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

vikingvampireparrot

Althought I agree with most of the points here - especially around too many people going to university now (the people who I went with who have now gone into non-graduate levels jobs they could have joined anyway and have no intention of repaying their loans really annoy me) I do think people are missing a point in that far too many students rely on the maintenance loan to live when this part of the loan should be unneccessary.

While I was at uni (2002-5) I worked (shock horror!). My part time job (20-30 hours a week) paid for me live in my own apartment rather than student housing (although a right hole), run a car and keep my horse. I did not use my student loan for living costs at all and only had a £50 per month contribution from my parents. Lots of students do not have the high level of living costs I had (through choice) and I am constantly amazed by this assumed 'need' for student finance to cover living costs. What is wrong with working for a living? If loans were just for the fees the problems would be greatly reduced.

Premier_2

vikingvampireparrot wrote: »

Althought I agree with most of the points here - especially around too many people going to university now (the people who I went with who have now gone into non-graduate levels jobs they could have joined anyway and have no intention of repaying their loans really annoy me) I do think people are missing a point in that far too many students rely on the maintenance loan to live when this part of the loan should be unneccessary.

While I was at uni (2002-5) I worked (shock horror!). My part time job (20-30 hours a week) paid for me live in my own apartment rather than student housing (although a right hole), run a car and keep my horse. I did not use my student loan for living costs at all and only had a £50 per month contribution from my parents. Lots of students do not have the high level of living costs I had (through choice) and I am constantly amazed by this assumed 'need' for student finance to cover living costs. What is wrong with working for a living? If loans were just for the fees the problems would be greatly reduced.

When I went to university it was full time!

Monday to Friday, 9am to 5pm with a 1 hour lunch break.
(Wednesday afternoons excepted as they are universally reserved to allow a common time for sporting/club activities)

If we failed to attend, we were kicked out of University permanently (as happened to more than one person on my course)

True, not all courses were as intensive as ours in their attendance requirements, but having said that, my couse was not the worst - at least our afternoons 2pm-5pm were usually practical courses rather than lectures.

Yes there was perhaps the odd 'free period' during the morning, or more correctly personal study period to allow us to do our own research/library reading or discussion with a lecturer/tutor, etc but that certainly didn't suit any period for paid employment, especially once you take into account travelling time to/from the university.
Furthermore it would vary from year to year, and even sometimes term to term.

Then theres the evening after 5pm, but we had already done an 8 hour day! (including lunch) We would need a break for an evening meal, and unlike a usual job, study does not end at 5pm - there are still assignments to be done and more personal reading on the subject matter expected.

Then there's the weekend, but even employees have limits on the number of hours/days they are expected to work ... and you couldn't find 30 hours paid work in a weekend if you tried.

If you managed to fit in 30 hours paid work whilst you were supposed to be attending full time education, we can all imagine what course you were reading there
(perhaps the same ones the governement are looking to halt all support of)

Employment we undertook tended to be temporary, concentrated in the 40% of the year when the educational course was not running.

spheric

The thing that concerns me is the number of graduates that will be trapped by the loan, never making a dent into the outstanding balance.

According to this link: http://ww2.prospects.ac.uk/cms/ShowPage/Home_page/Main_menu___Research/Labour_market_information/Labour_market_FAQs/What_is_the_average_graduate_starting_salary_/p!epmglcg

More than 2/3s of students leaving university get jobs earning 27k or less...

If fees are going to be around 6kpa, and loans will need to cover living costs (I'm lowballing these at 3kpa), students will be taking on 27k worth of debt over a 3 year course. (ignoring the intrest in years 2 and 3)

Even if the intrest rate is 3% (and we're hearing talk of RPI plus 3%) we're talking £800 interest a year.

The current student loan repayment system is that you pay back approx 9% of earnings over the threshold (15k) - if that threshold rises to 21k, a graduate earning 27k per year (and remember, most graduates earn less) won't even cover the intrest on the loan.

