MSE News - Tuition fees furore: what exactly are the plans?

Taiko

The point being you stated that on a £27,000 loan you'd be paying RPI+3%, which is completely incorrect.

Sit down and do your maths, because 9% of the £6000 is £540. Factor in compound interest on £3k/year fees, and then any maintenance loan, and this would not be paid off in the 5 years you quote on a £21k income. It wouldn't make a huge dent in this.

Oldernotwiser

andy465 wrote: »

@Taiko I did bother to read it, I just expect most people go to university to allow them to get a salary of more than £41k in their lifetime, otherwise what's the point in going?

Do you really think that nearly half of the population expect to get a salary of over £41,000 in their lifetime? What planet are you living on? You have no idea of people's motivation for university study.

atypical

Oldernotwiser wrote: »

Do you really think that nearly half of the population expect to get a salary of over £41,000 in their lifetime?

To reinforce what oldernotwiser says, a salary of £41,000 would put you in the top 20% of earners. Or to put it another way, 80% of people don't earn this much.

andy465

I'm not sure what you lot are getting at here, I've stated both sides of the case, < £41k earners never pay off their loan, so have a constant tax, and above that people pay through their noses unless they can afford not to have a loan or earn enough that the interest is pitance.

I for one am someone in the top 20% in that case, so I do care.

I was talking about my £3k total fees (i.e. pre-2006), so it does get paid off in less than 5 years. £9k total fees would take time at £21k/yr, but it's total value in inflation terms would still be £9k of current value assuming RPI = inflation.

Its RPI + 3% interest. Interest you end up having to pay unless your 30 years are up. The sweet spot is £45k earnings which is about £65k in repayments of current value, everyone else pays less.

I admit there is flaw to my maths in that I'm assuming a steady RPI of 4.4% (the current student loan rate for pre-1998 students), but I think it's safe to say RPI is going to be ~ 3%/yr on average (in which case the sweet spot is about £42.5k/yr at £56k in deductions), just see what this month's RPI is going to be with the vat rise, fuel duty and train fare rises.

Other assumptions I've made are that you go to a uni that charges £9k/yr. In practice not all uni's are going to do it. The biggest assumption was obviously that moneysavers are earners as well.

Taiko

Well you're wrong again, because there were no fee loans available to students before 2006. It was all non-repayable grants. Fee loans were brought in when top-up fees were introduced in 2006.

Give up already.

andy465

So the fee's I was paying 2002-2005 with a government issued student loan were someone scamming me, and the HMRC is stealing 9% of my salary over £15k?

Student loans and tuition fees have been around since 1998. It was maintenance grants before that. Please read the student loan guide and compound interest before saying I'm wrong.

Taiko

You are wrong. What you've taken is a maintenance loan, not a tuition fee loan.

melancholly

andy - Taiko used to work for the SLC (i think - EDIT: as i thought you left late last year?). they know more about the systems than most of the rest of us combined!

the new system isn't a disaster for students (it's not great but no fee increase would be and otherwise the hole in funding would be too great); i think it's a disaster for universities though.

andy465

The name doesn't mean much, just that it shows the split of the loan and the amount you're guaranteed verses the family income-dependent portion. You get the same interest rate, and I'm sure they count it in a singular pot.

So while you're mentioning maintenance loans, maybe I should add £12 onto that £27k pot and show how significantly worse that is? I left it out as it is independent of the fee increase.

Honestly I can't be bothered speaking here any more.

andy465

thanks melancholly, at last a post that make sense. I don't know about Taiko's SLC experience but my maths is right (within a few assumption limits as I mentioned).

I agree its not a disaster, graduates will survive and there will still be a benefit if not reduced to going to uni, but the fact that its no longer a inflation-linked loan makes it so much more expensive. For some, they are better off getting their parents to remortgage their homes and pay their parents the additional interest + repayments on that. The cheek that 'affluent' people might not be able to pay off their loan early is completely unjust.

I'm angry that people earning around my amount would be the hardest hit, whilst higher earners pay less. It would be solved by simply being RPI.

I'm not going to post anymore on this but will leave with my opening sentence. Has anyone calculated the full cost of this?