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MSE News: Guest Comment: Govt student loan explanations 'woeful'
Former_MSE_Guy
Former MSE 1.7K Posts
This is the discussion thread for the following MSE News Story:
"With tuition fees rising to £9,000, student finance expert Prof Nicholas Barr says governments haven't explained costs ..."
"With tuition fees rising to £9,000, student finance expert Prof Nicholas Barr says governments haven't explained costs ..."
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"They are a payroll deduction, like income tax and national insurance, but smaller than either. A better way of thinking of the system is as a form of graduate tax, but one that does not last forever."
Couldn't have said it better myself!
I attended a local university and lived at home. So had relatively low overheads. However, as the amount I could borrow was based on my parents income (relatively low), I could borrow a lot of money. Money I didn't necessarily need, but took because I wasn't looking at the long term.
However, if someone had drilled into me that, one day you will pay this back and yes, to start off with the repayments will be low, but when you start earning good money, the repayments are substantial. My repayments are now comparable to my mortgage repayments.
I actually disagree with the professors view of not looking at a student loan as a debt. It IS a debt, albeit one you payback out of your gross wage, but you STILL pay it back, all of it.
My advice is, if you don't need it don't take it.
Lastly, the professor states "Remember that your income will generally be higher because you have a degree and lenders regard graduates as good risks".
No lender has ever took any notice of my degree, it's always been based upon earnings and credit rating, so god knows where he got this from.
Although on paper some of us may look as though we have a good incomes, living in London, with all the high outgoings that involves means there is not a lot left over once food and other bills are paid. We are going to struggle to support our daughter with living costs if she gets a place at university for next year...and no, we don't go on lots of holidays, or go out for lots of meals etc. In fact we're not going away anywhere this summer.
I do not see this as fair to all students applying and feel that my daughter is being put at a disadvantage.
it swings both ways!
Very few people pay back all of their student loan, many pay none of it.
You must be earning an enormous amount of money for your loan repayments to be as much as your mortgage!
I've never heard of people not paying it back, you have no control, unless you a) move country and are untraceable (run away from it) b) declare yourself bankrupt or c) pass way. None of which are desirable.
No I wish, my mortgage repayments dropped due to the low interest rates. What I was trying to say was that the student loan repayment is sizeable.
Fair comment, although there are not many students that are thinking about mortgages or even past the 3-4 years at uni. Those that do, would be shrewd to do as you mention.
as interest rates are low, it's probably best to try and overpay so that you make big inroads into the balance as opposed to just the interest! (or save the extra somewhere else!)
You seem to have missed the most obvious reason for not paying it back - earning below the threshold!
Also, repayments have to be made when you move abroad and they're not wiped out by bankruptcy.
You seem to be rather misinformed, I'm afraid.