'If no-one will fully repay £9,000 student fees, how is the system sustainable?' blog

Lokolo

xycom1 wrote: »

The way that the new fees have been explained to me, is that they are repaid by means of a 'graduate tax' at a rate of 9% over £21K/year. This will run for as long as the person earns over £21K to a maximum of 30 years - and does not take into account the amount repaid against the notional borrowings in the form of the original loan. So some high earners will repay well in excess of the amount that they initially borrowed.

Right or wrong?

Almost correct, there is a threshold where if you earn enough you will repay the loan before the 30 year period.

2sides2everystory

Lokolo wrote: »

Dude, I have my S&S ISA with HL, I know what I am talking about ...
Only 3 banks were bailed out.

http://www.telegraph.co.uk/finance/markets/2814875/Barclays-borrows-1.6bn-from-Bank-of-England.html ... Was that one of them, Lokolo?

...if you lot keep wanting to tax people and their businesses, they will leave to go elsewhere and I'm not just talking about the banking industry! As I've pointed out already, THEY WILL LEAVE THE COUNTRY...

And as I think you have conceded, the 2012 Student Loan Scheme is just a tax? So it's actually a political question of who you want to tax and who might leave the country as a result? I know who I'd tax the hell out of.

melancholly

flimsier wrote: »

Mixed up with his explanation of the new system is a political tone; it reads as an argument for why the new system is better - and it manifestly isn't. Because he writes "I am not saying the new system is better" at the end of his blogs doesn't make the argument any less so.

The students who say him speak are taught in our citizenship classes to analyse the provenance of the message - they looked him up and (correctly in my view) labelled him a "government spokesperson once removed" - a remarkably mature observation and decided they would investigate the fees themselves.

you see i hate the new system - the effects on universities will be awful as will the effect of extra debt. i will never forgive this government for changing HE finance and pushing the sector off a cliff. (and as i can't forgive labour for breaking their election pledge on uni fees, i'm now stuck without a single trustworthy party on HE!)

however, the repayment terms of the loan are a much better aspect for students than the totals. now they're still not great, with added above inflation interest and potentially early repayment fees, but they make university an option. the media reporting has been so heavily focussed on totals of loans rather than how it will be paid back - just look at all the people who still think you pay 9% of the total salary not the amount above threshold!

i want more people to see the loans as an option because i don't want a whole generation of students to think that uni is only for the rich. it isn't and more importantly, it shouldn't be. i don't want people to have to take out the loans, but the repayments won't be crippling, although they do still suck compared to the current system in terms of the length of the loan. i don't want the main outcome to be making uni seem unachievable for those from less well off outcomes.... without someone explaining the loans and what they mean, that's what will happen.... and that is an outcome which would just be sad.

i don't want the message to be 'student loans are rubbish so don't bother going unless you can pay upfront'.......

as a side issue, i've posted a link to this before in the student forum, but people here may also appreciate it:
http://www.noconfidence.org.uk/

i hate the HE policies of this government; but i think the student loans aren't as bad as they could have been and aren't as bad as some people suggest. i'm in no way saying that they're good, but they're still the best loan anyone could get.

2sides2everystory

they're still the best loan anyone could get

Melancholly I understand the sentiment of your preamble entirely I think but this loan you are promoting is valid for one thing only - an exhorbitantly expensive UK university education for students from England.

You otherwise could buy a decent little house or even build an even more exceptional one yourself with a loan like that. Which would be the most educational experience do you think? Obtaining a degree or building your own house by age 21? Which would be the best value for the (real) money? Which would be more likely to set you up for a happy and productive position in a big society?

The single worst thing about this loan scheme is that it has hiked the actual price of a university education (for students resident in England only mind) to a ridiculous level.

The more I think about it, the more I think it is a blatant discrimination on a number of levels, the worst of which looks like a geographical discrimination which is dangerously close to race discrimination.

melancholly

2sides2everystory wrote: »

Melancholly I understand the sentiment of your preamble entirely I think but this loan you are promoting is valid for one thing only - an exhorbitantly expensive UK university education for students from England.

You otherwise could buy a decent little house or even build an even more exceptional one yourself with a loan like that. Which would be the most educational experience do you think? Obtaining a degree or building your own house by age 21? Which would be the best value for the (real) money? Which would be more likely to set you up for a happy and productive position in a big society?

The single worst thing about this loan scheme is that it has hiked the actual price of a university education (for students resident in England only mind) to a ridiculous level.

