Student Loan 2015 Discussion

edited 21 October 2015 at 11:52AM in Student Money Saving
928 replies 215.9K views
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  • sclufcsclufc Forumite
    2 Posts
    I think this is a really useful guide and would have loved this before I went to uni.

    One quick question, does the 30 year point about the debt being cleared, apply just under the new changes or all graduate post 1998 when the student loan rules changed?

    Cheers
  • MSE_Dan wrote: »
    Thanks Andrew,

    We've worked on this a bit more now, and have changed the assumptions to be nearer what you discuss (was always the plan to get one version up then refine in time for the weekly email)

    We now do grad earnings rising at RPI+2% yearly, and the payment thresholds going up at RPI+1%. These both closely match the best ONS stats we could find - though earnings statistics have always been bizarrely hard to pin down

    What's struck me during the process is how marked the changes caused by a tweaked assumption have been. It will be really interesting to eventually find out the levels set by government, and how they affect repayment amounts and timescales.

    Dan

    Dear DanThanks for your reply. Could you explain why you've modelled the thresholds at RPI+1%? Currently wage inflation is 2-2.5% and RPI near 5%. ONS change in average earnings isn't any good? If not, then why not have 'wage inflation = RPI' that seems less contentious to me over 30 years.I built my own model a few months ago and realised that tweaking the variables had such an impact on the model that I was reluctant to put anything into the public domain. I think the scheme is inherently volatile - this may be a general problem with 'income-dependent repayment loans' rather than the kind with which people are more familiar.I notice Willetts himself called it a graduate tax on Monday - 9% over 21K but with this complicated mechanism to curtail the length of its imposition. I would also stress that the government is changing the primary legislation to lift the restrictions on the interest that can be charged on student loans - the new limits will be 'commercial' rates or better in certain circumstances. This gives future administrations the flexibility to shift the thresholds and interest rates if the scheme looks like being too costly for the government. This legislation also allows the loans to be sold to 3rd parties who would also be able to charge commercial rates. This is why the terms of the agreements that people will be asked to sign are so important.I think sites like this one should be campaigning for a simpler system.Andrew
  • melanchollymelancholly Forumite
    7.5K Posts
    kayr wrote: »
    No, but the Guardian estimated an average of about £8.6 K and my own experience is that none of the universities my son is considering have set their fees at less than £9k. So I think setmefree2 is quite sensible to suggest that a table based on £9k fees would be more helpful.
    but that's half the equation; it's living costs plus fees. as has been already said, one is probably an overestimation and one is a probably an underestimation. making both more accurate won't change the total very much. for a ball park prediction of the fees and the state of the economy over 30 years, it's probably pretty fair!

    one of the biggest issues with the new student loans system is when there is an overemphasis on one particular part, rather than considering the whole package (which don't get me wrong, i'm not in favour of), but concentrating on only some details while ignoring the others isn't going to make anything more accurate.
    :happyhear
  • MSE_Martin wrote: »
    In point 1. I think you've misread the assumptions.

    We assume an individual graduates growth at RPI+2% of salary (this incorporates the fact that graduates tend to gain in seniority as they age - but factors in that some won't and some will take time off)

    Yet we assume the thresholds go up with average earnings which we have as RPI+1% which is historically roughly right (actually slightly higher)

    In point 2. While you are technically correct this is an extremely unlikely scenario.

    I think it is perfectly possible the scheme will be changed for new starters in the future. Yet we have never seen previous versions of student loans changed from their outset position (ie pre 1998 students still pay that version, post 1998 pre 2004 their version etc). So I disagree that this is likely going forward, the policy has always been that they stick with what was said at the point of study start.

    In point 3. Same answer as above - that legislation is to enable future schemes to change - it is not about changing conditions for those who have already contracted their course.

    Dear Martin

    Your man, Dan, changed the assumptions after my post - see up the thread.

    And, we have never seen a student loan scheme this big before so I would set precedents in that context. Plus, the government has had difficulty selling off the post-98 student loans precisely because of the 'income-dependency' of them.

