Student Loans 2012

Lokolo

setmefree2 wrote: »

Economists at Barclays Capital have just released a revised inflation forecast for the UK in direct response to the Scottish Power announcement of price increases in Gas and electricity. This has CPI inflation peaking at 5.2% in October, with RPI going as high as 6.4%.

RPI at 6.4% plus 3% = 9.4%

So the student loans 2012 could be charging 9.4% interest from the get go.

I doubt it will be like this and will be the same as the current system where it's based upon March's RPI rate. Too much administration to change it every month.

melancholly

Lokolo wrote: »

I doubt it will be like this and will be the same as the current system where it's based upon March's RPI rate. Too much administration to change it every month.

plus i'd assume they'd still have the link with the base rate, so in the example that would still be 1.5% (not that i can tell that explicitly from the current published details)

i'm a little surprised they didn't up the base rate today, but for most graduates/students, that's a good thing.

melancholly

there's a discussion on the 'new uni' and fees and things on 'this week right' now - worth a look tomorrow on iplayer if anyone is interested. (the for case is presented by toby young - so i'm immediately inclined to be against him, but some of the potential pluses being discussed are certainly true. i'm also very concerned that some things that alastair campbell is saying are reasonable too.... so many prejudices that i need to overcome! lol)

melancholly

http://www.moneysavingexpert.com/family/student-loans-tuition-fees-changes

key facts article from Martin. not sure why this was only announced on the families board and not on here!

Lokolo

I think the table and graph in section #17 shows a lot about how much people will actually pay back. It actually looks like the higher graduate earners will be paying back A LOT. There's only one graduate job I know that pays £40k+ so I have ruled this out, which means the top end of graduate salaries is around £30-35k, who end up paying the most back.

Personally I'd like to see more pay back at the lower end of the scale, which then is taken off the top earners.

Oldernotwiser

Lokolo wrote: »

Personally I'd like to see more pay back at the lower end of the scale, which then is taken off the top earners.

:eek:

I'm sure I must have misunderstood what you're saying!

:eek:

Lokolo

Oldernotwiser wrote: »

:eek:

I'm sure I must have misunderstood what you're saying!

:eek:

I doubt it. I think the scale is completely wrong if you look at how much they repay.

£21k pays back nothing
£25k pays back £30k
£30k pays back £68k
£35k pays back £105k....

I think the £30-35k is extortionate in comparison to the £20-30k.

Comparing a £35k to £25k, the £35k is earning 40% more but is likely to be paying back more than 300% more in student loan repayments. I'm all up for high earners to pay back more.... but I think there is a point where it is too much.

Obviously this depends on future earnings and is very approximated.

melancholly

well you can look at it differently - those at £21K versus £25K are earning 16% less but end up paying back 0% of whatever the £25K people do someone always loses....

since the annual average salary is something like £23K anyway at the moment, the number of graduates who will go straight into a job in the £35K bracket is so minimal that this won't really impact on many people. not saying that if it's only a few, it doesn't matter, more that in reality, almost all graduates will fail to pay back the loan within 30 years. the few that will are the ones earning a lot of money. as the article says, this really is a graduate tax by stealth (although in my mind, that was the better option anyway!). and the chances are that the repayments won't be sufficient to cover the outgoings so the whole system will collapse

atypical

According to this report the median graduate starting salary is £29,000 in 2011. The survey is based on what might be called prestigious employers though so it's probably higher than it should be. Prospects has the average graduate starting salary as £24,000 in 2008. The average salary for all graduates, including those who don't take graduate jobs, 6 months after graduating is around £20k.

My qualm with the system is that it effectively rewards people who come out of university unemployable. There are those who sacrifice salary to go on to do charity work or other equally heart-warming things but they're the minority. There's a lot of talk about how the wrong people do degrees and about 'mickey mouse' courses. This system does nothing to discourage this, but then it wasn't meant to.

Lokolo wrote: »

There's only one graduate job I know that pays £40k+ so I have ruled this out

I can think of three (investment banking, magic circle law, some energy/mining roles) but there's probably more. Probably a sizeable minority.

Lokolo

atypical wrote: »

I can think of three (investment banking, magic circle law, some energy/mining roles) but there's probably more. Probably a sizeable minority.

The role I got for an investment bank was £33k. Barclays was £36k. The only one I know of that is £40k+ is Aldi. But yes I suppose it is a very small minority.