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

tyler80

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'd like to swap to the new system please, 9% of anything over 21,000 for 30 years looks quite attractive compared to 9% of anything over 15,000 until retirement :-)

borntobefree

tyler80 wrote: »

until retirement :-)

Are some student loans repayable to retirement? Which years?

flimsier

tyler80 wrote: »

I'd like to swap to the new system please, 9% of anything over 21,000 for 30 years looks quite attractive compared to 9% of anything over 15,000 until retirement :-)

Retirement? What are you talking about?

melancholly

borntobefree wrote: »

Are some student loans repayable to retirement? Which years?

http://www.moneysavingexpert.com/loans/student-loans-repay#wiped

it's nothing if not complicated! there have been slight changes in the T&Cs every few years since fees were introduced - and even before that in terms of maintenance loans (although i don't think most people have noticed as it only really impacts on you when you/your kids go!).

some people will pay until 60, others til 65, others for 25 years post graduation. fees for students were about £1K from 1998-2005 and then went up to about £3K in 2006. in reality, it's the maintenance loans that have made up the bulk of the debt so it will still have been substantial. obviously the fee increases now will make the new totals a lot higher - just wanted to emphasise that students currently graduating will still be looking at debts of £25K-£30K. nothing compared to the 2012-starting cohort, but still a considerable sum.

wozearly

2sides2everystory wrote: »

Yes you are darned right it is about participation levels and if only ...

If only the disgraceful bonuses paid to the in-crowd spivs in the City were taken back and used to educate those that deserve it not those that were part of a gang that stole it.

There are countries in Europe where there are little or no tuition fees for university students or other types of FE to as far as age 25 I believe in some of them. Let's list those countries. Do they have a dumbed down workforce like us? Don't think so. So how did they get to be not dumb? By 2% university participation levels ... Er don't think so ...

I wouldn't agree that we have a dumbed down workforce, although it depends what you're getting at. If the complaint is with the quality of school leavers / graduates then its certainly a fairly regular theme in the press, but I'm not aware of any benchmarking against other countries.

If you're referring to participation, in 2009 there were 32% of UK residents aged 25-67 with degrees - I believe the rate is higher amongst the younger ages and lower amongst the older ones. This is above the OECD (27.5%) and EU (24.5%) averages. Source: Organisation for Economic and Co-operative Development, 2009

The top 5 for participation were Russia, Canada, Israel, Japan and New Zealand. The US falls just below that, as do a couple of the scandinavian countries. The UK ranks 15th globally.

I don't have a comprehensive list of tuition fee / free system charges, but here's what I could find:

USA: c.$9,000 for US students.
Participation rate: 40%

Canada: c.$9,000(cd) for domestic students.
Participation rate: 48%

Belgium: 500 euros
Participation rate: 32%

Ireland: 900 euros
Participation rate: 32%

France: 165 euros
Participation rate: 27%

Germany: 1,000 euros
Participation rate: 24%

Australia: 10,000 - 20,000 AUD
Participation rate: 34%

Denmark: No fees
Participation rate: 32%

Bear in mind that some of those fee structures didn't exist for all of the 25-67 age group, so the figures need a pinch of salt.

Ultimately, all of the systems get a fairly healthy injection of government support which is either retrieved from students partly over time via fees, or from the general population via taxation. Increasing participation means some people have to pay more.

So lets say you were to tax city bonuses at 95% and that it paid for that year's cohort of students to study fee-free. The next year, the city wouldn't pay bonuses and would either find other ways to remunerate or accept that the staff loss...either way, your revenue stream dries up and you're left with the choice of raising taxes or introducing fees all over again.

I think it would be great if the UK did move back to a fee-less system, but the funding for that has to be sustainable - otherwise we end up with yet another debt being kicked down the road for future generations to pay for while not receiving the same opportunity for themselves, as its now deemed too expensive...

tyler80

Are some student loans repayable to retirement? Which years?

1998 to 2005 (I think 2005 poss 2006)

Whilst fees were lower, maintenance loans were still a fair chunk, the 'poorer' you were the more you could borrow and I ended up getting hardship loans as well.

A few years with interest over 4% whilst you're completing further studies means I know many people who are in the situation where their repayments aren't reducing the loan. The interest rate was supposed to be based on either the retail price index or the bank of england rate plus 1% depending on which is lower. Yet when the RPI went into minus figures they decided not to stick to that.

