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  • FIRST POST
    • MSE Steve
    • By MSE Steve 1st Oct 17, 2:12 AM
    • 70Posts
    • 24Thanks
    MSE Steve
    MSE News: PM pledges to raise student loan repayment threshold
    • #1
    • 1st Oct 17, 2:12 AM
    MSE News: PM pledges to raise student loan repayment threshold 1st Oct 17 at 2:12 AM
    Prime Minister Theresa May has said the student loan repayment threshold will be increased from £21,000 to £25,000 as part of a wide-ranging review of student finance...
    Read the full story:
    'Victory for graduates as PM pledges to raise student loan repayment threshold'

    Click reply below to discuss. If you haven’t already, join the forum to reply.
    Last edited by MSE Luke; 02-10-2017 at 12:39 PM.
Page 3
    • silvercar
    • By silvercar 4th Oct 17, 10:45 PM
    • 36,207 Posts
    • 153,059 Thanks
    silvercar
    40% of pre-2012 don't pay off their loans. So 40% would be better off with a higher threshold. 40% would be better off under the post-2012 system.

    Furthermore, 40% of the post-2012 students are also better off than they would have been under the old system (See post below).

    And to think some students went to Uni a year earlier to avoid "higher fees".
    Originally posted by setmefree2
    If 40% would be better off with a higher threshold, that means that 60% wouldn't. So it isn't clear cut.

    I have 2 children, one with a pre-2012 loan and one post 2012; it was the younger one with the post-2012 that I thought was hard done by - now I'm not so sure.
    • silvercar
    • By silvercar 4th Oct 17, 10:48 PM
    • 36,207 Posts
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    silvercar
    But I can envisage a world in which if these ever get sold off to the private sector there could be massive discounts offered on paying off the account in one lump sum.
    Originally posted by Ed-1
    I thought the wisdom was that never could be allowed to happen, as it would favour those with money at the expense of those from poorer families. In fact there was talk of penalising people for paying early at one point.

    That is one reason why we won't move to a graduation tax, as not all students take loans. If a grad tax was introduced then everyone would take the max they could.
    • setmefree2
    • By setmefree2 5th Oct 17, 12:21 PM
    • 8,862 Posts
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    setmefree2
    My worry is they'll turn to increasing the repayment rate from e.g. 9% to 12% which would probably have to apply to pre-2012 loans too.
    Originally posted by Ed-1
    I can't see them doing that. This is a massive political problem now.

    • setmefree2
    • By setmefree2 5th Oct 17, 12:23 PM
    • 8,862 Posts
    • 18,952 Thanks
    setmefree2
    If 40% would be better off with a higher threshold, that means that 60% wouldn't. So it isn't clear cut.

    I have 2 children, one with a pre-2012 loan and one post 2012; it was the younger one with the post-2012 that I thought was hard done by - now I'm not so sure.
    Originally posted by silvercar
    I know.

    Remember the dash to get to Uni in 2011. Students putting off their gap year.

    Little did they know that some of them would be better off going in 2012.

    • setmefree2
    • By setmefree2 5th Oct 17, 12:25 PM
    • 8,862 Posts
    • 18,952 Thanks
    setmefree2
    I thought the wisdom was that never could be allowed to happen, as it would favour those with money at the expense of those from poorer families. In fact there was talk of penalising people for paying early at one point.

    That is one reason why we won't move to a graduation tax, as not all students take loans. If a grad tax was introduced then everyone would take the max they could.
    Originally posted by silvercar
    I think they will move to a grad tax. Or they could just go back to the Pre-2012 system. I think there will be change however.

    • silvercar
    • By silvercar 5th Oct 17, 3:27 PM
    • 36,207 Posts
    • 153,059 Thanks
    silvercar
    I wonder what percentage of students don't take their full entitlement of student loans?

    I'm talking older students who have worked for a few years and saved up rather than taking on the debt, the well off, those that take only the tuition fees and fund their own maintenance, those whose family think the non means tested element is too invasive so don't take that portion....

    If they all suddenly took the loan, the government could have a greater funding issue and this is more likely to happen if they have a grad tax.
    • Ed-1
    • By Ed-1 5th Oct 17, 5:27 PM
    • 2,043 Posts
    • 1,102 Thanks
    Ed-1
    I can't see them doing that. This is a massive political problem now.
    Originally posted by setmefree2
    I'm not talking about this government. But by bumping up the threshold so much they're creating an unsustainable ticking time bomb mountain of debt that a future government under current terms would have to write off. There will be massive pressure on public spending to write off half the post-2012 loan book and so towards the time there'd be massive pressure to adjust terms to reduce the write offs on the grounds that "when the system was introduced, the write offs were forecast at 28% not 50%".

