan has replied to my query. Apparently, it is because the calculator assumes that the £21k threshold will be increased by RPI+1% each year. So if RPI remains the at 5.6% over the next year then the 2013 threshold will be £22,400.

    I also made up my own spreadsheet and came up with a similar wildly different result than the calculator.

    This is worrying as I am trying to get a reasonable guide as to whether it is better to take out the full loan and repay in the fulness of time - or whether to try and pay up front or repay a.s.a.p. to avoid the high interest of this loan.

    I tried adding in linking the lower repayment salary threshold to RPI. It makes a big difference. But I can't find anywhere that says that the lower threshold will be index linked - let alone RPI + 1%.

    So what about the upper threshold? That also makes a difference to % interest portion above RPI for a given year.

    We have been sent a declaration to sign but it is all about how we commit to repay and submit to the courts, etc.

    What about letting us know clearly these important details that might make 10s of thousands of pounds difference to the total amount repaid during the 30 years.

    This is leading a generation of students into a 30 yr long tunnel with no way out without letting them know what is at the other end.

    If anyone knows where to find any clear guidance about these issues (i.e. the linking of the lower / upper salary thresholds to RPI) I would be very grateful to know - because at the moment, the picture seems incomplete to me - and we don't have very long to decide whether to commit to this or not.

    Probably for many there is no choice but to go down the tunnel. In our case we are considering borrowing against our mortgage which is currently at 1.25% - (i.e. a lot lower than RPI +3%)!

    Anyone who has had a mortgage knows that it costs money to borrow money. I am just over 50 and haven't yet paid of the mortgage. It concerns me that under this scheme I would only just be paying off my student loan at this stage in my life - when I'm almost thinking about retiring - well not quite but ...

    Concerned parent
  • Dunroamin
    Dunroamin Posts: 16,908 Forumite

    Anyone who has had a mortgage knows that it costs money to borrow money. I am just over 50 and haven't yet paid of the mortgage. It concerns me that under this scheme I would only just be paying off my student loan at this stage in my life - when I'm almost thinking about retiring - well not quite but ...

    Unless you're looking towards a very good pension, you're unlikely to be making repayments in retirement.
  • setmefree2
    setmefree2 Posts: 9,072
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    edited 9 March 2012 at 7:37AM
    I tried adding in linking the lower repayment salary threshold to RPI. It makes a big difference. But I can't find anywhere that says that the lower threshold will be index linked - let alone RPI + 1%.
    I'm not sure what you mean by lower threshold. Do you mean the threshold at which Graduates have to start paying back their loan? If you do then I can quote you this from the BBC
    The threshold at which graduates have to start paying their loans back will rise from £15,000 to £21,000. This will rise annually with inflation.
    LINK


    If anyone knows where to find any clear guidance about these issues (i.e. the linking of the lower / upper salary thresholds to RPI) I would be very grateful to know - because at the moment, the picture seems incomplete to me - and we don't have very long to decide whether to commit to this or not.

    Lots of good articles here
    http://www.moneysavingexpert.com/students/

    Probably for many there is no choice but to go down the tunnel. In our case we are considering borrowing against our mortgage which is currently at 1.25% - (i.e. a lot lower than RPI +3%)!

    Don't! Read http://www.moneysavingexpert.com/students/should-i-get-student-loan

    I am just over 50 and haven't yet paid of the mortgage.

    Double don't!
  • Thank you for replying!
    setmefree2 wrote: »
    I'm not sure what you mean by lower threshold. Do you mean the threshold at which Graduates have to start paying back their loan? If you do then I can quote you this from the BBC

    Yes, I do mean the (earnings) threshold at which Graduates have to start paying back their loan?

    I had read the statement that this threshold (sometimes referred to as lower earnings repayment threshold) will be linked to inflation - specifically to earnings inflation.

    I have read this as you quoted on moneysavingsexpert, BBC and BIS. All of these informative sites state that the threshold will be linked to inflation. These sites also assume this "fact" in the online repayment calculators that are designed to help us decide whether we should repay sooner or not.

    However, I have not been able to confirm this on the Student Finance, Student Loans Company or direct.gov sites, or in the terms and conditions of the student loan.

    This factor would have a significant effect on the total repaid.

    The upper threshold (£41,000) also has an effect. If linked to inflation this would reduce the earnings related portion of the interest accrued in a given year. A higher upper threshold results in a lower portion, so if it is inflation linked then the upper threshold will be higher and the interest lower.

