Student Loans 2012

The_One_Who

It is certainly something to bear in mind, though. No one can predict the future, and a lot of women will be wanting time off work for children. Commercial loans don't take your situation into account, but then in your situation it wouldn't be the student paying off the loan, it would be their parents stuck paying off a loan until their late career days or even retirement.

Oldernotwiser

setmefree2 wrote: »

You seem to be extremely confident in telling students to fill their boots with these loans. Yet, really you have backed up your opinion with little more than "one day you might get ill" or "one day you might die".

I cannot understand how you, as an accountant, can think it sensible advice to take out commercial loans with no flexibility when student loans are available.

It's not a question of "if you die/get ill" but all the other things I've mentioned previously. Who on earth would want to wager money on someone not being made redundant/having a child/wanting to go back into education/wanting a career change in their twenties and thirties?

It's just not the way that life works these days.

mumps

setmefree2 wrote: »

And this is what students spend their money on per week

Accommodation £77
Food £41
Alcohol £22
Transport £14
Utility bills £15
Leisure & Social £12
Materials, bks, & stuff for course £11
Ciggs £1

Total £193


Source 2009 Halifax Student Cost of Living Survey

It will depend alot on where they are and what they are studying. My DD pays more in rent and utilities, her flat is always cold so they have the heating on more than they would want. The flat isn't squalid but I wouldn't want to live there, very noisey with bars and takeaways all round her. Transport is higher than that, she has a bus pass to uni and budgets for one trip home per term, she also does a fair bit of volunteering which can cost her in transport. She doesn't smoke and I don't know what she spends on alcohol. I don't think materials etc for her course would come to £11. Her volunteering has meant she has paid for 3 CRB disclosures this year, volunteering in India last summer cost her over £200 in vacinations alone, uni paid for travel and accommodation. She would normally spend less on food but does seem to spend alot on take aways around exam time. Overall it is about right for her budget.

setmefree2

Thanks for your post mumps :money:

jennifernil

setmefree2 wrote: »

As well as reducing the availabilty of loans to students government is cutting grants. Currently, for example, a student whose family has a household income of £42,500k would receive £650 in grants. They will no longer receive anything, so this is £650 more parents/students have to find.

For someone with a household earning £47,708 their child would currently receive c£5100 in student loans. Under the new system the student will receive £3,564. So this family will have to find an extra £1.5K p a. Over 3 years that's £4.5K.

Plus nobody can realistically live on a £3.5k loan so what these familes are actually being asked to find is £4k per child for 3 years or £12k.

Looks like there are higher grants and loans available in England at the moment than in Scotland, relative to parental income.

Here the current maximum loan of £5067 starts reducing when parental income reaches £24275, going to the minimum of £915 on an income of £58300. And the maximum grant of £2640 is payable on an income of £19310, reducing to zero when parental income reaches £34195.

Still, we don't have tuition fees right now, so I suppose there are "swings and roundabouts".

setmefree2

Oldernotwiser wrote: »

I cannot understand how you, as an accountant, can think it sensible advice to take out commercial loans with no flexibility when student loans are available.

It's not a question of "if you die/get ill" but all the other things I've mentioned previously. Who on earth would want to wager money on someone not being made redundant/having a child/wanting to go back into education/wanting a career change in their twenties and thirties?

It's just not the way that life works these days.

Because, for example, if RPI is 5% (which it currently is and there is no sign of inflation cooling),and a student borrows £12,500 per year for 3 years then by the end of the 3 years they will have racked up £3,750 worth of interest before they have even had their graduation ceremony.

£625 in year 1, £1250 in year 2, and £1875 in year 3. Total £3,750.

Another example, 3 years after working the student still hasn't earned the requiste £21k to be either 1)paying extra interest at 1% or 2)paying their loan off. Interest charges in those 3 years will total £5,635.

So if both scenarios were true then in 6 years that is £9,375.

If wage inflation was rising at 5% then this wouldn't necessarily be a problem but wage rises are currently flat.

So I think it's worth considering all the options, as my son is going to Uni in 2012, when there is no sign that inflation will have cooled.

