Should I Pay Off My Student Loan? 2008/09 article discussion

MuffyMan

Oldernotwiser wrote: »

You really don't seem to have grasped the idea of the EU, do you?

Er... you don't seem to understand the word foreign. Let me enlighten you. It means "of another country". Being in the EU doesn't make Germans, French or anyone else from a foreign country within the EU suddenly British.
Anyway this isn't the point. The point is that large numbers of people are getting loans from SLC without paying them back and without SLC having any means to recover them. UK students are tracked rigorously using NI numbers, foreign students taking them out aren't tracked at all. I don't have any problem with foreign students takiing the loans, but the fact that 70% of the loans to this group aren't being paid back is alarming. People who can't provide some kind of surety are not normally given a loan. For UK students this is the arrangement with the Inland Revenue that the loan will be recovered through earnings. There is nothing to guarantee this for foreign students so it's hardly surprising that 70% default.

Oldernotwiser

MuffyMan wrote: »

Er... you don't seem to understand the word foreign. Let me enlighten you. It means "of another country". Being in the EU doesn't make Germans, French or anyone else from a foreign country within the EU suddenly British.
Anyway this isn't the point. The point is that large numbers of people are getting loans from SLC without paying them back and without SLC having any means to recover them. UK students are tracked rigorously using NI numbers, foreign students taking them out aren't tracked at all. I don't have any problem with foreign students takiing the loans, but the fact that 70% of the loans to this group aren't being paid back is alarming. People who can't provide some kind of surety are not normally given a loan. For UK students this is the arrangement with the Inland Revenue that the loan will be recovered through earnings. There is nothing to guarantee this for foreign students so it's hardly surprising that 70% default.

The figure quoted by the BBC was about 1500, so hardly "thousands" .

Many of them (as with UK students ) won't be earning enough to start repayments anyway. In fact, if these students can't be traced, how does anyone know that they're defaulting? You'd have to know where someone was working and how much they were earning to know that repayments owing weren't being paid. If this information is available then it's possible for action to be taken on the loans.

You've taken a perfectly sensible article by the BBC and blown it up out of all proportion. Of course, the SLC should be more proactive in keeping in touch and ensuring that people repay their loans (we read enough stories here about people who should be repaying and aren't) but that's all.

You've also missed out one of the most important bits of the article.

"British ex-students living overseas are also expected to make their own arrangements, and there is no suggestion that EU students are any more likely to avoid repaying their debts than UK students."

Says it all really!

Chris2685

Why are foreign students even allowed to apply for a student loan through the SLC? I would have thought it would make sense to not allow that to happen in the first place...

MuffyMan

Oldernotwiser wrote: »

"British ex-students living overseas are also expected to make their own arrangements, and there is no suggestion that EU students are any more likely to avoid repaying their debts than UK students."

Interesting and valid point. However, as a British student you are obliged to notify SLC that you are working abroad and if you don't, the SLC has the right to accelerate your debt. And they can get a court order to make you repay the total loan in a single payment which can be enforced in the courts as a civil debt whether you are in the UK or living abroad, which I suspect doesn't apply to other EU students.
This subject is close to me because I have a daughter currently the third year of a 4-year course at Bath Uni in European Studies with Modern Languages (French/Italian). She is currently at Naples Uni until August, having spent Sptember till Jan at Strasbourg Uni. I expect she will choose to work abroad after graduating.
She has taken out the basic loans for tuition and maintenance and was already being levied over £50/month in interest by Christmas. This may have gone down in the last month or two.
Sounds a bit like what you're saying is oh well, it's only 70% of 1500 so why worry? Maybe I should encourage my daughter to do the same.

atypical

MuffyMan wrote: »

Yes, they are foreign students (no 'quotes' required) from other EU countries who don't pay UK taxes.

I used quotation marks as I was quoting you. Foreign students is not the term I would use, rather I would use EU students as I think it an important distinction to make.

What are you actually suggesting? That the loans shouldn't be given to EU students? That's not an option. That there should be equally stringent debt recovery for EU students as for UK students? Yes there probably should be in an ideal world, but I daresay that more would be spent doing this (pursing international legal action, finding people abroad etc.) than would be lost in loan defaults.

Oldernotwiser

MuffyMan wrote: »

Sounds a bit like what you're saying is oh well, it's only 70% of 1500 so why worry? Maybe I should encourage my daughter to do the same.

Sorry, I really don't understand the point you're making here. You seem to be using the 70% (1,500) figure as the percentage of students defaulting whereas it is actually the number of students who haven't made any payments on their loans. Most of these, both EU and UK students, will not be liable for any payments as they will be earning under the £15,000 threshold.

As the for the interest accruing on your daughter's loan - well, that's the same for everyone. It's still only equivalent to the amount she's actually taken out because of the link with inflation.

Encourage your daughter to do the same? The same as what?

MuffyMan

The point I'm making is simply that it seems to be purely a voluntary arrangement for the overseas students. The 70% quoted is the figure who have made no payments and are effectively untraceable (no forwarding address) and therefore enforced recovery impossible.
Maybe one day 100% of them will suddenly volunteer to pay pack the loans. Or since SLC can't even write them a letter asking for it, probably they won't.
If you were a lender and 2 people came to your bank asking for loans of £14,000. One is a UK citizen with NI number and traceable UK address, the other is from another EU country with no traceable ID, no permanent address which you can even send a letter to and no guarantee of any payment. Would you treat both equally? The SLC is non-profit and you wouldn't expect the same level of guarantee required as a bank, but lending in these circumstances seems to be pure folly and is the type of behaviour that has caused much of the current financial crisis.

Anyway, I think this has gone as far as it can and is off the thread topic.

Oldernotwiser

SPAM - reported.

Oldernotwiser

MuffyMan wrote: »

The 70% quoted is the figure who have made no payments and are effectively untraceable (no forwarding address) and therefore enforced recovery impossible.

Of those 70% (just as with UK students) many won't have to make repayments because they're under the threshold to do so. It's also inaccurate to say that there's no forwarding address (which sounds like they've all done a runner!) when it actually says "Students applying for loans always have to provide a permanent address, such as their parents' home address. "

The BBC article rather manipulates facts to make its point but you take it to a whole other level! It certainly sounds as if something needs to be tightened up but it doesn't help your argument to exaggerate and misinterpret!

WelshGandalf

There's a real chance that this March's RPI figure will be negative. Is there any official, or unofficial news if this will lead to a negative rate of interest on student loans from this September? Or will they just charge 0%?