Help With Student Loans - HERE!

FrankinLondon_2

Hi All

My son has just been accepted to study medicine, starting in Sept 2013. We are just about to apply for the Tuition Loan.

Have I got my figures right here ?

It is a 5 year course, but the final year's tuition is currently payed for by the NHS, so a £36000 loan will be required to see him through.

Interest will be charged at a rate of RPI+3% (currently 6.6%)througout his course. So by the time he qualifies and becomes an F1 earning £22.5K, he will owe approx £44K already.

Repayments will then start at a rate of 9% of whatever he earns over £21K. However, interest continues to be applied at a rate of RPI + x% (where x varies between 0 and 3 depending on how much between £21K and 41K he earns), so the amount owed grows year on year.

Making some real guesses about how quickly a doctors salary grows, it could be 10 years AFTER his course before he earns enough for the repayments to actually start reducing the amount owed. It could then be another 10 years before it is paid off.

Over that 20 year period, he will likely end up paying approx £100K back for a £36K loan !!!!!!!!!!!!!!!

This seems a terrible deal. All of the publicity over the past couple of years has been on the increase of tuition from £3K to £9K per year. In fact, the real scandal is the huge increase on the interest charged on the loan.

If someone planning to be a doctor (a reasonably high paying career) will take 20 years to pay off just his tuition loan, how will a graduate on an average salary progression ever pay it all off, especially if they take a maintenance loan as well? Surely they'll simply make payments for 30 years and then see the remaining sum written off.

Have I got the above right ?

Lokolo

FrankinLondon wrote: »

Hi All

My son has just been accepted to study medicine, starting in Sept 2013. We are just about to apply for the Tuition Loan.

Have I got my figures right here ?

It is a 5 year course, but the final year's tuition is currently payed for by the NHS, so a £36000 loan will be required to see him through.

Interest will be charged at a rate of RPI+3% (currently 6.6%)througout his course. So by the time he qualifies and becomes an F1 earning £22.5K, he will owe approx £44K already.

Repayments will then start at a rate of 9% of whatever he earns over £21K. However, interest continues to be applied at a rate of RPI + x% (where x varies between 0 and 3 depending on how much between £21K and 41K he earns), so the amount owed grows year on year.

Making some real guesses about how quickly a doctors salary grows, it could be 10 years AFTER his course before he earns enough for the repayments to actually start reducing the amount owed. It could then be another 10 years before it is paid off.

Over that 20 year period, he will likely end up paying approx £100K back for a £36K loan !!!!!!!!!!!!!!!

This seems a terrible deal. All of the publicity over the past couple of years has been on the increase of tuition from £3K to £9K per year. In fact, the real scandal is the huge increase on the interest charged on the loan.

If someone planning to be a doctor (a reasonably high paying career) will take 20 years to pay off just his tuition loan, how will a graduate on an average salary progression ever pay it all off, especially if they take a maintenance loan as well? Surely they'll simply make payments for 30 years and then see the remaining sum written off.

Have I got the above right ?

The threshold at which you start paying at also rises. So if his salary raises with inflation, the actual amount he pays back would be the same every year, even with salary rises.

It's not a "great" deal. But you are right, the majority would not pay all back + interest and a lot would be wiped off. But this would be countered with extra payments from higher earners. The interest rates charged is more than I would have expected and it is a little unfair.

The tution rise from £3k to £9k has been overdone, original the £6k difference was just paid straight from the kitty, now at least the government can try and reap some of this back.

Dunroamin

FrankinLondon wrote: »

Hi All

My son has just been accepted to study medicine, starting in Sept 2013. We are just about to apply for the Tuition Loan.

Have I got my figures right here ?

It is a 5 year course, but the final year's tuition is currently payed for by the NHS, so a £36000 loan will be required to see him through.

Interest will be charged at a rate of RPI+3% (currently 6.6%)througout his course. So by the time he qualifies and becomes an F1 earning £22.5K, he will owe approx £44K already.

Repayments will then start at a rate of 9% of whatever he earns over £21K. However, interest continues to be applied at a rate of RPI + x% (where x varies between 0 and 3 depending on how much between £21K and 41K he earns), so the amount owed grows year on year.

Making some real guesses about how quickly a doctors salary grows, it could be 10 years AFTER his course before he earns enough for the repayments to actually start reducing the amount owed. It could then be another 10 years before it is paid off.

Over that 20 year period, he will likely end up paying approx £100K back for a £36K loan !!!!!!!!!!!!!!!

This seems a terrible deal. All of the publicity over the past couple of years has been on the increase of tuition from £3K to £9K per year. In fact, the real scandal is the huge increase on the interest charged on the loan.

If someone planning to be a doctor (a reasonably high paying career) will take 20 years to pay off just his tuition loan, how will a graduate on an average salary progression ever pay it all off, especially if they take a maintenance loan as well? Surely they'll simply make payments for 30 years and then see the remaining sum written off.

Have I got the above right ?

Yes, you're basically right - that's why it's better to look on this as a graduate tax rather than a loan being repaid.

mintymoneysaver

Ruby, I would be interested to hear the answer as daughter is about to fill in her student finance for this year ( went away last year but 'dropped out') and is not sure yet whether to live at home or in halls.

Dunroamin

The fact that you pay rent to your parents would be irrelevent as you'd normally do this out of the at home rate anyway.

If you don't come clean (and that's your choice) you could be looking over your shoulder for years as they could ask you to repay at any time.

ruby321

Dunroamin wrote: »

The fact that you pay rent to your parents would be irrelevent as you'd normally do this out of the at home rate anyway.

If you don't come clean (and that's your choice) you could be looking over your shoulder for years as they could ask you to repay at any time.

I simply wouldn't have that kind of money to give to them (i you're talking about the whole amount) so they just wouldn't be able to get the money from me...

I don't know. I could say that since my parents expect rent, I thought it would be ok to apply for the larger loan as it then wouldn't leave much for other expenses. i can't see why they would be so mean about it unless I'm wrong

Taiko

You'd be looking at a fraud arrest when you are found out. Not if you are found out.

These things are checked, and they will find you at some stage.

karatepet

I have sent 2 declaration forms back by first class post and 1 by special delivery on monday which they have signed for.But on my online account it is still saying missing student signature.How long does it take to update my account as i am getting sick of sending the forms?thank you

Savvy_Sue

ruby321 wrote: »

I simply wouldn't have that kind of money to give to them (i you're talking about the whole amount) so they just wouldn't be able to get the money from me...

I get the impression you're in your first year. How about if they simply suspend all payments for next year until it's repaid? Will you be able to continue? don't think they wouldn't do it: it happened to someone who had received more childcare payments than they were entitled to.

ruby321 wrote: »

I don't know. I could say that since my parents expect rent, I thought it would be ok to apply for the larger loan as it then wouldn't leave much for other expenses. i can't see why they would be so mean about it unless I'm wrong

You could say what you like, and think what you like, but from what Taiko says, you'd be wrong, and in big trouble. I would trust what Taiko says over wishful thinking any day ...

A conviction for fraud would seriously wreck your life chances.

Why you need the money (because you run a car) is not relevant. The Debt Free board may be able to help you reduce your expenses, but bottom line is learning to live within your means.

If in doubt, why not ring them and ask them?

ruby321

Taiko wrote: »

You'd be looking at a fraud arrest when you are found out. Not if you are found out.

These things are checked, and they will find you at some stage.

fraud? I was moving out, but then I wasn't. I honestly didn't mean to scam anyone, I just wasn't sure what to do :S

So you think I should phone them and give them the money back?