By the way you can always insure against ill health.

I also think that for many people, looking at the changes to Student maintenance loans, this is going to be academic because if your household income is greater than £45k then there is hardly going to be any maintenance loans available. If I was unable to help my son through Uni I "might" be telling him to take a gap year and save up some money. I don't see how students are going to be able to live on £3.5k (the minimum partial loan available) without help.

As I said I'm not telling anyone what to do. Posters should do their own research (but come on here and share their results with me )

melancholly

setmefree2 wrote: »

I don't see how students are going to be able to live on £3.5k (the minimum partial loan available) without help.

although there is a thread somewhere (DFW?) with people living off £4K a year.... and that's 'grown ups' with families. putting London aside, as the costs there are just ridiculous, students can get by cheaply if they choose to. if they cook themselves a lot, use student discounts and don't spend a fortune on alcohol (or at least focus on student nights so it's cheaper), you'd be surprised. students are also able to be at their parents' place for just under half the year.....so that gives time for full time temporary work (if it's possible - these days that's harder than it used to be) and usually, food paid by parents!

it's not a great amount of money, but it isn't impossible... especially with a part time job (which also gives less free time to spend money!). i worked in a bar as a student - got to spend Friday nights with friends and got paid for it!

it is also increasingly common for students to have that gap year and save up. it's not a perfect solution but is what a lot of us have had to do to pay for a masters as there are no loans at all for that.

there are solutions and they're not easy, but i know that a lot of people get their first job/go into further study and realise they have a lot less money than when they were studying the first time! i think the DFW board can be pretty inspirational for working out wants versus needs, and can help anyone save money from their budgets. you'd be surprised how many people get by on that amount of money and get by well!

Lokolo

setmefree2 wrote: »

Because, for example, if RPI is 5% (which it currently is and there is no sign of inflation cooling),and a student borrows £12,500 per year for 3 years then by the end of the 3 years they will have racked up £3,750 worth of interest before they have even had their graduation ceremony.

£625 in year 1, £1250 in year 2, and £1875 in year 3. Total £3,750.

Why do you assume inflation will be 5% for three years?

2010: 4.4%
2009: -0.4%
2008:3.8%
2007: 4.8%
2006: 2.4%
2005: 3.2%

That sure shows consitent RPI over a number of years

If you think inflation is going to stay at 5% for the next 3+ years then wow, rediculous to think! There's no way this will happen.

Interest rates are expected to rise in the second half of this year which will impact inflation figures.

setmefree2

Lokolo don't you ever read the news Here is today's

http://www.bbc.co.uk/news/business-12462901

Retail Prices Index (RPI) inflation - which includes mortgage interest payments - rose to 5.1% from 4.8%.

This is what Mervyn King said. (He is the governor of the Bank of England;))

In his letter he says inflation is likely to rise towards 5% in the coming months.

He is refering to CPI here. RPI is trending about 1% higher than CPI.

Perhaps you should google inflation and educate yourself. It's highly unlikely that inflation is coming down any time soon you will find.

Lokolo

setmefree2 wrote: »

Lokolo don't you ever read the news Here is today's

http://www.bbc.co.uk/news/business-12462901

This is what Mervyn King said. (He is the governor of the Bank of England;))

He is refering to CPI here. RPI is trending about 1% higher than CPI.

Perhaps you should google inflation and educate yourself. It's highly unlikely that inflation is coming down any time soon.

I know what inflation is now. I know what inflation is. I did not say, at any point, that inflation is not 5% at the moment.

What you are saying is that inflation will be 5% for the next 3 years. When it isn't.

You think inflation is going to stay like this for years? Are you serious!? Maybe you should pop into Savings and Investments forum and suggest that inflation will be at 5% for the next 3 years. You might learn something

(and FYI, it has been said time and time again that this high inflation is temporary, this means they don't think it's going to be here for the next 3 years, hence the rise in interest rates in the 3rd and 4th quarter of this year! I was actually expecting it to be sooner than that but alas, it's not sadly)

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Also CPI is irrelevant here. Student Loans interest is based on RPI's March value.

I am honestly struggling to believe you are an accountant.