Student Loans 2012

PaulW1965

Lokolo wrote: »

The Government is committed to the progressive nature of the repayment system. It will consult on potential early repayment mechanisms so that people on high incomes are not able to unfairly buy themselves out of this progressive system. These mechanisms would need to ensure that graduates on modest incomes who strive to pay their contribution early through regular payments are not penalised.

Maybe the op is not planning on their kids earning a modest income. Afterall most people don't go to Uni to earn a modest income.....;)

PaulW1965

Lokolo wrote: »

Honestly, I trust the government site rather than one from The Independant which is 3 months old.

The article heading is also "Graduates who pay off their loans early may face penalty".

Well you carry on then. Tell all those prospective students to fill up on those government loans.

Can't wait to see how that ends!

Lokolo

PaulW1965 wrote: »

Maybe the op is not planning on their kids earning a modest income. Afterall most people don't go to Uni to earn a modest income.....;)

I agree, but it is not guaranteed. I have 1 friend on £12k a year, 2 friends on £15k. The latest interview I had, which was on good money (£33k), there were 2/3 (they usually hire 2 but they said they may hire 3) positions and over 300 applicants.

PaulW1965

Lokolo wrote: »

I agree, but it is not guaranteed. I have 1 friend on £12k a year, 2 friends on £15k. The latest interview I had, which was on good money (£33k), there were 2/3 (they usually hire 2 but they said they may hire 3) positions and over 300 applicants.

Well if you get the job under the new system you would be stung with high interest on your student loans for YEARS!!!!!

..... still think you should take the loan?

Lokolo

PaulW1965 wrote: »

Well you carry on then. Tell all those prospective students to fill up on those government loans.

Can't wait to see how that ends!

So far so good most just spend it though ha.

Lokolo

PaulW1965 wrote: »

Well if you get the job you would be stung with high interest on your student loans..... still think you should take the loan?

Of course I would.

RPI is usually around 2% (government targets, see Bank of England website for more information). The biggest (and thats when I am earning over £41k), interest rate is RPI+3%. So around 5%.

Now, this means I would just need to find something more than 5% to make profit. Before the bad times recession, this was easy. Some people over in my home forum (Savings and Investments) people fixed at 6/7% ha. I bet they're thankful!

Investments can also gain even higher rates.

The money can also be used to lower mortgage (which would be higher than the 5%) costs, or use it to buy something which would cost more (instead of taking out a loan which would cost more than 5%).

And remember, the RPI+3% is for graduates on £41k a more. Very few graduates will start on this. And more likely start at the lower end (£20kish), where by the rate is RPI+x%, where x is less than 3 and rises, as your pay does, until 3% at £41k.

mountainofdebt

Well for what's is worth I think the OP's son should consider in the next 12 months getting himself a job and saving towards his life in Uni - this is exactly what Junior is doing.

Hopefully though Plan A will involve him in NOT going to Uni but the Armed Forces where they will happily help in get a degree through part time study. If Plan A does come off he will still have the money in bank account and the habit of saving some of his salary will be 2nd nature to him.

PaulW1965

Lokolo wrote: »

Of course I would.

RPI is usually around 2% (government targets, see Bank of England website for more information).

RPI is a lot more than that

http://www.statistics.gov.uk/downloads/theme_economy/RP04.pdf

RPI in Nov was 4.7% 2010 and in Oct 20104.6%. And inflation is low at present. Do you know that RPI was 10.9% in 1990? Are you aware that oil is approaching $100 a barrel? Do you know that there has been an explosion in commodity prices?

The biggest (and thats when I am earning over £41k), interest rate is RPI+3%. So around 5%.

Now, this means I would just need to find something more than 5% to make profit. Before the bad times recession, this was easy. Some people over in my home forum (Savings and Investments) people fixed at 6/7% ha. I bet they're thankful!

In other words you CAN'T FIND an interest rate to beat your hypothetical loan rate even when you have fudged it to get an ultra low RPI figure!

