Student Loans 2012

Oldernotwiser

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?

I would love to know how "most" parents can take out loans of over £30,000 where repayments aren't necessarily required and the unpaid loan is wiped out after 30 years!

Even a conventional loan with regular repayments is going to be beyond the vast majority; you're not living in the real world.

setmefree2

cgk1 wrote: »

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?

As I understand it, and I'm no expert, if you earn £25k or less your child will get a maintenance grant and perhaps a special support grant and maybe money from the Uni as a bursary.

This is not a loan - it's money the student does not have to pay back.

So presumably the good people of Blackburn and Darwin all get grants?

If students or their parents can't access money cheaper than the government is offering it then they will have to take what is on offer from the government.

setmefree2

Oldernotwiser wrote: »

I would love to know how "most" parents can take out loans of over £30,000 where repayments aren't necessarily required and the unpaid loan is wiped out after 30 years!

Even a conventional loan with regular repayments is going to be beyond the vast majority; you're not living in the real world.

As I said, if parents or students can't access money cheaper than what is on offer from the government then they have no choice but to take what is on offer from the government.

But these are commercial rates that are being charged and they are not great T & Cs imho.

I'm happy to change my mind but you have not persuaded me yet.

melancholly

one other factor to consider is that, on average (so clearly there is variation above and below this figure), graduates earn about £125,000 more than school leavers (different figures get thrown about so i took one from the telegraph last summer). i'm not sure i fully buy that as there are so many more graduates now, but even if it's only 50% of that, it's still a lot more than the fees. it's playing the long game, but i think the more information people can equip themselves with, the better!

melancholly

setmefree2 wrote: »

But these are commercial rates that are being charged and they are not great T & Cs imho.

in what way are they commercial? as i understand it, until a graduate earns over £21,000 it should be RPI only, as with the current system. the interest rate will rise with earning to a maximum of RPI plus 3%.

i agree that penalising early repayment is a poor choice to make, but they haven't actually clarified what it will be in real terms (this lack of detail is another separate issue related to how poorly laid out the information is!).

if you can get substantial credit at better rates, then it makes sense to go for it. i'm not sure many/most people really can get more favourable interest rates (which will have to go up in the next few years anyway - we're currently in a blip, not currently at the norm).

as far as i get the new proposals, the maintenance grants are separate to tuition fees. even with all the grants for living expenses, loans will be needed for the fees. the maximum maintenance grant will be £3,250 a year (i think - there are plenty of people working for the SLC who can correct that for me!) - that won't cover fees....

http://www.bis.gov.uk/studentfinance

Lokolo

setmefree2 wrote: »

As I said, if parents or students can't access money cheaper than what is on offer from the government then they have no choice but to take what is on offer from the government.

But these are commercial rates that are being charged and they are not great T & Cs imho.

I'm happy to change my mind but you have not persuaded me yet.

FYI I did a bit of a spreadsheet.

Using the Base Rate for the last 20 years, if a person took out £24,000 (£8,000 a year as the Daily Fail article says) it would be worth £69,854 (approx!) after the 20 years.

The article you posted, pointed out that after 25 years a student would have typically paid back £49,700.

So after 20 years the student has profited £20,000.

So is it really not worth it?

cgk1

setmefree2 wrote: »

As I understand it, and I'm no expert, if you earn £25k or less your child will get a maintenance grant and perhaps a special support grant and maybe money from the Uni as a bursary.

This is not a loan - it's money the student does not have to pay back.

So presumably the good people of Blackburn and Darwin all get grants?

If students or their parents can't access money cheaper than the government is offering it then they will have to take what is on offer from the government.

That's for living costs not fees. You still need to find £24,000-£29,000 for fees. As for Bursaries, few and far between.

setmefree2

cgk1 wrote: »

That's for living costs not fees. You still need to find £24,000-£29,000 for fees. As for Bursaries, few and far between.

Of course, you are right. It's gonna be tough for students who don't get any help.:o

setmefree2

Lokolo wrote: »

FYI I did a bit of a spreadsheet.

Using the Base Rate for the last 20 years, if a person took out £24,000 (£8,000 a year as the Daily Fail article says) it would be worth £69,854 (approx!) after the 20 years.

The article you posted, pointed out that after 25 years a student would have typically paid back £49,700.

So after 20 years the student has profited £20,000.

So is it really not worth it?

Really? I don't think you can be comparing like with like. How can you know what interest rates Steven Womack used?

I also looked at what borrowing £45k would cost over 30 years using a mortgage repayment calculator.

I used this one here:-

http://www.guardian.co.uk/money/mortgage-calculator

Play with the figures if you like but if you borrow £45k at 5% pa (RPI of 3% plus interest of 2%) you repay £41k of interest. Now remember that with a student loan you are barely paying anything off the loan at the begining, so you will be paying more interest than on a mortgage.

This student loan repayment calculator here

http://www.118student.co.uk/finance/loan-calculator.html

seems to show that on a salary of £21.5k the student will payback the grand total of £3.75 per month! Well that's going to clear the debt fast isn't it?

Martin Lewis says here

http://www.moneysavingexpert.com/loans/student-loans-repay

For students with pre-1998 4.4% loans, then at current savings rates, you can't outdo the student loan interest rate (though it may be possible again in future years). In which case you may want to consider simply bunging any spare cash at it but first check...

At the moment RPI is 5% plus at least 1% (up to 3%). So it won't be easy to make money on 2012 SLs in my humble opnion.


Looking at the mortgage repayment calculator for £45k at 8% (that's current RPI plus 3%) you would pay £74k JUST IN INTEREST over 30 years.

Lokolo

setmefree2 wrote: »

Really? I don't think you can be comparing like with like. How can you know what interest rates Steven Womack used?

I also looked at what borrowing £45k would cost over 30 years using a mortgage repayment calculator.

I used this one here:-

http://www.guardian.co.uk/money/mortgage-calculator

Play with the figures if you like but if you borrow £45k at 5% pa (RPI of 3% plus interest of 2%) you repay £41k of interest. Now remember that with a student loan you are barely paying anything off the loan at the begining, so you will be paying more interest than on a mortgage.

This student loan repayment calculator here

http://www.118student.co.uk/finance/loan-calculator.html

seems to show that on a salary of £21.5k the student will payback the grand total of £3.75 per month! Well that's going to clear the debt fast isn't it?

Martin Lewis says here

http://www.moneysavingexpert.com/loans/student-loans-repay

At the moment RPI is 5% plus at least 1% (up to 3%). So it won't be easy to make money on 2012 SLs in my humble opnion.


Looking at the mortgage repayment calculator for £45k at 8% (that's current RPI plus 3%) you would pay £74k JUST IN INTEREST over 30 years.

You're the one quoting the Daily Fail article, not me. I am just using historical data. If you want to do the same then fine, go ahead, make me a spreadsheet. But you can't use 5% (which it isn't even, its 4.8% with the December rate) and use that for the whole of 25 years.

I am not having this argument again, RPI is not going to continue at 5%. You say yourself you work in finance, so even you know what RPI is likely to do from previous history. It won't be at 5% for the next 25 years. Using the current RPI for the whole 30 years is extremely naive.

The bit in bold is irrelavant as loans get wiped, so even if you are paying back £3.75 a month or whatever, it won't matter at the end of the 30 years, and infact, the less you earn, the more you profit.