Student Loan worry

tjohn

In response to the comments about the Tories, if they increase the interest rate to a commercial level would that be on pre-existing loans or on future loans? My current interest is about £600 a year but would be around £1700 a year if the interest rate went up to 8%!!! :eek: :eek: :eek: :eek: :eek:

zar

tjohn wrote:

In response to the comments about the Tories, if they increase the interest rate to a commercial level would that be on pre-existing loans or on future loans? My current interest is about £600 a year but would be around £1700 a year if the interest rate went up to 8%!!! :eek: :eek: :eek: :eek: :eek:

I spent ages looking into this, I've even read the tories policy document now and I can't find anywhere what they plan to do with all the graduates currently with student loans. But it does say that the SLC would be replaced by a private company financed by banks from which I infer that pre-existing loans would move to the new system too...

zar

Savvy_Sue wrote:

So under the new system, you are borrowing heaps more money (£3000 fees pa as well as living costs) but it is potentially written off sooner? Somehow the maths doesn't add up!

Read a review of the 3 parties different policies and it discusses this very problem for different categories of graduates. Under labour's new system it calculates that 3.1-3.3% (from low-income and high-income families due to means-testing) of men won't have paid off the debt after 25 years and 58.1-54.6% of women whereas under the potential tory system it is 18.8-2.9% and 81.4-50.3%.

The sums don't add up because the shortfall is paid by the taxpayer, in one way or another.

"The extra money provided to universities would be broadly similar under all three
proposals. Students would gain most from Labour and least from the Liberal
Democrats. The cost of the proposed reforms would be shared more or less equally between taxpayers and graduates under Labour and the Conservatives, but would be
borne entirely by taxpayers under the Liberal Democrats....

Summarising the differences between the parties, this suggests that Labour’s and the
Conservatives’ plans would cost a similar amount to the taxpayer, at around £1.1 billion per
year under the Conservatives and around £1.3 billion under Labour, whilst the Liberal
Democrats’ plans would cost about £1 billion more than this."

I have mixed feelings about all of this - I do think universites need more money, but where you want to money to come from probably does depend on your politics and whether you want redistribution from all in society (e.g. the lib dems paying for it by a top rate of income tax over £100k), low paid graduates or high paid graduates. On an individual basis, of course, the lib dems approach is by far the most appealing! Its all a bit of a big mess really and I do feel for those who are just about to go into the system.

If you want to know more the review is long but interesting and details the propsals of all 3 main parties.
http://www.wb-infokiosk.org/bp.php?url=http://www.ifs.org.uk%2Fcomms%2Fcomm98.pdf

newfoundglory

I had my student loan statement this month... which was a lot but not too bad (just under 8 grand). I haven't finished my course yet, but i'm in the very fortunate position of being able to repay all of mine at any point i choose. Of course, this is the funny thing about student loans... even though i'm in a position to repay the lot it would be a stupid thing to do if you could... as you can earn more interest on my savings by investing it at the highest interest rate possible, in ISAs if you are a student who works. When students start working, they shouldn't be focusing on repaying the loan, rather earning and saving as much as poss and sticking it in cash ISAs at good rates. Believe it or not, you want to pay back the loan as SLOW as possible, taking advantage of low rates.

This is the case for the time being anyway...

Don't get too depressed over it... the student loans really are cheap chips in the grand scheme of things... even though to most students figures of 9000, 10000, 11000 can seem HUGE.

pioneer31

newfoundglory wrote:

Of course, this is the funny thing about student loans... even though i'm in a position to repay the lot it would be a stupid thing to do if you could... as you can earn more interest on my savings by investing it at the highest interest rate possible, in ISAs if you are a student who works. When students start working, they shouldn't be focusing on repaying the loan, rather earning and saving as much as poss and sticking it in cash ISAs at good rates. Believe it or not, you want to pay back the loan as SLOW as possible, taking advantage of low rates.

I agree....and that's what I'm doing - making interest on the money. I intend to pay it back as SLOWLY as possible too. There really is no point in paying it back quicker.

vickitoria6232

I graduated Uni in 2003 owing just over £10k. I didn't pay anything for a year (not earning enough - when it was £10k you had to be earning) & the interest was added on at £25 per month. I got very stressed and found a new job for more money and was happily paying £33 month (more than the interest - until I was told I would be 104yrs old by the time I had cleared it at this rate!)
I am now going back to Uni this Sep to do a PGCE & am faced with £3k in fees on-top of all the original living costs etc. I did not want to get another loan but have no other option.
However, when I spoke with the University's Financial Support dept. I was actually told:
"You might as well get another loan - as much as they will give you. On a standard teachers salary, you are never going to pay off what you already owe by the time you are 65 so any additional borrowing will have no effect! You repay the loan on the basis of what you earn, not how much you owe - so if you owe £3k or £30k you will still only be paying £30month on the starting teachers salary (£19,100)!"

Finally I am no longer stressed. It is more like a tax. It comes from my wage before I get a chance to touch it and I will never be expected to pay more than I can afford.

Also, it wasn't taken into account when I applied for my mortgage. They were not interested as it was "a negligible amount". :beer:

tjmack

I am at University and was advised that as the interest on the student loan is around 3.2% if you put the money into a high interest account such as ING at over 4% it will at least mean that while the money it is in your possesion (even if only for a short while) you can make a bit on the interest. I can understand why the student loan is such a worry, I'm a mature student so I haven't got age on my side for earning potential but I still think it's worthwhile to go to University.

w8ey

Something I am quite worried about:

I have nearly paid off my student loan, but my wife hasn't started paying hers off yet and probably never will as:

a) She earns 12k
b) We are planning to have children soon

The worry I have is that, as we are married, does that mean that I am now liable for her repayments (I earn quite a bit more than the 15k payment threshold) if she isn't paying it off herself? Her student debts are huge and i'm not sure I could afford to start paying it off... But then judging by all this talk about Conservative policies, can I afford not to pay it off either?!?

She finished her 3 year degree in 2003.

skintscotsman

Lady_K wrote:

Her friends that went to school with her that chose not to go to university have cars, houses, go on nice holidays ect. and she has an enormous pile of debt, is constantly struggling and won’t be able to get her own house for years after she’s left University.

Sorry to give you bad news but it doesn't get any better.

I graduated almost 5 years ago now and I am earning a pitiful amount (just under £17k).

I got an Honours degree from a very good Univeristy and it still didn't prepare me for the big bad world.

Started off earning an excellent salary (18k 1st yr, 22k 2nd yr and then 31k) - for some reason I couldn't cop with the job and I was dismissed.

Then ended up in a call centre earning £5.27 an hour. All for £10k of student debt!

Maybe I was very unlucky. I worked very very hard; moved 500 miles away to go to the Uni to get the best degree I could - entered a job where I was away from family and friends 70% of the time. All for nothing.

I don't rate degrees at all UNLESS it's a very very good (ie 1st Class Honours) degree from an excellent establishment.

When I have nippers I won't be overy encouraging them to go to Uni as it probably did me more harm than good financially.

Sorry that's such a negative outlook but that's my experience.

w8ey

Having a degree doesn't hand you anything on a plate (other than a load of debt :-)), but it does get you your first interview in my experience. After that, its really down to you. In the real world, experience definitely counts more than a degree after the first job, but I wouldn't be in the position i am in without my degree.

That my 2c