MSE News: Guest Comment: Govt student loan explanations 'woeful'

Oldernotwiser

The_One_Who wrote: »

Or those who have savings. Don't necessarily need to be wealthy (or to have a good job) to have savings.

I suppose it depends on your definition of "wealthy". I'd tHink that families with savings of £27,000 that they could afford to JUST give away were, at the very least, comfortably off.

Oldernotwiser

Soubrette wrote: »

If the 50% rate is done away with then the figures look even worse.
A 40% tax payers has a top tax rate of 42% on earnings of approx £38,000 whereas someone paying back their student loan has a top tax rate of 41% on an income of £21,000.
.

Your figures are misleading as you're not comparing like with like. In your first example above you're not including NICs as a tax and in your second example you are.

dimbo61

What are the right figures please ?
My son will at the end of his degree as a building surveyor earn good money and even better money once he is a chartered building surveyor
So how much out of his income will he pay each month in TAXES ( I include NIC,s student loans etc)

gadgetmind

dimbo61 wrote: »

So how much out of his income will he pay each month in TAXES ( I include NIC,s student loans etc)

No-one can possibly tell you unless you give a figure for income. Alternatively, it's very easy to see the tax and NI rates for the various bands, so it's easy to work it out for yourself.

atypical

dimbo61 wrote: »

What are the right figures please ?
My son will at the end of his degree as a building surveyor earn good money and even better money once he is a chartered building surveyor
So how much out of his income will he pay each month in TAXES ( I include NIC,s student loans etc)

Prospects says a graduate building surveyor earns roughly £23,000. Using a salary calculator you can see that he'll pay:
£3,105 - income tax i.e. 13.5%
£1,893 - NI i.e. 8.2%
£180 - student loan i.e. 0.8%

£5,178 - total i.e. 22.5%

Note that the calculator above uses the old income threshold for student loans i.e. £15,000. At this level he would repay £720 i.e. 3.1% making his total overall tax rate 24.8%.

A 20% income tax rate doesn't exist in the sense that it can never be achieved on someone's total income given the tax-free allowance. It's misleading to simply add tax percentages together without considering the thresholds they apply at.

The_One_Who

Oldernotwiser wrote: »

I suppose it depends on your definition of "wealthy". I'd tHink that families with savings of £27,000 that they could afford to JUST give away were, at the very least, comfortably off.

Oh, no I agree with that. I was thinking more of the student who has managed to save up themselves over time. I know that I can afford to pay back all of my student loan right now, but I am most certainly not wealthy. Granted, I am in Scotland so only got some maintenance, so my loan is a lot less than some.

andrewwallam

The rate is RPI plus 3%, a commercial rate. The message should be to pay upfront for tuition fees/ maintenance or if this isn't possible to pay back the money as soon as possible. The don't worry about it attitude seems somewhat irresponsible as the level of debt could balloon.

Oldernotwiser

andrewwallam wrote: »

The rate is RPI plus 3%, a commercial rate. The message should be to pay upfront for tuition fees/ maintenance or if this isn't possible to pay back the money as soon as possible. The don't worry about it attitude seems somewhat irresponsible as the level of debt could balloon.

If the message was to pay up front, that would rule out HE for the vast majority of students. Paying back money when there's no necessity to do so is a pretty daft thing to do, in my opinion.

gadgetmind

andrewwallam wrote: »

The rate is RPI plus 3%, a commercial rate.

It's not that simple. The rate is RPI+3% during the degree, then it switches to RPI if income <£21k, RPI+3% at £21k, and escalates up to RPI+6% up to £42k, and then levels off at that rate.

With RPI at 5% that's a max of 11% per annum.

Loan sharks R us.

Onyourcase

chaostheory wrote: »

I'd be willing to bet that by the time costs of loan administration and defaults is taken into account in 30 years time, it will be found that it would have been cheaper for the taxpayer to meet the bill in the beginning.

The concept of 'free' education at any level is a myth. Everyone who works pays for the education they had via taxes. Why create costly structures to replace the existing repayment means i.e through the Inland Revenue?

It doesn't matter how the new system is explained it's jus' plain dumb.

Exactly.
The only fair way is to return to only allowing the intellectual elite to go for free with general taxation paying. Cap student numbers at 1970's levels