Student Loan 2015 Discussion

setmefree2

There is a "clear intention" to sell to a private buyer the student loans taken out to cover higher tuition fees, says the Universities Minister David Willetts.
But he said this would not mean a change of terms for student repayments.
Mr Willetts told a committee of MPs that there would be a final assessment before "we push the button".
MPs were also told that selling off loans was not a pre-condition of plans to expand student numbers.
Mr Willetts, facing questions from the Business, Innovation and Skills Select Committee, gave the clearest signal so far of plans to sell "income-contingent" student loans borrowed after the introduction of tuition fees.

Mr Willetts said governments had always withheld the right to alter students' terms of repayment, but that the sale of loans should not be seen as meaning that payment rates would change.
The contract with the commercial owner would be expected to specify these terms, Mr Willetts told the committee.

So Willetts confirmed the terms of a student loan can only be changed by government and not the buyers of a loan book - meaning the terms are fixed at point of sale.

The minister was asked whether wider plans to expand student numbers would be "totally screwed" without the funds raised by selling loans.
But MPs were told that the removal on restrictions on student numbers was not dependent on such extra funding.

There were further details of how a privatised system could be structured, with one option being described as a "synthetic hedge" - a financial mechanism in which private buyers would be assured a revenue stream at the same time as students could continue borrowing and repaying as at present.
Pressed by MPs, the minister and his officials said there was no international example of how such a scheme would operate.

Threshold not reached
Mr Willetts also faced scrutiny over the cost of student loans, in terms of how much was not repaid.
The proportion of loans not repaid - for instance because graduates do not earn enough to reach the threshold for repayment - was at one stage forecast to be 28%, but is now running closer to 40%.
Mr Willetts told MPs that the difference was because earnings had failed to increase at the level expected - which meant that repayment levels had also been reduced.

http://www.bbc.co.uk/news/education-25729237

setmefree2

This is worth a note :-

Willetts said: “People on low earnings are more likely to be on low earnings consistently and less likely to have periods of buoyancy into high earnings as was envisaged in the first model [of repayments]".

Link

pasuk

Hi MSE! What an excellent resource MSE is.


I have an issue with my student loan which you may be able to advise me about.


I am studying part-time (50% rate) on a degree course with the OU. I'm in the second year of six. I have borrowed money from family & friends to pay the fees so far. My objective is to get student finance company to pay for the course and give back the money to the friends & family that I owe. My question is: Do you think this is possible (see below)?


I have applied for part-time finance from SLC (for last year and this year). I have two outstanding loans that were not paid back from 1997 & 1998. I am a disabled person and I did not pay anything due to ill health. I'm being helped by the C.A.B. and a resolution is likely soon. Once I have a satisfactory resolution to the outstanding amounts will I be able to get the loans for my current course with the OU paid for the first two years as well as future years?


Thanks for your help!
pasuk

setmefree2

Universities could face major OFT inquiry into fees

The OFT is considering whether to launch a full investigation into universities after collecting evidence on fees, applications, course quality and complaints procedures

Universities could face a full inquiry into anti-competitive practices amid concerns that students are failing to get value-for-money after a sharp rise in tuition fees. The Office of Fair Trading is considering launching a full-scale investigation into how institutions compete for undergraduates and whether degree courses meet students' expectations.

It may lead to questions being raised over the existing applications system that restricts students to just five choices and prevents candidates applying to both Oxford and Cambridge at the same time.

It will publish a report in March summarising responses to the initial appeal for information and outlining its next steps.
The watchdog could decide to launch a full inquiry into the universities system to ensure institutions are not colluding to fix fees and keep charges at their highest possible level.
The move would cause a major headache for universities and may even pave the way for a new regulatory system and greater course choice for students.