    Although I would like to think that moneysavingsexpert, BBC and BIS have the facts full and correct, I would also like to find evidence of this from the those who will actually be controlling the loan i.e. SFE, SLC, direct.gov.

    Often advice is given - "in most cases", "expect for a few" - we need the information in order to be able to work out whether we are one of those few who might end up paying a lot more - which incidentally seems to be middle earners.

    If anyone can point me to evidence of the linking of the lower (and upper) earnings thresholds to inflation on any of the loan or government sites, I would be very grateful.
  • setmefree2
    setmefree2 Posts: 9,072
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    edited 10 March 2012 at 10:14AM
    Although I would like to think that moneysavingsexpert, BBC and BIS have the facts full and correct, I would also like to find evidence of this from the those who will actually be controlling the loan i.e. SFE, SLC, direct.gov.

    If anyone can point me to evidence of the linking of the lower (and upper) earnings thresholds to inflation on any of the loan or government sites, I would be very grateful.

    Sorry I don't think you will find anything. The government can vary the terms and conditions of student loans whenever they want, so I suppose government bodies are quite careful in what they say as this may be construed as a binding contract.

    If a future government decides to freeze, lower (or even raise) the thresholds it can do so. If a future government requires students to pay back more than 9% above the threshold it can do so. Ditto with interest rates. In this regard the SLs are like a tax.


    Student Loans A Guide to Terms and Conditions 2012/2013
    Your Responsibilities
    When you take out a loan, you will sign a declaration which will be a contract. This states that you have read and understood the Terms and Conditions. You must agree to repay your loan in line with the regulations that apply at the time the repayments are due and as they are amended. The regulations can be replaced with later regulation.
    How much you will repay
    You will not have to make any repayments at all while your income is under the applicable threshold. Any change to these thresholds, along with examples of repayments, will be published at studentloanrepayment.co.uk.
    http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@educ/documents/digitalasset/dg_200469.pdf

    Stinks doesn't it?

    Don't forget, however, student loans can (at the moment) be repaid without penalty at any point. So if a future graduate doesn't like any change in T & Cs, the loan can be repaid. Unless the government change this of course.
  • setmefree2
    setmefree2 Posts: 9,072
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    Looking at the T & C guide this bit made me laugh/cry
    SLC cannot:
    •Provide up-to-date loan balances; or
    •Make sure your repayments will stop at the right time

    Page 22

    http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@educ/documents/digitalasset/dg_200469.pdf
  • The_One_Who
    The_One_Who Posts: 2,418
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    setmefree2 wrote: »

    Is that not because it is done through HMRC's PAYE system, rather than the SLC themselves? You pay your taxes and then they give the money to the SLC.

    I think it is a tad scaremongering (and a little paranoid) to not take a loan because of the possibility that the government will change the terms of the loan. To my knowledge they haven't done that yet, even though there are currently a few different systems in place, all with different terms.
  • Lokolo
    Lokolo Posts: 20,861
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    Is that not because it is done through HMRC's PAYE system, rather than the SLC themselves? You pay your taxes and then they give the money to the SLC.

    I think it is a tad scaremongering (and a little paranoid) to not take a loan because of the possibility that the government will change the terms of the loan. To my knowledge they haven't done that yet, even though there are currently a few different systems in place, all with different terms.

    The only change I know of is that with Post 1998 loans they are increasing the threshold with inflation.
  • nheather
    nheather Posts: 22
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    edited 11 April 2012 at 10:02AM
    Still deciding how best to finance my son's university when he starts in October 2012.

    I have just been on the phone to StudentFinanceEngland to clarify two points.

    I spoke to Gordan Clarkson

    (i) Will there be early repayment fees? Emphatic NO, though he was unable to point to any place on the website or documentation that states this. But I'm fairly confident on this one as I have seen several non-SFE organisations stating this.

    (ii) The MSE calculator assumes that the threshold will rise each year in line with UK Average Earnings (or RPI+1%), is this correct? Emphatic NO. Once a student takes out a loan he remains on that threshold (currently £21k) for the full term. The threshold may well increase but that will only apply for new students. So each student has the Threshold value at the start of the loan and keeps it throughout the whole term.


    If this is true, then the MSE calculator has a serious flaw because it assumes that the Threshold will increase each year. If it does not, then the MSE calculator is significantly underestimating the total repayment amount.

    It does sound nonsense to me but the representative at SFE was adamant, no matter how often I questioned its sense.

    Can someone from MSE comment please?

    Cheers,

    Nigel
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