    As I said, the government 'intends' to do this with regard to thresholds and rates, but it uses this word but it recognises that the scheme is so large and potentially volatile that things may have to change. Given this is a political decision, the public, and you, perhaps ought to be campaigning for a simpler solution.

    A.
  • edited 15 June 2011 at 2:10PM
    sharpz111sharpz111 Forumite
    2 Posts
    edited 15 June 2011 at 2:10PM
    Unfortunately I don't think the guide has anything on those opting for second undergraduate degrees, who will still be expected to pay up front (and other students studying Equivalent or Lower Qualifications - ELQs). In this respect it is like most material provided by the Government.

    For most second degree students they receive no help from the Government and will now be expected to find £9,000 a year in cash, up front.

    The situation is more complex for those who do get partial funding for second degrees, for example in medicine or veterinary science.

    These people would benefit from guidance because most staff at Student Finance England are utterly clueless about the special arrangements for these courses - any enquiry usually has to be elevated to a supervisor for someone to recognise what a GEM (Graduate Entry Medicine) course even is.

    In these cases maintenance loans will still be available on the same conditions (as well as grants for dependents etc.) and they will be income assessed, but no maintenance grants, and no tuition fee loans.

    On a standard medical course that will amount to £36,000 cash for tuition in the first four years, and for those on 4-year courses they will be expected to find £9,000 for the first year (before the NHS payment of tuition fees kicks in in years 2-4).

    There have also been rumours that the NHS bursary provision for special 4-year accelerated Graduate Entry Medicine courses in years 2-4 and standard courses in years 5 onwards are under review.

    There are 15 universities that teach medicine in England, all have announced plans for £9,000 fees, yet back in 2004 over 20% of medical students were graduates.

    According to the Executive Director of the Medical Schools Council (the council of the heads of all the medical schools in the UK), they are working to try and secure loan provision from commercial providers on a similar basis to the loans offered by the Government. How likely that is, I don't know.

    Judging by the terminal decline of Personal Career Development Loans (PCDLs) - now only provided by two banks - which only allow for a maximum loan of £10k, and are only lent on a maximum of 3 years (if for a longer course, the last 3 years), I'm not sanguine about this prospect.

    Some graduates on the current system were working 2 or 3 jobs on top of a medical degree in order to pay £3k fees up-front. The availability of charity grants and scholarships is woeful to non-existant.

    There is in fact a campaign (and petition) among prospective graduate medical students at w w w . s a v e g e m . c o . u k

    It would be helpful if these caveats were made in the guide though. A good chunk of people were paying up front, and are still expected to. This is causing massive problems, and the Department for Business, Innovation and Skills, and the Department of Health have not given any indication that they will be providing a credible solution in the White Paper due this Summer.

    (This is despite the fact that doctors enjoy 99-100% guaranteed employment, and are therefore some of the least risky investments.)
  • MSE_MartinMSE_Martin MoneySaving Expert
    8.3K Posts
    ✭✭✭✭
    Hi folks just to say that we welcome any feedback on "what's missing" - though only about practical financial things not the politics behind it (ie we will leave the impact on universities own funding for others).

    It's only by publishing that we find out if there's anything we've missed - though I hope its pretty comprehensive as a start point compared to anything else that's been published.

    So keep the questions coming - and we will research and add them in when we find out (e.g 2nd time round undergrads as above)
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.
    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.
    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
  • Can someone pls explain why, if it is the student who is taking out the loan, parental income is taken into account when setting the amount of living cost loan they are eligible for?
  • LokoloLokolo Forumite
    20.9K Posts
    Part of the Furniture 10,000 Posts
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    Can someone pls explain why, if it is the student who is taking out the loan, parental income is taken into account when setting the amount of living cost loan they are eligible for?

    Because those with higher incomes are more likely to be able to contribute towards the childs educations.
  • edited 15 June 2011 at 3:38PM
    lsur02lsur02 Forumite
    2 Posts
    edited 15 June 2011 at 3:38PM
    Based on my own experience of the Student Loan Scheme, I would advise prospective students to be very careful indeed before signing up. The Scheme has been mis-sold since the outset. It is not clear, for example, how long the loan is meant to cover each year - is it a full calendar year or just 30 weeks of the academic year? How will you pay the rent for the rest of the year, especially with unemployment being so high for everyone, young people included. You will have no rights to any form of social security.

