MSE News: 100,000s face student loan interest hike

setmefree2

davidgmmafan wrote: »

Is he totally unaware that many students also take on lots of REAL debt simply to live?

It's not just David Willetts - nobody on MSE acknowledges that student take on real debt (denial isn't just a river in Egypt )

Apparently, according to the wisdom of MSE, students live quite comfortably on £4k per year and they all find well paying part time jobs and they all leave Uni wth just loans from the student loan system

Away from MSE, research does show that a quarter of student is debt is held outside the student loan system.

http://www.bbc.co.uk/news/education-14488312

Lokolo

setmefree2 wrote: »

It's not just David Willetts - nobody on MSE acknowledges that student take on real debt (denial isn't just a river in Egypt )

Apparently, according to the wisdom of MSE, students live quite comfortably on £4k per year and they all find well paying part time jobs and they all leave Uni wth just loans from the student loan system

Away from MSE, research does show that a quarter of student is debt is held outside the student loan system.

http://www.bbc.co.uk/news/education-14488312

There's a difference between being able to live comfortably and living a luxury. Students need to be able to shop at Waitrose, they need to be able to go home every few weeks, they need to have a car to get to uni...

ElmerFudd

I have student loans that started in 1997. I assume all of these I would have to pay 5.3% on each year?? Either way wonderful news. Just another hike. Funny how pay isn't going up...

Lokolo

ElmerFudd wrote: »

I have student loans that started in 1997. I assume all of these I would have to pay 5.3% on each year?? Either way wonderful news. Just another hike. Funny how pay isn't going up...

Yep that's correct, just imagine, 2 years ago you had a negative interest being applied - bet you weren't complaining then!

lazer

setmefree2 wrote: »

It's not just David Willetts - nobody on MSE acknowledges that student take on real debt (denial isn't just a river in Egypt )

Apparently, according to the wisdom of MSE, students live quite comfortably on £4k per year and they all find well paying part time jobs and they all leave Uni wth just loans from the student loan system

Away from MSE, research does show that a quarter of student is debt is held outside the student loan system.

http://www.bbc.co.uk/news/education-14488312

Students take on "real debt" to live beyond there means.
I managed to get by on the student loan together with a part time job which paid about £25 every saturday, and i had to pay about £10 to travel home to go to it every weekend.

The parttime job paid for my nights out and general entertainment, living expenses were met by the loan.

I actually had saving before going to university, and never used them. I used them to buy a car after graduation.

Students tend to spend their money to get in real debt for drinking and partying, not for general living costs

The_One_Who

Lokolo wrote: »

There's a difference between being able to live comfortably and living a luxury. Students need to be able to shop at Waitrose, they need to be able to go home every few weeks, they need to have a car to get to uni...

Don't forget the double room with an ensuite bathroom within ten minutes walking distance (or less) to the lecture theatre.

williham

I did Uni, had a car, went home every month, spent loads on food and drink, didnt work whilst at Uni atall and finished Uni with £1000 of overdraft that I paid off in a few weeks with my new job.
I didn't take any money from my parents like some of the people on my course.

Holy !!!!, the system works!

danothy

sexymouse wrote: »

In real terms, does this mean that we should start making overpayments on our loans, or is the interest still low enough that we shouldn't worry about it?

Lokolo wrote: »

Post 1998 still pays only 1.5%. You can get 3% ISAs.

For every £100 you overpay you are missing out on £1.50 profit that you could make from savings. Which may not seem a lot, but if you end up overpaying by £2k a year, then it ends up being £300 of lost profit.

I'd just like to chime in and say that even if those figures were reversed you still need to consider things like a possible future need for credit (which is extremely likely to be at a higher rate than the student loan).

Even if you are a couple of hundred quid better off a year paying it off rather than saving it that might mean a smaller mortgage deposit (for example), and therefore a higher rate.

It's a tough calculation to make quantitatively, but generally you should be better off long term by minimising any potential outstanding commercial rate balance in the future before you minimise the income contingent (i.e. limited liability) low interest (relatively) one.

girllikeme1

Lokolo wrote: »

Depends if you are pre or post 1998. Pre would give more reason to.

If you're post-1998 like me, and are paying 1.5% interest at the moment, then you are better off saving the overpayments in an ISA (around 3%) or any savings account that is netting you more than 1.5%- as long as you're not tempted to spend the money elsewhere.

Alternatively if you have a mortgage and the % interest rate is higher than what the SLC is charging (or what you can accrue in interest in a savings account) then you may be better off making overpayments on your mortgage.

If the interests goes up then you have to consider whether the interest % the SLC is charging you is higher than you can accrue in savings interest. If that happens, then make overpayments if you can afford them.

ElmerFudd

Lokolo wrote: »

Yep that's correct, just imagine, 2 years ago you had a negative interest being applied - bet you weren't complaining then!

Not at all :-p