'Don't pay your kids tuition fees upfront' Discussion Area

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Former_MSE_Alana
Former_MSE_Alana Posts: 252 Forumite
edited 26 September 2011 at 9:06AM in Student MoneySaving
This is the discussion area for the guide

Don't pay your kids tuition fees upfront: Many will end up throwing £20,000+ away

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  • Taiko
    Taiko Posts: 2,711 Forumite
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    One thing I will add, the SLC do employ debt collectors as such, Smith, Lawson & Co. Wouldn't really apply for new students, which I know is what the guide is aimed at, but they do employ them. They may also chase if a student slips from HMRC's radar.
  • ikr2
    ikr2 Posts: 170 Forumite
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    Great article, dispelling many of the myths about Student funding.

    Yes students on higher incomes after graduation may have to pay more but those on lower incomes pay less than now.

    It really is a capped Graduate Tax. I wonder why the coalition didn't call it that? My guess is that a Graduate Tax would mean tuition fees and maintanance support would be a debt to the state and add to overall govt. expenditure. By calling it a loan, is the debt is assigned to individuals and removed from govt. spending?

    One criticism is that the maintenance is still partly assessed on parental income. This always seemed wrong to me, even in the days of a grant. If you go to university, you are generally over 18 and an adult in the eyes of the state. Why should your income depend on what your parents earn?

    And of course you have no legal recourse to get your parents to pay up their part of the maintenance contribution if they can't or won't do so.
  • Don_Draper
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    Anyone have a sense of when the government will make up its mind whether it will introduce an early repayment penalty and on what terms?

    We have been waiting for this detail for months. Until we know this it is impossible to make a definite plan.

    We are filling in the 2012 UCAS forms right now; it asks if the applicant is taking student finance or not. Don't know how to answer.

    Does anyone know what the hold-up is on producing this crucial detail?

    Thank you.
  • kayr_2
    kayr_2 Posts: 131 Forumite
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    Don_Draper wrote: »
    Anyone have a sense of when the government will make up its mind whether it will introduce an early repayment penalty and on what terms?

    We have been waiting for this detail for months. Until we know this it is impossible to make a definite plan.

    We are filling in the 2012 UCAS forms right now; it asks if the applicant is taking student finance or not. Don't know how to answer.

    Does anyone know what the hold-up is on producing this crucial detail?

    Thank you.

    The consultation on this ended on Sep 20th. Wouldn't be surprised if they'd already decided what they are going to do anyway (so might announce it soon) but I hope they don't have a penalty - why should someone who chooses to pay a bit of the loan off rather than spend the money on e.g. a holiday be penalised for that? They would presumably still have to get any proposal through parliament (I hope) and I know that at least one MP (mine and Conservative!) is dead against penalties. I think it's wrong that that many students have to put a UCAS application in by Oct 15 with finance details still unclear but I suppose they would argue that if the detail was that significant for a student they could always withdraw an application.
    In your case I would just say you are taking student finance - it doesn't commit you to anything, does it? And if you said "no" your child could still apply for a loan. They would apply next year then sign the forms once the application is approved so there is plenty of time to make whatever arrangements suit your situation. Not that I approve of the Government's approach to this - I think it's appalling that they can leave quite important details so unclear for so long. Our child is in the 2013 cohort so I would hope things will be clearer by then!

    Also, shouldn't this thread be entitled "Should I...", like the article?
  • MrsManda
    MrsManda Posts: 4,457 Forumite
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    ikr2 wrote: »
    It really is a capped Graduate Tax. I wonder why the coalition didn't call it that?

    I think it's because a 'tax' is a compulsory contribution to the state and therefore is only applicable to the population. This would mean that anyone who moved out of the country would no longer be subject to the graduate tax and therefore would not have to repay their loans.

    Whereas with student loans you are still liable for repayments even when you leave the UK.

    At least this was one of the arguements put forward when a graduate tax was being discussed.
  • silvercar
    silvercar Posts: 47,094 Ambassador
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    We are filling in the 2012 UCAS forms right now; it asks if the applicant is taking student finance or not. Don't know how to answer.