    Also, you don't necessarily know how much your rent and other expenses will be - the University I attended charged very high rents for so-called student accomodation to cover the costs of their recent building programme. Students unable to get their first choice had to hand over their entire loan cheque at the beginning of term and were left dependent on family to live.

    The deferrment of repayments is not hassle-free. You will be required to tell Europe's biggest debt collector a.k.a the Student Loans Company, where you are at all times and all details of your income and expenditure. If you move or travel when the repayments are due, they will first of all pester your next-of-kin for your wherabouts and then obtain a County Court Judgement against you and be able to send bailiffs round. This process will, in many cases, follow you for the next 30 years!

    Martin's Guide does not give these facts and seems, no doubt from good intentions, to play into the hands of the politicos behind the scheme. You should give the full reality, which is that study in Britain is designed now for those with money behind them and no one else need apply.

    If you are academically able, consider courses abroad (there are some in Holland, for example, set up for English speakers) or work for a while and have your own money behind you before studying. You don't need to get a degree straight from school. Indeed, part of the mis-selling has been to imply that all degrees are equally valuable - they cannot be if the market is flooded with graduates, that is basic supply and demand economics.

    Finally, has no one considered challenging the SLS legally on the grounds of mis-selling? It is a nasty scam and only suitable for a minority of students. Take care before you get caught with lifelong debt!
  • LokoloLokolo Forumite
    20.9K Posts
    Part of the Furniture 10,000 Posts
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    lsur02 wrote: »
    Based on my own experience of the Student Loan Scheme, I would advise prospective students to be very careful indeed before signing up. The Scheme has been mis-sold since the outset. It is not clear, for example, how long the loan is meant to cover each year - is it a full calendar year or just 30 weeks of the academic year? How will you pay the rent for the rest of the year, especially with unemployment being so high for everyone, young people included. You will have no rights to any form of social security.

    Also, you don't necessarily know how much your rent and other expenses will be - the University I attended charged very high rents for so-called student accomodation to cover the costs of their recent building programme. Students unable to get their first choice had to hand over their entire loan cheque at the beginning of term and were left dependent on family to live.

    The deferrment of repayments is not hassle-free. You will be required to tell Europe's biggest debt collector a.k.a the Student Loans Company, where you are at all times and all details of your income and expenditure. If you move or travel when the repayments are due, they will first of all pester your next-of-kin for your wherabouts and then obtain a County Court Judgement against you and be able to send bailiffs round. This process will, in many cases, follow you for the next 30 years!

    Martin's Guide does not give these facts and seems, no doubt from good intentions, to play into the hands of the politicos behind the scheme. You should give the full reality, which is that study in Britain is designed now for those with money behind them and no one else need apply.

    If you are academically able, consider courses abroad (there are some in Holland, for example, set up for English speakers) or work for a while and have your own money behind you before studying. You don't need to get a degree straight from school. Indeed, part of the mis-selling has been to imply that all degrees are equally valuable - they cannot be if the market is flooded with graduates, that is basic supply and demand economics.

    Finally, has no one considered challenging the SLS legally on the grounds of mis-selling? It is a nasty scam and only suitable for a minority of students. Take care before you get caught with lifelong debt!

    This isn't meant to be rude but you seem to make your point that student's shouldn't have to research anything before they make a decision?

    A lot of your bugs seem to be about costs, terms and conditions, jobs. All of these can be researched beforehand by the student themselves. You say people don't know costs or anything, these are available from every university website, estimating food costs can be done with parents or friends etc. I don't get why Martin would do a comprehensive guide to every single university cost, it would be completely pointless. People are going to university over the age of 18, they should be able to do this research themselves, not just be spoon-fed the information.

    Student loans are not a nasty scam, they enable those from "lower class backgrounds" to go to university without having to pay costs upfront. I know that if these loans were not available then I would not have met most of my wonderful friends.
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