'Stopping graduates repaying student loans early...' blog di

Doc_N

As someone who graduated some time ago, with the benefit of a totally free university education, even to the extent of maintenance grants (admittedly means-tested according to parental income), it grieves me considerably to see my generation shafting today's students so comprehensively.

Ex-National Union of Students presidents Jack Straw and Charles Clarke should be thoroughly ashamed of themselves for their part in this, and it's not a pretty sight to see today's politicians, most of whom had the same totally free university education as I did, busily making sure that others don't benefit as they did.

Oldernotwiser

Doc_N wrote: »

As someone who graduated some time ago, with the benefit of a totally free university education, even to the extent of maintenance grants (admittedly means-tested according to parental income), it grieves me considerably to see my generation shafting today's students so comprehensively.

Ex-National Union of Students presidents Jack Straw and Charles Clarke should be thoroughly ashamed of themselves for their part in this, and it's not a pretty sight to see today's politicians, most of whom had the same totally free university education as I did, busily making sure that others don't benefit as they did.

You forget that in their (and my ) generation, only 5-10% of that age group went to university, as opposed to the 40% today.

I don't see many current parents complaining about the fact that their children are 4 times as likely to go to university as they themselves were. If we hadn't over expanded HE and allowed educational standards to collapse, we wouldn't be in this situation.

That is the scandal!

Doc_N

Oldernotwiser wrote: »

You forget that in their (and my ) generation, only 5-10% of that age group went to university, as opposed to the 40% today.

I don't see many current parents complaining about the fact that their children are 4 times as likely to go to university as they themselves were. If we hadn't over expanded HE and allowed educational standards to collapse, we wouldn't be in this situation.

That is the scandal!

In a sense, I agree with you. Entry to university then depended largely on academic ability. Now it's going to depend on parental income. That's not in any way an improvement.

aris

Martin is right - there will be a huge range of offerings from banks for these student loans as an alternative to what the government is offering. I suspect people going into fields where they know they will earn a good wage (the "professions") will take these up so they can pay them off early, and people going into social sciences and other lower-paid careers will take the government help knowing they might not even have to pay them off at all. Perhaps this is what the government wants. Very short sighted I would think.

tyllwyd

I agree with the blog - I've got two children, who are some way off university yet, but the idea of them being stuck with these loans with no flexibility and no way to pay off early horrifies me. When the time comes, we will have to look at all the options, including taking on the debt ourselves to try to avoid them being stuck with a millstone like that round their necks. Maybe they won't be able to go to university, they will have to look at other options - and maybe a UK university won't be the best option, maybe looking at universities in other EU countries will be more attractive. I also think that there are going to be many more part-time or more flexible courses, or maybe more school leaver jobs with training offered by large employers, because taking three years out to study will be unaffordable to so many students.

Premier_2

setmefree2 wrote: »

Can anybody provide me with a link that says students are not going to pay these loans back early as I can't find any.

Thank You

David Willetts made a statement to the House immediately following PMQs on Wednesday.
It's available for 7 days here

http://www.bbc.co.uk/programmes/b00vsxf7

Whilst the programme lasts an hour, he only speaks for about the first 10-15 minutes (after that it's debated)

About 3 minutes in he talks about hindering repayment early

Alternatively, the statement can be found here:

http://www.bis.gov.uk/news/speeches/david-willetts-statement-on-HE-funding-and-student-finance

and in particular:

...The Government is committed to the progressive nature of the repayment system. It is therefore important that those on the highest incomes post graduation are not able unfairly to buy themselves out of this progressive system by paying off their loans early. We will consult on potential early repayment mechanisms - similar to those paid by people who pre-pay their mortgages. These mechanisms would need to ensure that graduates on modest incomes who strive to pay off their loans early through regular payments are not penalised. For example, a 5% levy might be charged on additional repayments each year over a specified amount such as £1000 or £3000. Alternatively, those on higher incomes (e.g. over £60,000) who made an additional repayment could be required to pay a 5% levy on this sum. ...

MAIA

The whole business stinks, firstly they push people into higher education who will probably get more benefit from joining the workforce, learning a trade or similar. The whole of our society is conned into believing that a person is only worth employing if they have higher education of some sort.
Then they make the higher education progressively more and more expensive.
Then they start looking at how to make people carry on paying indefinitely!
To try and help young people to steer their way through this minefield created by successive governments made up of privileged people.....getting harder by the minute!

Oldernotwiser

Doc_N wrote: »

In a sense, I agree with you. Entry to university then depended largely on academic ability. Now it's going to depend on parental income. That's not in any way an improvement.

As long as loans are available for the fees, I can't see how you can say that it depends on parental income. Most parents don't pay the fees now and I can't see why they would in the future.

Doc_N

Oldernotwiser wrote: »

As long as loans are available for the fees, I can't see how you can say that it depends on parental income. Most parents don't pay the fees now and I can't see why they would in the future.

Most parents may well not pay the fees, either now or in the future.

But many, perhaps most, well-off parents do pay the fees now, and will certainly continue to do so in the future. That's going to mean that students with parents who can afford to fund the fees (and probably the living costs as well) are far more likely to go to university than those who don't have such parents.

Faced with the prospect of a debt which could approach £60,000 for a Russell Group university (and a lot more for 5 year courses) a lot of students are going to opt for something much cheaper, or opt out of further education altogether. Unless Mum and Dad are paying.

Perhaps that's the long-term aim?

blackaqua

As soon as I heard about this tact in the news I knew it was a sly way to make extra money. Exactly as you said, raising the payment threshold and charging penalties for paying off the debt early isn't designed to help the student - its to make more money. Rather the government (and universities) should be encouraging students to pay off early.

Quick calculation, forgive me if i'm wrong.
Debt of 20k for a standard 3 year degree. Interest at 3% for inflation, earning uk average of 28k a year, therefore paying back £108 a month (10% of 13k annually) would take 20 years to pay the debt off.

Raise that to repayments over 21k a year, you pay only £58 a month which would get wiped off after 30 years with an outstanding balance of £15k due to annual inflation adding £15k to the total loan cost over the years - who picks up the bill? Its still the taxpayer (or the university?).... End result is pretty much the same as not changing the fees.

loads of flaws - your salary *should* go up to at least meet inflation, you should be earning more than the UK average etc, doesn't include the new interest style, higher fees, inflation differences (which are typically high after a recession) - but you get the idea. Add onto the fact the average debt will increase by ~£9k, plus interest charges and it escalates, quickly...