    You answer "yes". You still need to make a separate application if you want the finance.
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  • melancholly
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    MrsManda wrote: »
    I think it's because a 'tax' is a compulsory contribution to the state and therefore is only applicable to the population. This would mean that anyone who moved out of the country would no longer be subject to the graduate tax and therefore would not have to repay their loans.

    Whereas with student loans you are still liable for repayments even when you leave the UK.

    At least this was one of the arguements put forward when a graduate tax was being discussed.
    hadn't considered that angle..... the upside of a fixed tax for a fixed period would be that those in the middle don't pay disproportionately more than those with higher incomes. i wonder what the numbers would work out as comparing the income of a fixed period so that the higher earners paid more as they paid for longer versus losing repayments from those who move abroad.......

    i guess the other downside of a tax system would be the money would be organised centrally rather than linked to the university as it is at the moment. although i'm sure others would argue that would be an upside!
    :happyhear
  • Oldernotwiser
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    MrsManda wrote: »
    I think it's because a 'tax' is a compulsory contribution to the state and therefore is only applicable to the population. This would mean that anyone who moved out of the country would no longer be subject to the graduate tax and therefore would not have to repay their loans.

    Whereas with student loans you are still liable for repayments even when you leave the UK.

    At least this was one of the arguements put forward when a graduate tax was being discussed.

    Sorry, I don't agree.

    Many retired expats pay UK taxes on their government pensions so I can't see how this couldn't have been arranged for the payment of a graduate tax as well.
  • Aghabe
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    What a spin! Firstly, average salary in UK at present is around £25K. This means that only very few, if any indeed, university graduates would be exempt of paying back the loan by the time they are qualified. Second, many courses run for more than 3 years and some may go on for even 4-6 years (depending on Univerity) including for instance medical, dental, veterenary, pharmacy etc. Thirdly, the interest on the loan is calculated from the time the loan is taken and at a startling rate of inflation + 3% (compound) and not at Bank of England Base rate (currently at 0.5%) this is at a time when inflation is running at some 5%. Fourthly, students would not be allowed to pay back early or may be asked to pay a hefty penalty to do so. Fifth, it is not true that loan companies may not pursue the debt repayment or get a Bailif knocking on your door. Sixth, students will keep paying 9% of their income to repay the loan until they retire resulting in them paying far far more than the amount borrowed in the first place. to put things into perspective, if students join a 4/5 years course they will end up borrowing £36-£45K (excluding maintenance loans) and by the time they retire they may end up paying well over 80K-£90K. This is a betrayal to our children and future generation and betrayal to the concept of fair access to university education even to the poor as well as a betrayal to future of the UK that depends on investing in education.
  • Oldernotwiser
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    Aghabe wrote: »
    What a spin! Firstly, average salary in UK at present is around £25K. This means that only very few, if any indeed, university graduates would be exempt of paying back the loan by the time they are qualified. Second, many courses run for more than 3 years and some may go on for even 4-6 years (depending on Univerity) including for instance medical, dental, veterenary, pharmacy etc. Thirdly, the interest on the loan is calculated from the time the loan is taken and at a startling rate of inflation + 3% (compound) and not at Bank of England Base rate (currently at 0.5%) this is at a time when inflation is running at some 5%. Fourthly, students would not be allowed to pay back early or may be asked to pay a hefty penalty to do so. Fifth, it is not true that loan companies may not pursue the debt repayment or get a Bailif knocking on your door. Sixth, students will keep paying 9% of their income to repay the loan until they retire resulting in them paying far far more than the amount borrowed in the first place. to put things into perspective, if students join a 4/5 years course they will end up borrowing £36-£45K (excluding maintenance loans) and by the time they retire they may end up paying well over 80K-£90K. This is a betrayal to our children and future generation and betrayal to the concept of fair access to university education even to the poor as well as a betrayal to future of the UK that depends on investing in education.

    1. Very few newly qualified graduates earn £25,000.
    2. The vast majority of degrees are 3 for years.

    5. Loan companies will only pursue graduates if payments aren't up to date.
    6. Many students will repay a small amount of what they borrow; some will pay nothing.
    7. Students from poor families are able to access extra funding and will end up owing less.
    8.Our problem now is that far too high a proportion of our population are expected to go to university.
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