The goalposts have been moved in the past and if I was a soon to be student I'd be very wary of them being moved again.

flimsier

tyler80 wrote: »

The goalposts have been moved in the past and if I was a soon to be student I'd be very wary of them being moved again.

Something Martin should mention. A rational decision should include the high probability that the terms will get worse.

Of course this would encourage opposition to the system.

If I was going to go into education, I'd still go, but I'd also be angry and vocal (and active) in my opposition.

2sides2everystory

Firstly, a big thank you to wozearly for seeking out those international tuition fee figures. I think the Netherlands must be another on the list from what I have read about the growing numbers of UK students who have checked out their universities e.g. Maarstricht. I think I also read that Finland is free or very nearly so.

wozearly wrote: »

I wouldn't agree that we have a dumbed down workforce, although it depends what you're getting at.

If the complaint is with the quality of school leavers / graduates then its certainly a fairly regular theme in the press, but I'm not aware of any benchmarking against other countries.

If you're referring to participation, in 2009 there were 32% of UK residents aged 25-67 with degrees - I believe the rate is higher amongst the younger ages and lower amongst the older ones. This is above the OECD (27.5%) and EU (24.5%) averages. Source: Organisation for Economic and Co-operative Development, 2009

In my mind I was actually referring albeit obliquely to the numbers doing fluffy subjects and also what happens to our graduates when they attempt to get taken seriously by recruiting employers. Essentially far too many find that the only thing they are deemed to be good at is in understanding and following a sales training brief and then following it directly in order to sell some product that wouldn't otherwise sell itself.

Thesedays many employers just see the recent graduate pool as a crowd of (hungry / debt ridden) clever brains that can be persuaded after short inductions and cheap ra-ra training courses, to start outwitting prospective customers. In the process these clever brains are also outwitted by their own employers. As a group, major employers seem not only to have got the notion of "internships" accepted with a degree of ill-deserved credibility now, but they also seem to get away with offering career progression to the bulk of graduates which is no faster than it used to be three decades ago for O level school leavers. It is debateable whether or not before they finish their studies that the current batch of graduates are dumbed down compared to those of three decades ago for example. One thing is fairly certain however if they are lucky or forceful enough to be part of the 75% who find employment, their current roles, workplaces and prospects are certainly dumbed down compared to thirty years ago. To survive or break out of it, they too often are tempted to be selfish and ruthless.

... So lets say you were to tax city bonuses at 95% and that it paid for that year's cohort of students to study fee-free. The next year, the city wouldn't pay bonuses and would either find other ways to remunerate or accept that the staff loss...either way, your revenue stream dries up and you're left with the choice of raising taxes or introducing fees all over again.

I take your point about a bonus tax. In fact didn't we already see something of the kind that led to a recent doubling of salaries I think in order to obviate increased tax? Taxation is quite a blunt instrument of course when attempting fine tune an economy.

However, is fine-tuning what I am suggesting? No it is not. It is about hunting down where the bulk of the ill-gotten gains went and sequestering them for the benefit of the nation. This isn't just one year of tax that's missing - it what has "walked" as a result of a couple of decades of descent into a debauched world economy led by firms and individuals who are less and less able to hide either themselves or their ill gotten gains.

Maybe part of the fightback will come not as new taxes but as new lawsuits by governments against the stealers led by the long reach of people like Obama if not by people like Cameron.,

wozearly

2sides2everystory wrote: »

Firstly, a big thank you to wozearly for seeking out those international tuition fee figures. I think the Netherlands must be another on the list from what I have read about the growing numbers of UK students who have checked out their universities e.g. Maarstricht. I think I also read that Finland is free or very nearly so.

My vague understanding is that a few countries in the EU have free tuition for domestic students, but charge international students some form of fee. Short of investigating each country in turn, the OECD report was all I could find that summarised a number of stances and costs.

However, because a) its over a long period, b) it doesn't also show government spending on higher education and c) there is no attempt to benchmark quality of degrees, its not really much help in terms of understanding what the picture looks like in 2011. But its better than nothing...

2sides2everystory wrote: »

In my mind I was actually referring albeit obliquely to the numbers doing fluffy subjects and also what happens to our graduates when they attempt to get taken seriously by recruiting employers. Essentially far too many find that the only thing they are deemed to be good at is in understanding and following a sales training brief and then following it directly in order to sell some product that wouldn't otherwise sell itself.