And in fact you are just gambling on RPI being low.

Investments can also gain even higher rates.

Why does the op want to gamble with student loan money? AND the op said they can borrow at less than 1% so why would they borrow at 5%?

The money can also be used to lower mortgage (which would be higher than the 5%) costs, or use it to buy something which would cost more (instead of taking out a loan which would cost more than 5%).

The op can borrow at 1%. But even if they couldn't the best five-year fixed rate mortgage is just 3.99 per cent this week.



Still want that loan?

Lokolo

PaulW1965 wrote: »

RPI is a lot more than that

http://www.statistics.gov.uk/downloads/theme_economy/RP04.pdf

RPI in Nov was 4.7% and in Oct 4.6%. And inflation is low at present. Do you know that RPI was 10.9% in 1990?



In other words you CAN'T FIND an interest rate to beat your hypothetical loan rate even when you have fudged it to get an ultra low RPI figure!

And in fact you are just gambling on RPI being low.


Why does the op want to gamble with student loan money? AND the op said they can borrow at less than 1% so why would they borrow at 5%?

The op can borrow at 1%

You are thinking too shorterm. Think longterm. I have already said, at the moment it isn't worth it. But over the longterm it is. As I have said, interest rates will raise, inflation will fall. The target inflation rate is 2%, to do this, the Bank of England will need to raise interest rates. This is how you stop inflation. The fact you are telling me I am gambling that inflation will lower to 2% shows you do not understand.

For instance, you have already said, in 1990, RPI was 10.9%. Did you even bother to look up the base rate? In 1990 the base rate was 13.38%.

The Bank of England have a target inflation rate. This is because no country wants hyper inflation. This would lead to a lot of problems. If you can remember back a few years, Zimbabwe had hyperinflation:

http://news.bbc.co.uk/1/hi/world/africa/4665854.stm

See here. This would be very bad for the economy (as the same as the 1990s). The only reason the Bank of England haven't risen base rate yet is because of economy isn't yet fully stable. They need businesses to grow back to where they were. Otherwise things could collapse again. This will of course improve in the near future.

You also state about the OP being able to get it less than 1%. I have never said, that the OP shouldn't give their son money and instead let them take out the loan. I have just stated, they should take out the loan, alongside it, because debt isn't bad, bad debt, is bad. It can be useful to use it for something else.

PaulW1965

Lokolo wrote: »

You are thinking too shorterm. Think longterm. I have already said, at the moment it isn't worth it. But over the longterm it is. As I have said, interest rates will raise, inflation will fall. The target inflation rate is 2%, to do this, the Bank of England will need to raise interest rates. This is how you stop inflation. The fact you are telling me I am gambling that inflation will lower to 2% shows you do not understand.

For instance, you have already said, in 1990, RPI was 10.9%. Did you even bother to look up the base rate? In 1990 the base rate was 13.38%.

The Bank of England have a target inflation rate. This is because no country wants hyper inflation. This would lead to a lot of problems. If you can remember back a few years, Zimbabwe had hyperinflation:

http://news.bbc.co.uk/1/hi/world/africa/4665854.stm

See here. This would be very bad for the economy (as the same as the 1990s). The only reason the Bank of England haven't risen base rate yet is because of economy isn't yet fully stable. They need businesses to grow back to where they were. Otherwise things could collapse again. This will of course improve in the near future.

You also state about the OP being able to get it less than 1%. I have never said, that the OP shouldn't give their son money and instead let them take out the loan. I have just stated, they should take out the loan, alongside it, because debt isn't bad, bad debt, is bad. It can be useful to use it for something else.

I am aware that the BOE have a 2% target. And how many times have they met this target in the last 2 years!? How many letters has Merv wrote to explain why inflation has over shot it's target!? The idea that inflation is 2% is ridiculous! Furthermore, the 2% target figure is CPI and NOT RPI!

RPI is 4.7% currently, add 3% to that - that makes 7.7%. Please show me an account paying interest of 7.7% (NOW not back in 2008!)