So, under the new proposals, the majority of graduates will be saddled with a loan on which they aren't even able to service the accrued intrest year-on-year... - and remember I used 3% in my maths, if we're dealing with RPI plus 3% then it could be that only the very richest graduates even have a chance of ever paying the loan off.

SideArm

I love the site and have used some of the guides in helping clear some debt but, have to disagree on Martin claiming that the loan is a zero-rate effect.

I was at uni from 99 - 02, so it was the first type of loans. I was entitled and took the full loan available ~£3k a year. If the plan as put forward by the Labour Governent at the time went ahead I should have repayed this loan last year, but of course it has not.

The inflation rate was applied to my balance for each year i.e. whilst studying and only earning enough during holidays for living expenses.

So my balance at the end of the degree was ~£10,500 and I can now look forward to repaying it over the next 10 years due to having my degree and higher paid job. But alas, even with in a subject like computer science I couldn't find work and had to take any job I could, a couple of supermarkets and finally council work.

Its now 3 years later and the balance is ~£12,500 due to interest and still not paying past the £15k limit. I finally get a £17k job with MoD and start paying off £50 a month.

5 Years after that and I am paying £85 a month with a balance of ~£9k and if I stay with the MoD two years of pay freeze but, still intrerest charges of inflation.

So you can cleary see during the degree itself, earning less than the limit and due to public cuts I have been charged interest that do not equate to a zero-rate loan. My situation happend 2 years after the loans where introduced with a tution fee cap of £1025 so god help the 2012 intake of students.

vikingvampireparrot

Premier wrote: »

When I went to university it was full time!

Monday to Friday, 9am to 5pm with a 1 hour lunch break.
(Wednesday afternoons excepted as they are universally reserved to allow a common time for sporting/club activities)

If we failed to attend, we were kicked out of University permanently (as happened to more than one person on my course)

True, not all courses were as intensive as ours in their attendance requirements, but having said that, my couse was not the worst - at least our afternoons 2pm-5pm were usually practical courses rather than lectures.

Yes there was perhaps the odd 'free period' during the morning, or more correctly personal study period to allow us to do our own research/library reading or discussion with a lecturer/tutor, etc but that certainly didn't suit any period for paid employment, especially once you take into account travelling time to/from the university.
Furthermore it would vary from year to year, and even sometimes term to term.

Then theres the evening after 5pm, but we had already done an 8 hour day! (including lunch) We would need a break for an evening meal, and unlike a usual job, study does not end at 5pm - there are still assignments to be done and more personal reading on the subject matter expected.

Then there's the weekend, but even employees have limits on the number of hours/days they are expected to work ... and you couldn't find 30 hours paid work in a weekend if you tried.

If you managed to fit in 30 hours paid work whilst you were supposed to be attending full time education, we can all imagine what course you were reading there
(perhaps the same ones the governement are looking to halt all support of)

Employment we undertook tended to be temporary, concentrated in the 40% of the year when the educational course was not running.

My course was not that intensive in course tuition as it was research based and we were supposed to do more work under our own steam than in lectures. But my paid work was all evenings - 5-9 Tues to Sat plus overtime where I could fit it in. Then I would work on assignments when I got home until 12/1.

I don't think it's fair to assume that because people have a course that isn't solely lecture based that means there isn't work to be done and it's not a worthwhile course! I got onto a finance graduate scheme after my degree and now have a professional qualification as well, and my loan will be paid off in March.