Today, an OFT spokesman refused to comment on the report, saying no decision had been made on the next course of action.
But the regulator has already heard evidence that the current system is not providing value for money.
In a submission to the OFT, the consumer group Which? said that students were being ripped off by some degree courses that provide less than 40 minutes each week of small-group tuition.
It was claimed that some degree courses contained just 36 minutes a week of tuition in groups of less than 15 students, despite a national average of four hours.
Which? also claimed that some students received just half of their overall teaching time from an academic while those at other institutions have 97 per cent delivered by a staff member.
Sonia Sodha, head of public services policy, said: “There are worrying signs the higher education market is not working to promote value for money for students, and this has to change.”

http://www.telegraph.co.uk/education/universityeducation/10656725/Universities-could-face-major-OFT-inquiry-into-fees.html

gfplux

Good news setmefree2,
My daughter is completing her third year at a UK uni and frankly if she were paying the higher fees (lucky she started one year before the fees increased) I would be fuming with rage at the value for money.
By subsidising fees the Government have unwittingly hidden how bad value higher education is or how badly it is run.

setmefree2

Student fees policy likely to cost more than the system it replaced

The proportion of unpaid loans is approaching a critical level as write-offs are on track to pass the gains from tripling of fees

The proportion of graduates failing to pay back student loans is increasing at such a rate that the Treasury is approaching the point at which it will get zero financial reward from the government's policy of tripling tuition fees to £9,000 a year.
New official forecasts suggest the write-off costs have reached 45% of the £10bn in student loans made each year, all but nullifying any savings to the public purse made following the introduction of the new fee system.

Universities will now fear that further cuts to their budgets will be needed to plug the gaps in the Department for Business, Innovation and Skills (BIS) budget.

The 45% RAB figure covers the write-off expense of both old and new style student loans. London Economics' Dr Gavan Conlon said that this meant the specific write-off costs of the new loan system were expected to be above 45% and it would effectively be cheaper for the government to have kept the old £3,000 tuition fee system.

http://www.theguardian.com/education/2014/mar/21/student-fees-policy-costing-more

setmefree2

http://www.moneysavingexpert.com/news/loans/2014/04/erudio-student-loans-graduates-have-money-taken-from-accounts-despite-deferring

Erudio student loans: time to complain to the ombudsman?


Former students being aggressively chased for debts could soon deluge the Financial Ombudsman Service with their complaints.



Student from the 1990s are fed up with the tactics of the firm which bought the outstanding debts from the Government last autumn. Erudio Student Loans paid just £120m for around £900m-worth of debt and last month contacted graduates with demands for proof that their loans do not yet need to be repaid.
Those concerned have repayments deferred because their wages have stayed below an earnings threshold.
Yet many have had money wrongly snatched from their accounts by Erudio, which is owned by debt collecting giant Arrow Global.

http://www.independent.co.uk/money/spend-save/erudio-student-loans-time-to-complain-to-the-ombudsman-9304826.html

nemo183

TurnUpForTheBooks wrote: »

Thanks for sharing that article, SMF. Anyone with an ounce of sense can see that Student Loans in the UK are being disgracefully missold. The very sad thing is that Martin Lewis is as responsible as anyone in the UK for this happening right under our noses. I don't know if he realises how "used" he is. Martin above anyone else in the UK was responsible for making financial product misselling accusations actually stick to insurance companies and banks after a couple of decades of financial services companies ducking and diving and conniving with FSA. The biggest single coup of the type was of course the PPI misselling victory for common sense led by Martin and the total cave in by the banks that resulted. The extent of the cave in even took bankers by surprise who thought their legal teams had things stitched up good.
.

I think the position is more serious, and I agree it's an obscene scandal. If the system were to be run in the private sector, all concerned would be jailed.

This comes from a Commons Standard Note (my bold)

"An average fee of just over £8,000 could mean that England has the second highest (average) fees in the developed world and the highest in any ‘public’ system. This package of reforms is expected to result in a more progressive distribution of repayments than at present. The highest earning graduates will repay considerably more, the lowest somewhat less depending on the assumptions used. On average graduates will repay more overall because they will repay for longer. Half or slightly more than half of graduates are expected to have some loan written off under these proposals, up from around 15% at present"

You can find it here: http://www.parliament.uk/briefing-papers/SN05753/changes-to-higher-education-funding-and-student-support-from-201213

The Government are expecting that 60% of graduates will never pay back part of their loan.