The problem with 'fluffy' subjects is that its a fairly subjective judgement as to whether its valuable content or considered academically rigorous - and that's often based on prejudice.

I'll pick a commonly maligned one - there is no reason why a degree in media studies is less rigorous, or less valuable, than a degree in economics. Academic rigour isn't constrained by subject matter, and the media industry continues to be a very hungry one for graduates who actually understand the technical skills of audience targeting, who are aware of the trends behind the use of the internet, social media, etc. and are able to convert this into something useful.

The most stupid thing Media Studies ever did was not to call itself Media Science or Communications. That's not to say that there aren't bad Media Studies courses, of course.

Ultimately, as you add more personal expense, would-be graduates are more likely to choose degrees with better employment prospects. So degrees with limited career value are likely to see a huge demand drop, and would be taken only by people pursuing it out of academic interest. So we may see less demand for unusual subjects in future...

2sides2everystory wrote: »

Thesedays many employers just see the recent graduate pool as a crowd of (hungry / debt ridden) clever brains that can be persuaded after short inductions and cheap ra-ra training courses, to start outwitting prospective customers. In the process these clever brains are also outwitted by their own employers. As a group, major employers seem not only to have got the notion of "internships" accepted with a degree of ill-deserved credibility now, but they also seem to get away with offering career progression to the bulk of graduates which is no faster than it used to be three decades ago for O level school leavers. It is debateable whether or not before they finish their studies that the current batch of graduates are dumbed down compared to those of three decades ago for example. One thing is fairly certain however if they are lucky or forceful enough to be part of the 75% who find employment, their current roles, workplaces and prospects are certainly dumbed down compared to thirty years ago. To survive or break out of it, they too often are tempted to be selfish and ruthless.

Pretty much agree with you across the board here.

The acceptance of unpaid internships is, sadly, a triumph of employers demanding people prove themselves in a job before they're allowed to be paid to do it. Which is a bit of a Catch-22. But faced with that, you can't blame unemployed graduates for tolerating unpaid internships if they feel they have no choice - of course, some get exploited as a result and working unpaid isn't exactly a progressive option. The government should be braver in ruling it as illegal...but, of course, MPs staff their own offices with unpaid interns (sigh).

Speaking about graduate prospects, they are worse than thirty years ago on average - but that's as much supply and demand as anything else. There are more graduates around now, but the number of 'graduate' jobs didn't rise at the same pace. So the winners won't see a difference, but the losers will...

When you couple that with the added cost, you can't blame some recent graduates for having a mercenary eye on their prospects. Many people took degrees expecting it would be financially worthwhile (whether that was the right reason to go to university is debateable, but still...). They gave up 3-4 years' worth of earnings and took on significant personal debt. Then they hit a horribly competitive job market, prejudice against recent graduates based on lack of experience, unpaid internships, etc.

Once they get somewhere, they want to start seeing that financial reward sooner rather than later...its the ones who wear that on their sleeves that give a bad name to the majority who just have a bit more amibition than average.

I can only speak from experience about recent graduates. My own cohort had its variation between the brilliant and the utterly mediocre. I work with my company's graduate recruitment process and have seen a similar mix (and we don't exploit the good ones - promise!).

2sides2everystory wrote: »

I take your point about a bonus tax. In fact didn't we already see something of the kind that led to a recent doubling of salaries I think in order to obviate increased tax? Taxation is quite a blunt instrument of course when attempting fine tune an economy.

However, is fine-tuning what I am suggesting? No it is not. It is about hunting down where the bulk of the ill-gotten gains went and sequestering them for the benefit of the nation. This isn't just one year of tax that's missing - it what has "walked" as a result of a couple of decades of descent into a debauched world economy led by firms and individuals who are less and less able to hide either themselves or their ill gotten gains.

Its tricky to retrospectively hunt down ill-gotten gains if they were gained legally at the time. If anyone can come up with an effective way to do so, I'd be happy to see it...

melancholly

tyler80 wrote: »

The goalposts have been moved in the past and if I was a soon to be student I'd be very wary of them being moved again.

just to add that while the rules have changed, they have never been changed retrospectively (RPI/CPI aside!). the rules for repayment were clear when the loan agreements were signed. they may be changed for the next year's intake, but once you're in the system, it stays the same. i pretty much expect the terms/fees for future students to be worse, but they don't change things for existing cohorts (which is why giving a lot of advice on student loan repayments is tricky; there are so many systems running concurrently - no-one gets shifted onto the new system).