    Maybe that's the politics at the moment - give Corbyn's Labour even more debt to deal with. But it's completely irresponsible after Cameron's government spent 2015 trying to fix the system by freezing the threshold until 2021...
    • Lingua
    • By Lingua 11th Oct 17, 5:01 PM
    • 206 Posts
    • 213 Thanks
    Lingua
    Are they moving the threshold for those taking the postgraduate loan too? Currently it is set to the same 21k threshold as undergraduate loan repayments.

    Lingua
    Long-Term Goal: £14'000 / £40'000 mortgage downpayment (2020)
    • Ed-1
    • By Ed-1 11th Oct 17, 6:31 PM
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    • 1,102 Thanks
    Ed-1
    Are they moving the threshold for those taking the postgraduate loan too? Currently it is set to the same 21k threshold as undergraduate loan repayments.

    Lingua
    Originally posted by Lingua
    No. It's been confirmed that the postgraduate threshold will stay frozen at £21k meaning bizarrely there will now be 3 repayment thresholds (£18,330 for pre-2012 undergrad loans, £21k for postgrad loans, £25k for post-2012 undergrad loans)

    http://www.researchresearch.com/news/article/?articleId=1370662

    http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-10-09/HCWS145/
    • Lingua
    • By Lingua 12th Oct 17, 8:25 AM
    • 206 Posts
    • 213 Thanks
    Lingua
    That's going to add even more confusion into the system. Thank you for providing the links, I couldn't find anything definitive online!

    Lingua
    Long-Term Goal: £14'000 / £40'000 mortgage downpayment (2020)
    • Ed-1
    • By Ed-1 12th Oct 17, 11:05 AM
    • 2,043 Posts
    • 1,102 Thanks
    Ed-1
    That's going to add even more confusion into the system. Thank you for providing the links, I couldn't find anything definitive online!

    Lingua
    Originally posted by Lingua
    What a mess.
    • setmefree2
    • By setmefree2 17th Oct 17, 2:50 PM
    • 8,862 Posts
    • 18,952 Thanks
    setmefree2
    The Chancellor of the Exchequer is understood to be examining ways to link tax to age for the first time to promote “intergenerational fairness” in next month’s Budget.
    Tax breaks would be offered to workers in their 20s and 30s, paid for by cutting pension reliefs for older and better off workers.


    Also,
    David Davis calls for Tory U-turn on tuition fees and cancellation of student debts

    The Brexit Secretary ‘would urge the Treasury to look at the financial structures to see if there was a better way for students’, a source told The Sunday Times
    http://www.independent.co.uk/news/uk/politics/david-davis-u-turn-university-tuition-fees-cancel-student-debt-a8001891.html

    • setmefree2
    • By setmefree2 17th Oct 17, 2:53 PM
    • 8,862 Posts
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    setmefree2
    it would come with a hefty price tag, with the Institute for Fiscal Studies estimating that writing off extra debt incurred since tuition fees were trebled in 2012 would cost £10bn.
    https://www.politicshome.com/news/uk/education/universities/news/89810/david-davis-urging-treasury-write-historic-student-debt

    • Lokolo
    • By Lokolo 17th Oct 17, 3:37 PM
    • 19,858 Posts
    • 14,941 Thanks
    Lokolo
    The Chancellor of the Exchequer is understood to be examining ways to link tax to age for the first time to promote “intergenerational fairness” in next month’s Budget.
    Tax breaks would be offered to workers in their 20s and 30s, paid for by cutting pension reliefs for older and better off workers.


    Also,

    http://www.independent.co.uk/news/uk/politics/david-davis-u-turn-university-tuition-fees-cancel-student-debt-a8001891.html
    Originally posted by setmefree2
    Complicating an already complex tax/student loan system even more. Just KISS.

    Still over a month away from the budget though so this could just be made up.
    • setmefree2
    • By setmefree2 18th Oct 17, 11:51 AM
    • 8,862 Posts
    • 18,952 Thanks
    setmefree2
    Theresa May’s plans to hike the repayment threshold on student loans ‘could lead to up to three quarters of them being written off’
    The move has been criticised by London think-tank for putting a greater burden on future taxpayers
    THERESA May’s plans to hike the repayment threshold on student loans could lead to up to three quarters of them being written off, new think tank analysis shows today. The Centre for Policy Studies said it would be fairer to cut tuition fees and interest rates instead.
    Experts said it would make university more affordable and ensure the Treasury gets more of its cash back.
    But the think tank said Mrs May’s plan would put a greater burden on future taxpayers, including today’s students, as the Government currently expects a third of loans to be written off.
    Their report said the “simplest and fairest alternative” was lowering the upper cap on tuition fees to either £5,000 or £7,500 a year.
    They said the interest rate charged throughout the term of the loan should be slashed and the original repayment threshold of £21,000 should be retained.
    https://www.thesun.co.uk/uncategorized/4709106/theresa-mays-plans-to-hike-the-repayment-threshold-on-student-loans-could-lead-to-up-to-three-quarters-of-them-being-written-off/

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