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

Oldernotwiser

tyllwyd wrote: »

I think maybe we are working from different assumptions - I'm assuming that his original loan for the course he's already taking is an old style loan, so that the repayments on that are calculated separately to any new loan. Or is there some provision to take account of them both when repayments are calculated so that repayments don't go over 9% total? Otherwise if you had two different loans at the same time, you could end up paying 9% on income over £15K, and then another 9% on income over £21K - sounds expensive so fingers crossed I'm wrong and they've allowed for that in the new scheme.

edited to say

I've just looked and last time they changed, if you had two loans you could decide which one you repaid first - if they took the same approach I guess you'd have to pay the original one first because the threshold is lower - but I assume the new loan would still be accruing interest in the meantime.

Actually, the earnings threshold for "old style" loans was much higher; I think that you're talking about the current system.

As you've found out, you don't repay separate loans simultaneously but how the combination you describe would work out I'm not sure (and I doubt if anyone else is either!).

tyllwyd

Oldernotwiser wrote: »

Actually, the earnings threshold for "old style" loans was much higher; I think that you're talking about the current system.

As you've found out, you don't repay separate loans simultaneously but how the combination you describe would work out I'm not sure (and I doubt if anyone else is either!).

Yes, sorry, when I said old style I meant current rather than new 2012 loans.

I was trying to work it out - I think a lot depends on how much your current loan is for, and whether you think you can pay it off in a reasonable time. If you are going to be stuck with it for a long time then my first thought is that since the 2012 loans get written off after 30 years, then you may as well take out a new loan since if it is deferred until you've paid off the first loan, by the time you start paying there is no way you will pay it all back before it's written off.

I've completely confused myself - but if I was in that situation I don't think I'd sign up for a 2012 loan unless I was completely sure of how the two different types of loan would work together.

Edited to say - I've just found this on the University of the West of England website

"Will students who wish to 'top up' from a Foundation degree to an Honours degree be affected?

Students who start their ‘top-up’ year immediately after completing a Foundation Degree, DipHE, Cert HE or HND in 2011/12, will be charged fees and funding under the existing arrangements rather than under the new 2012 scheme. This means that as long as the only gap between the lower level course and the degree course is the summer vacation, students will retain the existing student support arrangements that were in place for their lower level course.

Students completing their full or part-time lower level course in 2010/11 who delay starting their 'top-up' course until 2012 will be subject to the tuition fee charge and student support arrangements that will apply to new students in 2012/13."

So assuming that applies generally, whether it will be a current or 2012 loan does depend partly on when the OP's son's course is due to finish. Doesn't explain how two different types of loans might work together though.

MrsAverage

melancholly wrote: »

but isn't the best message the truth?!

in reality most people won't pay it back and the question isn't really about £6K versus £9K anyway, since almost all are charging above £8K. picking, say the University of West London (TVU) versus UCL because you'd save £4.5K in total over 3 years on fees would be, quite frankly daft in terms of actually getting value for money from a degree!

surely the biggest issue is that the setting of fees in the range of £6k to £9k is a red herring, since even at £6K the vast majority won't pay it back. isn't that the biggest issue that has been neglected so far? that this is a fees and loans system set up so that most people should focus on repayments versus totals.

Having done a round of Uni open days in the past few weeks, no one else seems to have picked up the fact that Unis themselves will be charging students from lower income families lower fees.e.g at Southampton quoted fees of £9k pa are discounted down to as low as £3k for the poorest families under the access rules.
Yet where is the government logic if they all repay same amounts anyway?
All it means is, those who had benefit of lower fees because of their parents lack of income may be more likely to repay their debt because it is lower, than some one from a (slightly) higher earning family.
Oh wait a minute, but they get to borrow more for living costs so are they ending up borrowing more or less than the student in the next room? I'm confused again

Surely, if students graduate from benefiting from the same course and go into the same jobs at the same salaries, they should all pay the same repayments for the same period - that would be a true graduate tax.

This half cooked version is just a messed up muddle.

melancholly

MrsAverage wrote: »

Having done a round of Uni open days in the past few weeks, no one else seems to have picked up the fact that Unis themselves will be charging students from lower income families lower fees.e.g at Southampton quoted fees of £9k pa are discounted down to as low as £3k for the poorest families under the access rules.
This half cooked version is just a messed up muddle.

i actually don't know much about how the unis will be 'improving access' by offering lower fees. it was all unknown until the fees were confirmed by OFFA...... and as it will be decided by each uni, it adds a massive level of complication. if they all discount at different incomes by different amounts, the tables of total fees will end up being useless for a lot of families.

hopefully by 2013 entries all will be clear - it's the 2012 entry that have the most difficult situation!

tyllwyd

I can't see that it's going to help improve access that much tbh - if you think about it, they are going to be paying the loan back relatively early on in their careers (when they might also be looking at trying to buy a house, start a family etc so you might think someone from a less affluent background might need a bit of extra help). By the time they have paid the loan off, it will be towards the end of their working life when - assuming that they have had a good career with earnings boosted by their degree - they will be much more comfortably off than their parents were. So someone's take home pay at age 50, say, compared to a colleague who did exactly the same degree and earning exactly the same salary, might depend on what their parents were earning 30 years previously!

fuglyjowls

came here looking for advice - wasn't expecting to step into the middle of a row!