Many many people believe that this is woeful underestimate. They won't repay the loan because there aren't enough jobs in the economy that have high enough salaries attached. It's also morally bankrupt to promote the idea that a degree=better job=more money

The Government target is to have 50% of entrants to the workforce having a degree. It is currently 38%.

Ask yourself "Looking around you, do you think that half the jobs that need doing require a degree?"

If you answered "yes" then you must be a coalition MP. They are the only people that believe this is rational. Even when the total size of the bill for unpaid loans is estimated to be as high as £.3 trillion, a figure of which they are aware. That is a simply staggering debt. I don't know what has lead us to be a nation where this delusional acceptance of irrationality has become the norm.

Part of the problem is that the systems we are building are so complex we are too stupid to understand them. We may want answers from the Government but we haven't the ability to understand them, assuming they actually know - but that's another story. Perhaps another curse is the internet, where it is almost impossible to debate complex ideas, but very easy to give the world our uniformed knee-jerk reaction.

Should anyone be in doubt as to the seriousness of this, they should take a look a the US C.I.A. World FactBook. Within the economics data they note a 2-Tier labour market, where the top 20% have accrued all the gains in household income. (incidentally, 20% seems to be a figure that matches the actual demand for graduates) In case you doubt the veracity of this, here's the link to the site: https://www.cia.gov/library/publications/the-world-factbook/

Later on this is described as a potential threat to national well being, because it will have "The ultimate effect of making the rules and inhibitions that once governed the conduct of most people seem less and less relevant"

A final irony is that last year the most popular degree was business studies - 14% of graduates. This is the exact part of the economy that least needs them, which probably explains why "72% of last years graduates have settled for a job that is less than they wanted" (Source- LI poll 2014) THey had better get with the program because they may be in that position for far longer than they think.

To end on a positive note, students should aim to enter the public sector, where in future the jobs will be the most secure. Teaching is going to become a very desirable profession.

setmefree2

Student loans: the real cost could be £40,000 more than official estimates

The calculations used by the Government to estimate the cost of long-terms loans could be wildly optimistic, with students paying far more in real life

How much will you pay?
RedSTART’s warning that student debt could be more expensive than expected comes at a time of uncertainty for people trying to decipher total study costs.
People trawling the internet for an estimate will find a range of calculators and online tools, which all throw up wildly different results.
For example, MoneySavingExpert.com’s student loan calculator shows someone who started a three year full time degree in 2012 and borrowed £45,000, would repay around £36,000 over 30 years.
But type the same details into the student loan repayment calculator on DirectGov, a website run by the Student Loans Company, and the same student will be told they will face a repayment of £93,792 over 30 years. What the website doesn’t explain is that this figure is presented in future money terms, which makes it look like a much bigger sum because inflation isn’t taken into account. If the figure was presented in today’s money terms, it would be around £54,500.

But a further blow could be on the way for young people if the salary level at which graduates start repaying their student loans is frozen at this level, as several senior education advisers have recommended.
The move would help cover university financing shortfalls at the expense of far higher repayments for graduates, which would hit everyone with a post-2012 student debt.
Mr Lewis claims the move would mean the Government would have “mis-sold university education to students”, and has pledged to organise a mass protest outside Parliament if politicians do decide to go ahead with it.

http://www.telegraph.co.uk/finance/personalfinance/11366155/Student-loans-the-real-cost-could-be-40000-more-than-official-estimates.html

setmefree2

Freeze student loan repayment salary at £21,000, says adviser

http://www.independent.co.uk/news/education/education-news/freeze-student-loan-repayment-salary-at-21000-says-adviser-9952209.html