'The argument over student loans could kill the next generation's...' blog discussion

jamesd

Simon_c wrote: »

there will be many many graduates who end up on "normal" jobs (as opposed to high flying professions or city jobs) who will effectively be paying 40% marginal rate of tax form £21000. Someone earning £50000 is going to have a marginal rate of tax of 50% for near to 20 years under this system. That can't be right.

Of course it's right. These are the median incomes for those 20 years in 2007-2008:

age 25-29: £18,500
age 30-34: £21,400
age 35-39: £22,700
age 40-44: £22,600 and from here it starts falling.

You're complaining about those earning more than twice the median income repaying the loan (not a tax, a loan) at a higher rate. That's a group who can easily afford to do it compared to those earning median income.

Better still, the threshold of £21,000 means that you have to be making around the age 30-34 median income before you have to repay anything, so even then you're pretty well off compared to much of the population.

Here's Martin's table with some earnings context added:

Earnings 	Pay
£22,000 	£90	50th percentile is £18,500
£30,000  	£810	75th percentile is £29,500
£40,000 	£1,710	90th percentile is £44,900
£50,000 	£2,610	95th percentile is £61,500

So, who exactly should be objecting to those making more than half the working population paying £90 a year off the loan that helped them get there? Who should be objecting to those in the top 10% of earners paying £1,710? Those who are getting the benefit in the form of higher earnings are paying. Seems reasonable compared to taxing those who are making less than average so that those making more than average can be better off.

Martin has some good and real concerns about this scaring people away but one thing that isn't unjust is to have those who are making more and much more than average paying for their loans.

Simon_c wrote: »

I'm really hoping that the increase in fees will move universities to start competing on the type of course they offer.

I'm hoping that it may encourage more students to study outside the UK if it makes that competitive. It'll add significantly to the educational value.

I'm still the only person I know in my extended family to have a degree, courtesy of a system that made it relatively easy for someone from a poor background to go if they did well enough in school. Though not easy, there are still major hurdles when coming from a poorer background than traditional middle class. If you're intelligent enough to benefit from going to university, don't be scared off by these proposals.

jamesd

Crowqueen wrote: »

The last time we had political unrest like this the PM was booted after six months (poll tax riots, 1990).

There's a huge difference between those two situations.

Poll tax: per head tax that greatly penalised those on the lowest incomes.

Student loans: the top earning half of the population repaying the loan that helped them to get into that group.

adindas

They do not want to acknowledge that with the current tuition fee e.g about £3,000, UK is already the highest among EU countries for EU/UK students.

If the limits is increased to £9,000. I can not imagine it will not attract the most Brilliant EU students want to study in the UK. Future of Britain UK will be full of people who are just claiming benefit ......and people who do not want to work ....or they can not compete with other people from EU countries. HAI WAKE UP .......

They are going to Germany, France, Switzerland, Austria, Scandinavian Countries because the tuition fee there is almost free or very little.

I am saying this because I fell symphaty the future student who will start working with huge amount of debt, while they contribite a lot to UK competitiveness, development.... I am not the student anymore.

ADINDAS

pjala

How about this from the Daily Mail this is money:
http://www.thisismoney.co.uk/savings-and-banking/student-finance/article.html?in_article_id=519220&in_page_id=52
Talk about a complete b*lls up in policy. If we used tax to fund universities, then those who had already been and had had "free" university education would be doing their bit to contribute. This would blow apart the issue with the old elite who had free University education. Pump up the tax on those earning more than £50000 per year, this is the only honest thing to do.

pjala

And one more "inequality", even the "good" debt of student loans is calculated to rise at RPI. All the other cost measures for this government are being changed to reflect inflation as measured by CPI. CPI has always been lower than RPI, so this is seen very much as a cost saving measure.
Basically, if it costs money and we have an inflation guarantee (pensions) we will measure inflation by the cheaper measure - CPI.
If it brings in money, and we want to sell the loan as a type of loan that does not increase in cost ( a good loan) then we will use RPI as the measure of inflation, the consistently higher measure of inflation.
To see what I mean:
http://www.statistics.gov.uk/cci/nugget.asp?id=19
Notice that in a decreasing inflation environment (2008) RPI was below CPI, but the opposite is true in an increasing inflation environment. No points for guessing where this government thinks we are heading.

The problem with this differential way of approaching inflation proofing, is that it is inherently unfair, and when you are hurting people to pay for the banks then it has to be fair, otherwise it can be seen as a corrupt approach to government statistics.
Effectively, future students can claim, that THEY are paying the most for the recession that has been caused by the banks. That is, students are being mortgaged to provide government income in times of recessionary need. Talk about robbing the young!

jmaster

As a parent and a teacher I think many are missing the point here. Many young people (my own children included) are put off going to Uni by the huge cost of accommodation and daily living - and this fees augment is just adding more pressure. Sure - you don't pay back these fees until you earn enough, but the huge overdraft and loan that you needed just to live has to be paid back as soon as you graduate regardless of how much you earn. My son finally decided to bite the bullet - and go to uni at the age of 27. He had saved hard, but realised that he needed the degree to progress. As he was studying medicine - his fees were paid. But the nature of the course (intensive and hard work) meant that he could do little holiday work. I had to find £7k a year for his board and lodgings etc as it was in an expensive area and he moved to a different hospital every 6 weeks. He now has relatively little debt (£12k) due to me meeting these expenses - but he had to move back home and find a job here so that he can save for a house! - he is now 30. It is this debt that has put off many young people who do not have parents willing or able to help - my own parents did not have to pay anything towards my education.

Many people are confusing this fees debate with the day to day costs of going to uni. This is the thing that has to be addressed. Student loans do not meet the true cost and are putting off many.

briesmith

So, 44% of our rising 18 year olds want a 3 or 4 year sojourn where they a) grow up b) acquire a degree; and they want the rest of us to pay for it.

As things stand, a typical degree requires perhaps 30 weeks in a year commitment; contrast that with a full time job where the requirement is typically for 47 weeks.

A working week outside university consists of about 35 to 40 hours supervised or directed attendance. An arts degree course requires somewhere between 4 and 12.

Funds are limited and education budgets are under pressure. About 400,000 11 year olds move from junior to secondary education unable to effectively read and write.

Where would you spend your money?

Nednats

The old argument for student loans is people who go to university earn more when they leave therefore they can afford to pay for it out of their wage.
since 15k is an average wage raising to 21k less people will have to pay it.
How long of not paying off your student loan do have under the system before you don't need to pay it back?
Not everyone who leaves university becomes a high earenr. What if a lot of people leaving univeristy doesn't become high earners? - there are going to be alot of loans not being paided off.

whacked

I really worry about this. I have worked really hard on educating my daughter about financial responsibility. Then we are told that our kids should borrow large sums of money and "not worry" about whether or not they repay it in their lifetimes. What kind of a lesson is this??

Surely it would be better to tax everyone earning over say £30k a couple of pence more income tax which will have most graduates making a contribution, and sharing the burden with those who got their education for free in the good old days. This will also save vast amounts of money setting up a new and expensive bureaucracy.

Calico_2

rdtrdt wrote: »

I'm astonished that the "value for money" aspect has not become more prominent.

Many of my Uni lectures were in a lecture theatre containing 120 or so students. Plus there was some (inexpensive) lab work and a tutorial. This at a decent 'proper' Uni too.

This would not cost anything remotely like £6k-9k per annum. My estimate would be more like £2k per annum.

Can I just ask what your 'estimate' is based on?