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

kayr_2

setmefree2 wrote: »

Has my memory failed me or has this thread changed its title?

Yes it has. It was, "Should I pay tuition fees...etc" It seems Martin Lewis feels we need to be told what to think. Not sure how the new title fits in with scenario 3! For most the new title will be sensible advice but not for all. But obviously some of us were in danger of trying to make up our own minds and needed to be brought in line with MSE thinking.

Oldernotwiser

kayr wrote: »

Yes it has. It was, "Should I pay tuition fees...etc" It seems Martin Lewis feels we need to be told what to think. Not sure how the new title fits in with scenario 3! For most the new title will be sensible advice but not for all. But obviously some of us were in danger of trying to make up our own minds and needed to be brought in line with MSE thinking.

The first title didn't make any sense, as someone pointed out to them.

silvercar

Another reason to take the loan in this thread:

https://forums.moneysavingexpert.com/discussion/3506257

Student finance in Wales is reducing the loan by £1500 for anyone that pays anything off it this year. So investing a fiver can reduce the loan instantly by £1500!

I accept it is only last year and this year's loans and only in Wales, but whose to say other schemes won't happen.

setmefree2

silvercar wrote: »

Another reason to take the loan in this thread:

https://forums.moneysavingexpert.com/discussion/3506257

Student finance in Wales is reducing the loan by £1500 for anyone that pays anything off it this year. So investing a fiver can reduce the loan instantly by £1500!

I accept it is only last year and this year's loans and only in Wales, but whose to say other schemes won't happen.

This is a change to T&Cs of past loans isn't it?

To be honest this has always been my biggest fear about paying up front. It isn't too hard to imagine the Labour Party doing this to 2012 Tuition fees, is it? I imagine it would be a big vote winner.


Link http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,5482301&_dad=portal&_schema=PORTAL

tyllwyd

silvercar wrote: »

... I accept it is only last year and this year's loans and only in Wales, but whose to say other schemes won't happen.

On the other hand, Martin has spent a lot of time trying to convince people that they won't pay back all of their loans, and that for most people tuition fees at £6K will cost the same in practice as £9K - if he's right, for 2012 students £1.5K off the loan will be just a drop in the ocean and won't make any difference to the overall amount paid back.

setmefree2

tyllwyd wrote: »

On the other hand, Martin has spent a lot of time trying to convince people that they won't pay back all of their loans, and that for most people tuition fees at £6K will cost the same in practice as £9K - if he's right, for 2012 students £1.5K off the loan will be just a drop in the ocean and won't make any difference to the overall amount paid back.

"Analysis carried out by the House of Commons Library, using the Department for Business, Innovation and Skills' own model, found that the package would benefit the lowest 10% of earners the most. They would be 16% better off than under the Government's plans. The highest 10% of earners, those with incomes of £65,000 or more every year of their working lives, would be 2% worse off.
"This is because under Labour's proposals the highest earning graduates would pay more. All graduates would benefit from lower fees. But those who pay off their loan within 20 years and are earning £41,000 or more at the time, would make additional payments for two years. Combined with the increase in the interest rate for this group, it means that while 90% would be better off, for those in the top 10% the benefit of lower fees would be more than offset by their overpayments."

setmefree2

Link to ML's current Blog

"Stop Early Redemption Penalities"

http://blog.moneysavingexpert.com/2011/09/26/stop-early-redemption-penalties-on-student-loans-the-mse-consultation-feedback/

kayr_2

setmefree2 wrote: »

Link to ML's current Blog

"Stop Early Redemption Penalities"

http://blog.moneysavingexpert.com/2011/09/26/stop-early-redemption-penalties-on-student-loans-the-mse-consultation-feedback/

Well have to agree with all that! My contribution to the consultation was a lot shorter and had a different emphasis - mostly that it is wrong to penalise someone for choosing to spend their money in a certain way - £2000 for a holiday to the Seychelles is fine but paying off student loans needs to be penalised... where's the logic in that? As for being progressive, someone from a poor background would also be penalised for wanting to pay off the loan. Of course their "debt" may well be smaller as they would have had grants/bursaries etc but penalties wouldn't be a good way of bashing the rich (or in effect the "squeezed middle").

I really liked his idea of a "penalties holiday", if the worst comes to the worst. Now if they did that and could change the RPI + 3% while they are students to something a bit more reasonable I'd be really happy...

MSE_Martin

@Setmefree2

To answer your initial questions (i got a bit lost later in the thread)


1. Why is it a laudable aim gone wrong. If her parents were planning to BORROW to not pay tuition fees, its almost certainly a big misunderstanding of the system. Plus I've taken one quote from what the journalist told me - and trust me the story I was hearing was one where they simply didnt know how it worked! Overall though Im happy with what was written to make peopel realise that it isnt'a a clear cut case.

2. Why do you focus on the students who don't earn much. I don't I focus on the greatest fear which is "I wont earn much and I'll be stumped with this debt that'll cripple me". I use three scenarios in the article. In both the low and average earner ones its not worth repaying - for me that's why the no is the focus. (also because most people assume always avoiding the loan is good and that's the assumption i'm challenging)

3. Why do I factor out inflation. People paying pay at current prices - they dont repay at future prices - so factoring out inflation is the fairest comparison. However I do link time and again to the student finance calculator and hope people go play with it to see their specific options and both views.

The key here is to stop parents making a knee jerk response and paying upfront. It isn't always a bad decision - but it is in many cases - and I suspect lots of people don't realise that.

I hope the article explains most angles and gives people something to think about.

Martin

Dustykitten

setmefree2 wrote: »

I do agree with you. There are some very hard working low paid people.

But most high earners already pay half of their salary in tax (over the threshold) : 40% plus 10%ish NI. Many pay 60% at the margin : 50% plus NI.

Add Student loans which are about 7% at the margin - some people could be paying nearly 70% at the margin.

70% !!!!!! There should be a law against taking 70% of someone's hard earned money!!!!!

There is a limit to how much you can bleed high earners.

NI is 12% up to about £42,475 and then 2% after that. See this link for more details of the thresholds for tax and NI