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

setmefree2

fatal1955 wrote: »

Not letting people pay off debts even if they have the wherewithal and the desire is simply oppression - it keeps people trapped in the state's grip unnecessarily. The reasons given by David Willetts are a specious piece of sophistry.

Well said :T:T:T:T:T:T

magpiecottage

I have a really good opportunity for you:

Pay me £9,000 each year for the next three years. Don't worry, I can lend you the money. Naturally you will have to pay interest on it but don't worry, I will allow you to add it to the loan and charge you interest on interest.

Don't bother working during that time. I will lend you money to live on (again charging interest).

At the end of the three years I will give you a piece of paper to show employers that says you are really clever and they should pay you more (provided I am satisfied that you are). They can then pay you more than average and you can slowly pay me back.

We will ignore the fact that I don't guarantee to give you the piece of paper or that you will be competing with the other 50% of the population that I hope to do a deal with.

Come on sign up - its a great deal.

I am so glad this is not an investment that is regulated by the Financial Services Authority!

Doc_N

An Arts graduate (on today's figures) is expected to earn around £20,000 more than a non-graduate over a 40 year workspan. £500 pa more on average.

And that's justification for saddling students with enormous debts?

Premier_2

setmefree2 wrote: »

... We can borrow money at less than 1%, ...

Where's that please? :huh:

Ignoring relatively small amounts (e.g. £100 overdraft that can be recalled at any time) or short term promotional deals designed to suck you into debt (but even then, most credit cards charge a balance transfer or cash advance fee)

Oldernotwiser

setmefree2 wrote: »

Thank you so much for this post. This helps me understand that these loans are poison.

But, if the borrower had never earned over the threshold, the loans would (and still will) be written off. If earning under the threshold for a time (quite common) no repayments need to be made. All this and interest rates at the rate of inflation!

The new situation may well be different but it's hard to see how existing loans can be described as "poison".

Aless

I do not know why that are stopping early repayment, it seems unfair. I took part time work while doing a professional qualification solely to pay my loan off early as I have (what is probably considered by a lot of people as an old fashioned and unsophisticated) dislike of debt.

The thought that immediately popped into my head when I heard about the plans was that the purpose was to try to stop more well off families from benefiting from investing the loans. I saw a lot people do this, they were fully paid up by their families at uni but they took the loans and their parents told them where to invest them. Due to the low interest rates on the loans lots of people made some profit. Not sure if this is true though and not sure if the higher interest rate makes it less likely to turn a profit.

setmefree2

Premier wrote: »

Where's that please? :huh:

We have a flexible mortgage that is BOE base rate (0.5%) + 0.49%.

setmefree2

Oldernotwiser wrote: »

But, if the borrower had never earned over the threshold, the loans would (and still will) be written off. If earning under the threshold for a time (quite common) no repayments need to be made. All this and interest rates at the rate of inflation!

The new situation may well be different but it's hard to see how existing loans can be described as "poison".

LOL - the new rates are at their highest RPI PLUS 3%! RPI is currently 4.5% so that's 7.5%. Not a good deal. AND remember inflation is low at the moment. Interest rates in double figures is highly likely as inflation rises. Poison my friend.

Premier_2

setmefree2 wrote: »

We have a flexible mortgage that is BOE base rate (0.5%) + 0.49%.

(a) thats a secured loan

and

(b) where can you get that rate today?

setmefree2

Premier wrote: »

(a) thats a secured loan

and

(b) where can you get that rate today?

You can't. I'm not sure what your point is?