Anyway - wonder if anyone can offer any advice. My son is planning to (hopefully) go to Uni in 2012 having skipped a year earlier on and of course saddled himself with higher debts because of it. Regardless of that (much complained about) issue - we have a sum set by which we have been saving since he was 8 in case he ever did go to Uni. We are now in two minds whether giving him this money towards his fees/living expenses whilst he is at Uni is going to be the best idea or whether we would be better keeping it until he leaves and giving it to him to help set him up once he starts working (eg for a deposit on a house or something). The amount we have saved will not cover the whole of his fees for three years but is a substantial amount.

Anyone offer any advice?

Oldernotwiser

fuglyjowls wrote: »

came here looking for advice - wasn't expecting to step into the middle of a row!

Anyway - wonder if anyone can offer any advice. My son is planning to (hopefully) go to Uni in 2012 having skipped a year earlier on and of course saddled himself with higher debts because of it. Regardless of that (much complained about) issue - we have a sum set by which we have been saving since he was 8 in case he ever did go to Uni. We are now in two minds whether giving him this money towards his fees/living expenses whilst he is at Uni is going to be the best idea or whether we would be better keeping it until he leaves and giving it to him to help set him up once he starts working (eg for a deposit on a house or something). The amount we have saved will not cover the whole of his fees for three years but is a substantial amount.

Anyone offer any advice?

Row - what row?

Which option would your son prefer?

tyllwyd

It depends a lot on how much you he will need to borrow, and how quickly you think he will pay it off.

If he will still need to borrow a substantial amount, you could argue that since he will be paying anyway, he may as well borrow as much as possible with the plan that anything left at the end of 30 years will be written off.

If you are worried about his income in his 20s and 30s, before the loan is paid off he will be paying the same monthly amount whether he borrows £2000 or £50000, so it would make more sense to pay the money into his mortgage to bring that payment down.

Longer term, it depends whether he is comfortable with the payment terms of the student finance scheme, whether he is happy with the projections of the total amount he might pay back compared to what he might pay on a mortgage. It's totally impossible to make a straight comparison of the two figures because there are so many variables in the student finance scheme.

As I understand it, Martin's advice is that parents shouldn't try to help their children with fees, let them borrow it all on the student finance scheme and keep your money for yourself.

http://www.moneysavingexpert.com/family/student-loans-tuition-fees-changes#17

From that article:
"The reason I stress the tax concept is because many parents wrestle with 'how will I pay for my child to go to university?' and then risk their own financial solvency and security to do so.

Let me be clinical for a moment: it could sound callous but you need to decide whether paying for it really is your responsibility.

The system is set up that the cost is met by the beneficiary of the education - your child. When this is referred to as a 'loan' many parents feel guilty and become desperate to avoid their child getting into this debt, even though they may not need to repay it.

Yet if we'd called this system a graduate tax, would you still feel compelled to prevent your child paying a higher tax rate? Of course there is a balance to be had but it's worth thinking this through to judge your own reaction."

Occams_Razor_2

anyone choosing their university on the basis of the fees charged i.e. 6,000 vs 9,000 is probably not smart enough to usefully get full value out of higher education in the first place.

the real problem is whether the institution is capable or able to provide value for money. Private business schools (i.e. all of them) for example pride themselves on the increase in base salary achieved by their graduates within 3 years of completing their courses. its one the key criteria for the all important FT MBA ratings.

whether little timmy or sally has accrued 20 or 30K debt isn't the first issue if their qualification is worthless.

Occams_Razor_2

tyllwyd wrote: »

But going back to the article yet again - I thought one of the aims of the Browne review was to encourage competition among universities?

"In our proposals, there will be no single fixed price for higher

education. Institutions are all different and they provide a
wide range of different courses. We want this diversity to
flourish. Different courses will cost different amounts.
Institutions will have to persuade students that the charges

they put on their courses represents value for money."

But Martin's article seems to show that this aim has failed, since he is telling us that there is no point in choosing a course based on lower fees. If that is the case, why have we got loans and not a graduate tax? Where is the incentive for universities to compete on quality and cost of their courses? Why is this being presented to us as a postitive result instead of as a failure?

I think you need to re-think the bolded bit again.

there is every incentive, as a university is not guaranteed a full quota of applicants if they do not provide value for money.

i.e. people won't apply to the crappy places, and that's probably a good thing. the real damage of people doing applied economic media studies through interpretative dance at the University of East Anglia is that it falsely raises expectations, incurs significant debt, and wastes 3 years of their lives.

we do not want people to do these fluffy crappy degrees, and if a university expects people to pay £30K for a degree it better deliver.