Student Loan 2015 Discussion

Oldernotwiser

jennie65 wrote: »

What is needed is help for those parents who will now struggle to pay for housing now the children are considered as left home, but are still obliged to keep a room for them to come "home" to in spring break etc.

I have been told I will be treated as a single person, and be expected to rent a property for a single persons need and will only get help as a single person and if i continue to rent the house we have called home for the past 6 years then i will not get any assistance as it is too big for a single person being a 3 bed house. despite the fact that my children will need somewhere to return to when not in Uni.

Many students stay in their student accommodation all year, so this might be a possibility. Alternatively, if they do come home, it would be reasonable to expect them to get part time jobs and contribute to the household budget.

Lokolo

TheBees wrote: »

This is a very useful guide but I'm finding the whole 2012 tuition fees thing quite frightening. Our son hopes to start uni in 2012 and I understand that the debt is his and he won't have to repay until he's earning a certain amount , blah, blah, blah..etc.....

In my view, having this type of debt hanging over you for so many years goes against everything we have taught ourselves and our children. We repay our credit card in full every month and our only debt is our mortgage which is very small. Our two teenagers have had part time jobs since the age of 14 and have learned to save for things and now know the value of money we think.

So why are we being discouraged from supporting them? What parent wants to see their child lumbered with debt? I would love to pay the tuition fees for them and them pay us back once they start earning rather than getting involved with a debt company but cannot find £9k per year for this. Some parents, I have heard, might borrow against their property to fund this? Another alternative is for us to put some money aside each month until the he starts repaying the loan to pay it off early but I understand there may be an early repayment penalty which is appalling. What if a youngster inherits a lump sum for a deceased relative and wanted to use that to repay? It seems so unfair not to allow this. Or if he's not allowed to repay it early it has been suggested that any savings we have accumulated for him would be better used for a future deposit on a house rather than repaying the loan?
Sorry to ramble but these are the thoughts spinning around my head at the moment. I'm sure other parents will be thinking the same as us.

The fact is you are looking at this from the completely wrong point.

Just because you have a lot of debt, doesn't mean it will effect you greatly. It's nothing like a mortgage or credit card debt, you only ever pay back what you can afford.

As ONW has pointed on many occasions to SMF, thinking of taking out a mortgage for the educational costs could be extremely bad. These debts will defiantly need to be paid back, so should the student come out without a job, then that's a problem. If the student takes out the whole debt at the beginning of the course (unless people are planning on re-mortgaging every year), but then drops out. If the student gets ill and no longer works. Or, just if the student takes out a low minimum wage job, commercial loans do not increase pay back with earnings but instead are static throughout. These things could all happen to parents (if they've re-mortgaged) as well.

You shouldn't be teaching kids that debt is bad, it's not always bad. What about stoozing/snoozing? You have debt on CC then, but it's not bad because you are making money at the other end. At the moment a mortgage at 1% isn't a bad debt, a mortgage at 7% is. It's understanding what debt is bad and what is good. The article here is explaining what you will pay back.

Another point is that current interest rates are extremely low. The only way they can go is up from now on. What if parents take out £40k in loan (be it a normal loan, mortgage or whatever), and then interest rates soar?

The repayment part hasn't been finalised so anything about this is speculation.

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I would also like to point out something.

Take £43,500 on a 4% mortgage (now this is assuming 4% throughout, which I think it pretty low, so could be even higher) over 30 years.

Total repayments would be £75,466.

Compare that to the paying back of student loan, whereby the highest amount paid back will be £77k with those assumption. Still thinking of taking out the mortgage?

setmefree2

Martin and Dan

There appears to be a massive discrepancy between the figures in your table and those produced by Accountants for the BBC in March.

The accountancy firms, which include Baker Tilly, modelled the payments for BBC Breakfast over the lifetimes of three fictional students.

The calculations assumed all the students borrowed a total of £39,000 - £9,000 in fees and £4,000 for maintenance over a three-year course - and go on to earn above the national average. (This is assumed to be £25K)

After 30 years, the student has paid back £78,882 in cash terms, and still owes £14,513, which is written off.

The MSE student who starts on £25k (and has borrowed £39k) only pays back £43k.

That is a massive difference from the Baker Tilly et al figures.

http://www.bbc.co.uk/news/education-12767850

There is a spreadsheet to support their sums about half way down the page.

Lokolo

setmefree2 wrote: »

Martin and Dan

There appears to be a massive discrepancy between the figures in your table and those produced by Accountants for the BBC in March.

The MSE student who starts on £25k (and has borrowed £39k) only pays back £43k.

That is a massive difference from the Baker Tilly et al figures.

http://www.bbc.co.uk/news/education-12767850

There is a spreadsheet to support their sums about half way down the page.

The BBC spreadsheet is assuming a very random salary increase. Starting off with 8% gradually lowering to 4.8% which I suspect is the reason.

atypical

Lokolo wrote: »

The BBC spreadsheet is assuming a very random salary increase. Starting off with 8% gradually lowering to 4.8% which I suspect is the reason.

You could probably argue that this is more accurate. Graduate salaries tend to jump quite a lot in the early years compared to later in working life.

It's never going to be an exact science though. I doubt the 8% and 4.8% is random. Maybe they have figures of average increases from somewhere.

Lokolo

atypical wrote: »

You could probably argue that this is more accurate. Graduate salaries tend to jump quite a lot in the early years compared to later in working life.

It's never going to be an exact science though. I doubt the 8% and 4.8% is random. Maybe they have figures of average increases from somewhere.

You are right, but I couldn't work out how they did it. Although I didn't spend too long looking, about to go watch Paul as my housemate said its funny.

calgary1

What happens to a student racking up debts in this country then working in another country?

setmefree2

Martin

I'm very concerned by these discrepancies. In the following article dated today you are quoted as saying the following

http://www.timeshighereducation.co.uk/story.asp?sectioncode=26&storycode=416544&c=1

Independent experts step in to clear up fees confusion

The initiative, led by Martin Lewis of MoneySavingExpert.com and Wes Streeting, former president of the National Union of Students, will attempt to stop people being deterred from applying to university as a result of confusion about the new arrangements.

That sounds highly, highly noble (nobody wants to be the one to put students off going to Uni) but does that sound like impartial advice?

How do we know we can trust your figures when your aim is to "not deter" students from going to Uni?

I'm not questioning your integity. I'm just pointng out a possible conflict.

Oldernotwiser

calgary1 wrote: »

What happens to a student racking up debts in this country then working in another country?

Student loans have to be repaid whatever country you live in although the threshold for repayment will vary, depending on the country.

MarkWatson

Would someone be able to tell me what is taken into account when a parent's residual income is assessed? Is it just what you are paid by your employer or are savings and investments counted? What about income from Buy to Let? And if they are all counted, is it the gross sum from each (eg the gross income from Buy to Let without the usual deductions?) and what about self employed income - is it based on the previous year(s) and is it gross or net?

Many questions I know but I can't seem to find any of these answers anywhere so any info from anyone would be a great help!