Student Loans 2012

Oldernotwiser

Quoting the Daily Mail as "evidence" seems to me to be a pretty high risk strategy.

I love the idea that a new graduate is not only going to start work on a salary of £18,000 but that salary is going to increase annually by £2,000 for the next 20 years. One wonders what planet the DM journalist is living on.

The_One_Who

So, even taking that 'advice', where would the students find the money from? Parents would need to be taking out the loans rather than the students, and with most parents in enough mortgage debt as it is, how many would be willing or able to do it? I know that I would rather take out the loan myself, but a bank would never loan that to an eighteen year old.

Higher education costs, and the money needs to come from somewhere. No one is forced to take out a student loan, and if they are able to borrow from elsewhere there is nothing stopping them from doing so.

melancholly

the new loans are still, actually, 'good value' for the student in the sense that unlike any commerical loan, the amount to be paid back is entirely determined by income... if someone loses their job, they don't have to pay back any more. that shouldn't be forgotten. it is a lot of money though but the details outlined in that article only differ in some details versus the current system (it's just thresholds, amounts and %ages that are changing). i can't see anywhere commercial offering such good terms so that they would be real alternatives.

they are though, going to be bad for the taxpayer because unless student numbers dramatically drop, it just isn't feasible for a lot of students to pay back the full amount (obviously some will earn megabucks and not struggle, but throw in women having time off to have children, or people working in careers that require degrees but don't pay very well and it changes things, not to mention the current lack of graduate jobs full stop). this means that the system is not likely to save the government much if any money (or a marginal amount that must be less than the other costs in terms of changing systems, time in parliament etc).

http://www.bbc.co.uk/news/education-11989773

setmefree2

melancholly wrote: »

if someone loses their job, they don't have to pay back any more. that shouldn't be forgotten.

The interest being added isn't frozen however, so the debt is still ballooning.

setmefree2

melancholly wrote: »

the new loans are still, actually, 'good value' for the student in the sense that unlike any commerical loan, the amount to be paid back is entirely determined by income...

The amounts students will be paying back, at least initially, will be tiny. It's a bit like paying the minimum balance on a credit card - meanwhile the underlying debt will be getting bigger and bigger. I'm not sure that is good value.

setmefree2

And once again thanks for the PMs and support. You are :A:A

melancholly

setmefree2 wrote: »

The interest being added isn't frozen however, so the debt is still ballooning.

but that's always been the case. this isn't 'new' with the new loans - that's the way they have always worked. it's the same with repayments.... that's how it has always been and i don't think it's something that will change.

i don't think it's fair that students will have to pay the huge amounts, but the terms of the loans are still not that bad. if someone never gets a job, they never pay anything back. there's no other way to borrow money with these terms.

how could it be 'better'? no interest? not an option - the government would lose a fortune. allow early repayment - well yes, that seems fair enough, but for a lot of people, it isn't really something that will help! interest will still be linked to inflation (whether RPI or CPI should be used is separate and that has been contraversial over the last few years), so this isn't like a 20% APR credit card. big student loans aren't great.... but the repayment terms are the only bit that makes them just about ok.

i guess i don't think the terms of the loans are the problem. they're not the worst part of this situation and it would be a very sad thing if students were put off applying to uni because they were scared of debt, when this isn't like any other type of debt.

setmefree2

melancholly wrote: »

they're not the worst part of this situation and it would be a very sad thing if students were put off applying to uni because they were scared of debt, when this isn't like any other type of debt.

I think most parents can access much better terms and conditions to pay for their kids to go to Uni than those the government are offering for 2012 students. So are you suggesting that parents shouldn't do that?

melancholly

setmefree2 wrote: »

I think most parents can access much better terms and conditions to pay for their kids to go to Uni than those the government are offering for 2012 students. So are you suggesting that parents shouldn't do that?

no i'm not. i'm saying that students shouldn't be put off going to uni because of concerns over what the loans will cost. one of the worst possible side effects of the changes in student funding would be for uni access to only be to those with wealthy families. i think the student loan repayment terms aren't as bad as is being suggested and if any future students read this thread, they shouldn't be scared by them.

i also don't think that 'most' parents have that easy access to this amount of money. if you do and can offer help, that's great and your decision to make. but the loan system will be only way for the vast majority of students to enter higher education with these massively increased fees. i don't think comparing student loans to a credit card is fair and doesn't explain the key differences in repayment terms.

they aren't perfect, that's a given, but i think there's a fair amount of scaremongering in the press from journalists who are being very selective in what terms they highlight. i think in all these cases, some kind of balance is needed and that's what i'm trying to point out. you have to weigh up pros and cons - the article only mentions the cons and it's important that anyone reading this thread also sees the pros. then they can decide what to do (although again, for most people, the only option will be the loan system or no degree).

cgk1

setmefree2 wrote: »

I think most parents can access much better terms and conditions to pay for their kids to go to Uni than those the government are offering for 2012 students. So are you suggesting that parents shouldn't do that?

Can you explain how? Let's take a random area, The average household income in somewhere like Blackburn and Darwin is something like £22,000. Can you explain to me what the better deal is for the average family from this area?