MSE News: £6,000 or £9,000 uni fees? Is it an irrelevant decision?

Taiko

Dylanwing wrote: »

It looks an absolute pigs ear to me. The idiot Tories keep blathering on about reducing taxes to stimulate the economy, whilst effectively adding 9% tax to your most highly educated workforce.

You do realise that the 9% repayments have been in place since 1998, right? I don't want facts to get in the way of your pointless post, but the current government upped the repayment threshold to £21,000, meaning that actually people will pay less per month.

chriswatts

Doesn't set a good precedent though does it, you can be saddled with debt for most of your life but don't worry after 30 years you'll automatically default on your loan.
Add on top of this students will probably be looking to settle down and purchase a house, it doesn't bode well.

Then I suspect those loans that don't get paid off will come out of taxpayers money!

Andymoney_2

The new Student Loans Scheme works as a graduate tax, and as such is kind to low earners and does not saddle any graduate with lifetime debt as it is written off after 30 years, and it is ignored for the purposes of mortgages, etc. The money to pay for the increased fees comes from market borrowing as far as I can see, and it replaces some direct university funding that the government can now cut back on. Thus it helps reduce the current public deficit.

However, does it reduce the long term public debt? We have been told (Osborne) that it is wrong to load our debt onto future generations for them to pay back, and this is the main reason we must reduce the current public deficit. Wait a minute, what does the Student Loans Scheme do? It is estimated that a large proportion of the value of the loans will be written off. When this happens a government of the future will have to pay back those market borrowings, and that will mean higher future taxes. What is this if not loading our debt onto future generations?!? I think the scheme is just a way of getting public debt off the books.

Andy

Valor

I came to the comments because the assumption of theshold rising at 4% per yer seemed very unsound to me.

I see from a previous comment that the calculation is "Threshold rises by RPI+1%"

This seems extraordinarily generous to me, on top of a starting point of £21k (I think I'm paying 9% of everything over £15k) - have the government commited to this scaling of the threshold for the lifetime of the scheme?

The "Pay rises by 5% a year" assumption may seem too high at first, and it's true that annual pay awards are more likely to be 1-2%, but once you factor in career progression, moving jobs etc, I don't think it's an unreasonable assumption for a graduate career.

Thanks,

Val.

Oldernotwiser

chriswatts wrote: »

Doesn't set a good precedent though does it, you can be saddled with debt for most of your life but don't worry after 30 years you'll automatically default on your loan.
Add on top of this students will probably be looking to settle down and purchase a house, it doesn't bode well.

!

You do not "default on your loan" after 30 years, it is wiped out.

Repayments are such a small amount that they'll have little effect on people's ability to get and pay for a mortgage.

Oldernotwiser

Valor wrote: »

The "Pay rises by 5% a year" assumption may seem too high at first, and it's true that annual pay awards are more likely to be 1-2%, but once you factor in career progression, moving jobs etc, I don't think it's an unreasonable assumption for a graduate career.

.

With the large numbers of people now having a degree, many of them do not have a graduate career and many of those that do will also have a substantial amount of time not earning or working part time.

kida

Is it just me or is Martin's logic on this counter intuitive and hypocritical. Basically he is condoning an 18 year old taking on life long debts - now remember debt of any kind at MSE is an evil that should be avoided.

Martin's advise , on the vast Majority of issues is clever and rational and has rightly earned the "ear" of a lot of people struggling with life's finances. But on this I think he is misguided & should be working to persuade us & the state from planting this level of debt on any young person..

And here's some economic logic.

IF gaining a degree = better pay THEN Higher Pay = Higher tax contribution.

Students "pay" for their degree (and others to do theirs) from higher tax payments all the way through their working lives. Don't make them pay twice.

And let's hear less of this "the state can't afford it" rubbish - if we can "afford to avoid" the income generated from overseas business tax havens, non habited homes or increasing death duties for those leaving estates of over £1million we can "afford" to pay for young people's education.

Stop the Governing elite funded by the wealthy from hitting the PAYE middle classes for everything..

Rant over - sorry but I just think this country's gone mad and being forced into "look after yourself mode" and sod society! The 80s are back..

JimmyTheWig

kida wrote: »

now remember debt of any kind at MSE is an evil that should be avoided.

Have thanked the post above because I agree with just about all of it, but I think that the part quoted above isn't true.

Martin and MSE have never said that all debt is bad. Mortgages, for example, are worth getting for many people. Saving until you could afford to buy a house outright would be impossible for most.

tyllwyd

Oldernotwiser wrote: »

That would make sense if student loans were similar to commercial loans but they're so different that comparisons are irrelevant.

By your reckoning someone planning to go into a low paid career (the ministry or conservation work, for example) or who wants to have a large family and be at home to bring them up should either not go to university or consider themselves "morally bankrupt". I hope that this isn't what you really believe.

You still aren't hearing what I am saying - I am questioning Martin's original argument in his article, that you needn't worry about the level of fees charged by the different universities, because no matter the size of the debt that you are taking on, you know that you won't have to pay it all back. Go ahead, spend all you like, no need to try to economise, because in the end it won't make any difference. Is that really the message that we should be hearing about student loans?

brummierebel

Taiko wrote: »

You do realise that the 9% repayments have been in place since 1998, right? I don't want facts to get in the way of your pointless post, but the current government upped the repayment threshold to £21,000, meaning that actually people will pay less per month.

This isn't a "pointless" post. Dylanwing has hit the nail on the head with this particular point. You do realise that prior to these reforms tuition fees were a lot lower and a real rate of interest was not applied to these loans? As a result, combined with the lower threshold, people paid off effectively what they owed and a lot more quickly. I know one person who only took out one year's student loan and paid it off within three years after the reforms in 98. This simply is not possible with the new system which, for the first time, charges a significant tuition fee for the poorest households who effectively never paid fees under the old systems.