The more I think about it, the more I think it is a blatant discrimination on a number of levels, the worst of which looks like a geographical discrimination which is dangerously close to race discrimination.

if you want to be a doctor, an artchitect, a nurse, a teacher, a lecturer, a dentist, an engineer, a solicitor, a barrister, etc etc, then a university degree will be more useful than a mortgage! it's all about what you want; a degree isn't for everyone but also, not having a degree will make some careers impossible. if the option is to give up on a vocation or take the loan, then it's a simple choice.

i'd encourage anyone to think carefully about whether a degree is right for them but i don't think it's sensible to discourage anyone from going into higher education based on the current loan system (there are plenty of other reasons why a degree might not be a perfect choice for anyone). the choice to do a degree or not shouldn't be financial.

2sides2everystory

choice to do a degree or not shouldn't be financial

I agree, but now the facade has been dropped it very much is now a financial decision.

MSE_Martin

flimsier wrote: »

Just gotta say that I love this post (apart from the pedant in my wanting to focus on the mis-used apostrophes).

Your final paragraph - I have no idea either. It's the opposite of what he used to say as General Secretary of the LSE Students' Union.

OK lets get this right. Its easy to argue that someone who explains a system and doesn't demonise it - is therefore a cheerleader for it.
I'm not. The changes are not ones I support. I wouldn't have done them had I been in charge. I say that quite publically and have done very often.

Yet equally I don't support confusion or misinformation about the changes when it puts people off going to uni when they shouldn't be put off (if they make a rational decision based on the facts - not to go - by thinking the new system is too expensive that's fair enough).

As for when I was leader of LSE students union in 1994/5 I was in favour of maintenance income contigent loans and wanted the system changed towards that (which happened in 1998) but against tuition fees.

I still don't like tuition fees - though I recognise that to make higher education affordable with the massive participation rates we now have, they are unavoidable. Personally I think £9,000 is too high.

When I was a student leader, I only focused on the student position. These days I'm older and I look at a wider group.

Education has never been free, and it can't be. Someone has to pay.

In 1979 it was the taxpayer who paid for fees and generous grants to go to mostly the children of the elite (about 2-3% participation rates) so they could have an education. That meant many who never went to uni and who's children wouldn't were footing the bill for those who did.

Currently you have a good split between the taxpayer and the graduate for repaying the loan.

From 2012 the burden has been shifted further towards the graduate and away from the taxpayer. For me that shift is too far - I believe an educated populus is a public good, giving us benefits far beyond the financial - therefore the state (and business via business taxation) should pay something towards it.

Yet the fact that isn't happening as I'd like it - won't stop me explaining to 17 year olds and their parents the practical reality of how it will work, so they can make a decision on it.

flimsier

That's a good post actually, and I accept what you say about your views. I suppose I should apologise for casting aspersions on your motivations. Sorry.

I disagreed with the move in 1998 (I didn't leave LSE until then - I remember Louise Ashon arguing very vociferously with you on this), so have a different position, and I don't agree with yours. I think the most important part of your post is the second sentence though. It really is easy to think that, particularly given the position you were appointed to (and appointed by the same people who brought in the changes and need to sell them) - and though you claim to have said many times that you're opposed to the changes, your opposition is certainly not clear.

I also think your explanation of the system assumes that nothing will change over the next 30 years; something I find very unlikely and a caveat you might want to put in your advice. Given the way our past pension contributions are going to worth less than we were told when we made them, it's not an unlikely scenario that (as with the previous 15 years) governments will return to students to raise further revenue.

antonia1

Thanks for the new tool, it does help me see how the new system works in comparison to the system I had (started uni 2003). Under the new system I would pay back roughly the same amount total, but over 30 years and then have the debt wiped, where I am currently expecting to pay my loan off after 17 years (assuming no career breaks, salary increase 1% above inflation on average, my engineering firm doesn't relocate to central Europe).

2sides2everystory

Education has never been free, and it can't be. Someone has to pay.

Hopefully that was not a play on words ...

In 1979 it was the taxpayer who paid for fees and generous grants to go to mostly the children of the elite (about 2-3% participation rates) so they could have an education. That meant many who never went to uni and who's children wouldn't were footing the bill for those who did.

Well I finished my degree before 1979 and neither I nor my parents paid a penny for it and nor could we have done. I was not a member of an elite and I was not an unusual case. I got a full grant and I eked it out on books and accommodation and food (salad sandwiches for the last few weeks of term!)

The problem Martin might be that you are too young to realise what was once possible and the norm under the Union Flag

The country has supposedly got hugely more wealthy since then but who's got it?