Student Loans 2012

setmefree2

Update note - see the full guide to the new system at

Student Loans 2012: 20 key facts about tuition fees, loans, grants and more

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Well what a terrible blow. After years and years of attempting to get Mortgage Free we now find that our kids will be burdened with a humongous mountain of debt if they go to university. Our eldest is already in Lower 6th, so there really isn't much time to deal with this

So this is my blog of our attempts to help them.

I believe that the first thing I need to do is find out what interest rate our children will be paying on these enormous loans and make sure that they are even worth taking from the government.

Any thoughts?

setmefree2

It's this bit I find alarming about the new proposals

What's more, students who want to pay off their loans early will possibly be hit with a financial penalty.
He said: "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 to unfairly 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."

Poolie

setmefree2 wrote: »

Well what a terrible blow. After years and years of attempting to get Mortgage Free we now find that our kids will be burdened with a humongous mountain of debt if they go to university. Our eldest is already in Lower 6th, so there really isn't muchg time to deal with this

So this is my blog of our attempts to help them.

I believe that the first thing I need to do is find out what interest rate our children will be paying on these enormous loans and make sure that they are even worth taking from the government, as we presently have a mortgage rate of less than 1% (BOE base rate + 0.49%), it may well be cheaper for us to borrow the money.

Any thoughts?

The changes to Tutition fees do not come into force till students starting their first year of their course on 1st September 2012 (New Academic Year).

Interest rate - We will need to see what the white paper from the GOvernment actually says as there has been talk of Inflation while studying then a high rate (up to 3% + inflation) when repaying based on income.

Poolie

The early repayment charges will be listed in the white paper when published. There is currently talk of either 5% charge on repayemnts over a set amount

setmefree2

Poolie wrote: »

The changes to Tutition fees do not come into force till students starting their first year of their course on 1st September 2012 (New Academic Year).

This is my eldest son. Looking at the details it would appear that most Unis will be charging £6k p.a. and only £9k in exceptional circumstances? Is that correct?

setmefree2

Poolie wrote: »

Interest rate - We will need to see what the white paper from the GOvernment actually says as there has been talk of Inflation while studying then a high rate (up to 3% + inflation) when repaying based on income.

Do you know when we will know what the white paper actually says?

There is no point in our son taking out an expensive government loan when we can borrow extremely cheaply ourselves.

AndyGuil

setmefree2 wrote: »

This is my eldest son. Looking at the details it would appear that most Unis will be charging £6k p.a. and only £9k in exceptional circumstances? Is that correct?

That is correct. The fees are not paid upfront anymore and the repayments start when their salary reaches £21k and that rises with inflation every year. The repayment period has been increased to 30 years reducing the monthly outgoings they will pay.

AndyGuil

setmefree2 wrote: »

Do you know when we will know what the white paper actually says?

There is no point in our son taking out an expensive government loan when we can borrow extremely cheaply ourselves.

It is possible that taking out a separate loan or paying upfront will incur an extra fee. It is done to prevent well off families paying off the fees to avoid interest repayments.

setmefree2

AndyGuil wrote: »

It is possible that taking out a separate loan or paying upfront will incur an extra fee. It is done to prevent well off families paying off the fees to avoid interest repayments.

Awww man - that stinks! Why don't they just call it a graduate tax then? 'cos that's what it is...:( Surely they can't make you take a loan out????? Do you currently have to take a loan?

AndyGuil

setmefree2 wrote: »

Awww man - that stinks! Why don't they just call it a graduate tax then? 'cos that's what it is...:( Surely they can't make you take a loan out????? Do you currently have to take a loan?

No you don't have to take a loan now or for the new system. It is a little like a graduate tax except it ends when it is paid and you can't escape it by moving abroad.

setmefree2

Ok - so from the BBC I've found this

The subsidised interest rate at which the repayments are made - currently 1.5% - will be raised. Under a "progressive tapering" system, the interest rate will rise from 0 for incomes of £21,000, to 3% plus inflation (RPI) for incomes above £41,000.

http://www.bbc.co.uk/news/education-11483638


Can anyone explain to me what this means?

Does this mean that before you reach £21k interest will be charged at 0%, increasing to 3% plus RPI at £41k.