gainsboroughgirl

Graduates are supposedly on average earning £100,000 in a lifetime more than non graduates. I presume this is gross. So, take off the (possibly higher rate) tax. Then take off the debt which will be even higher if you are not allowed to pay extra off and the graduate will be no better off for taking the degree than if they had left college with a few A levels or less. This will lead ultimately to a brain drain - oh, except for the rich who have a higher chance of getting into Oxbridge whether they are cleverer than their peers or not. No worries, hey? We can invite India and China to fill our unis. That'll sort it! The problems began when mickey mouse degrees were invented, kids who ought to have gone into apprenticeships and work at 16 or 18 were given EMA (in cash!) for A level years which many spent on booze and buying their first car- supplemented by doing the supermarket job part time which took jobs off struggling families). The degree was dummed down and the taxpayer couldn't afford to fund so many attending university, so the loan system was introduced. Then we had the financial crisis and the writing was on the wall for an increase in fees. Now we have rich and priviledged people running our country who could afford to pay up front for their kids to go to university; making decisions for the avearge Joe. I have to say though, that many non academic courses could probably be done in 2 years or less judging from the reports I've heard and there is a case for technology to play its part. This will not solve the problem though. Blair was right to raise the aspirations of teenagers to get a degree but many kids if we are honest, would have been better going into work and apprenticeships. Someone pointed out that having an outstanding debt would also make it harder to get other loans - eg a mortgage. Can you imagine a Britain where the poor are the intelligent poeple bringing huge benefits to society, the middle those who do low paid low skill jobs and the top being what it has always been - those who already have money because money makes money and money means power. Our new feudal landlords are in government. Plus ca change.

Doc_N

gainsboroughgirl wrote: »

Graduates are supposedly on average earning £100,000 in a lifetime more than non graduates.

That was certainly the case once, when degrees were at a premium and only a small percentage of people had them.

Highly unlikely still to be the case, though.

RRatchet

My Uni course was from '87 to '91. There were no course fees and a maintenance grant for 3 years & student loan 1 year. As my father was self-employed the last term's grant was always withheld until his accounts were finalised; this caused me a some hardship. The course was full time with only 1 or 2 free periods a week apart from Weds afternoon, so unless I was prepared to have virtually no social life working during term time was a no no. Instead I worked all the holidays even some Christmases and still graduated with £1,000 debt; I consider my self very lucky. I have 4 kids who I would love to go to Uni as I did, if that is what they want. Unfortunately I can't see that being financially possible. We earn very little so would qualify for free tuition but the maintenance costs might still be unaffordable for us and them.

Something the government seem to forget is that it is not just the individual that potentially benefits from further education it is also of great benefit to the country and society as a whole. We all need well educated people.

ThinkingOfLinking

I have mixed views/feelings on this.

On a personal/selfish note, I just started uni and am hopeful these changes won't affect me and grateful to have got in when I did. Having said that though, it was a long, hard road to get to where I am, as I am 25 years old so it was a decision made for the right reasons.

On another hand, and somewhat controversially, it'll deter those kids who are just going for the sake of it, or for the sake of another 3 years deferring growing up and a long doss/p1ss up. Those students who want to learn will be the ones to still go and they'll be more likely to succeed as they are paying so much they must be serious. The poorer students will still get bursaries and grants and of course those who don't earn enough will never pay it off.

This is from the perspective of someone who is on such a low income that I receive full loan, grant and a bursary so I understand completely what it's like for the poorer students out there. I have no help from parents or anyone else.

One bummer here is that it may mean I won't be able to do an MA as planned after my BA.

Bob_B_Surrey

University courses should be available to those with the academic ability rather than how well off their parents are! Why should one student be in more debt than another just because of their parents income?
Far too many people are going to university when many would be better off going into employment after A levels.
The number of university courses should be cut and entry standards raised.
I totally agree with all of Martin's reason (1 to 3).
Not being able to pay off the loan early without penalty is very unfair, students will be paying interest from when they get the loan not when they start earning, as Martin stated is totally wrong.
Regardless of whether I could afford to pay the fees and living costs now is irrelevant. What if I am out of a job in a few years and need the money, I can't retrospectively get a loan for my children's study.
I also disagree with the proposed raising of the threshold for repayments to £21k - This just extends the repayment period and total interest paid. If they could afford repayments at £15k before then why not in the future, perhaps this should move with inflation to keep it effectively the same for all.
Both my children are currently at university so I don't believe they will be effected by these changes.
However they will both leave university with large debts and hopefully a good degree, to an uncertain future with no guarantee of a good job.
The government should not penalise successful students, it should be in their interests to get the money back sooner from students to reinvest.
I feel very sorry for students slightly younger than my children who will appear to be getting a raw deal.
I understand that the government must do something to cut the deficit but this is not the way. These children are the country's future.