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

melancholly

Dustykitten wrote: »

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

never knew that (i'm not a higher rate tax payer, clearly!) - although i'm surprised that the threshold for change in NI contributions doesn't match the 40% tax bracket cut off.

setmefree2

Dustykitten wrote: »

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

I was arguing roughly to make a point. But more precisely :-

At £22k a student will be paying at the margin 20% income tax, 12% NI and 9% student loans =41% on £22k!!!!

At £40k a student will be paying at the margin 20% income tax, 12% NI and 9% student loans = 41%

At £42.5k at the margin 40% income tax, 2% NI and 9% on their student loans.... 51%!!!!! on JUST £42k pa !!!!

At £100k at the margin 40% income tax, 2% NI and 9% student loans = 51%

At £150k at the margin 50% income tax, 2% NI and 9% student loans = 61%


Roughly.

51% tax at £42k.....

Who knows what that can do to a student's life time earning potential? That promotion they didn't go for? The overtime they never worked?

Maybe the student without the loans decides to go for that promotion whilst the student with the loans holds back.

dizzie

The UK is already the third most expensive place in the world for university study:

http://www.telegraph.co.uk/education/universityeducation/8759436/OECD-UK-student-tuition-fees-third-highest-in-the-world.html


....and that's before tuition fees treble!

I'm predicting an increase in the "brain drain"...well educated graduates with good earning potential emigrating abroad (which makes it much more difficult to chase defaulted student loan repayments!)

setmefree2

dizzie wrote: »

I'm predicting an increase in the "brain drain"...well educated graduates with good earning potential emigrating abroad (which makes it much more difficult to chase defaulted student loan repayments!)

And the Labour Party look like there are just going to add to that problem

However, a key element of the proposal - to force richer graduates settling student loans early to make additional payments for two years - did not emerge in the initial media interviews with Mr Miliband.
Under Labour's plans - which the party has stressed may not form part of its next manifesto - graduates earning more than £41,000 who pay off a loan within 20 years would make the overpayments.
Gareth Thomas, the shadow universities minister, said this element, together with a higher interest rate for top earners, made the proposal more progressive than critics were suggesting.
"While 90 per cent (of graduates) would be better off, for those in the top 10 per cent the benefit of lower fees would be more than offset by their overpayments," he said.
In a fringe meeting hosted by Universities UK and the Social Market Foundation, Mr Thomas added that the policy was a "strong contender" for the party's next election manifesto.

http://www.timeshighereducation.co.uk/story.asp?sectioncode=26&storycode=417587&c=1

Even more tax!!!

And the "people" they want to pay these extra taxes can't even vote yet and won't even be able to vote at the next election!!!!

FATBALLZ

setmefree2 wrote: »

At £42.5k at the margin 40% income tax, 2% NI and 9% on their student loans.... 51%!!!!! on JUST £42k pa !!!!

You think that's bad... on the current system, a graduate will get taxed at a rate of 41% on anything over £15k at the moment. 20% tax, 12% NI and 9% student loan. It disgusts me.

setmefree2

FATBALLZ wrote: »

You think that's bad... on the current system, a graduate will get taxed at a rate of 41% on anything over £15k at the moment. 20% tax, 12% NI and 9% student loan. It disgusts me.

To be honest until my son was contemplating gong to Uni I hadn't really paid much attention to what was going on with SLs.

How long does that sort of loan you are talking about last?

Oldernotwiser

FATBALLZ wrote: »

You think that's bad... on the current system, a graduate will get taxed at a rate of 41% on anything over £15k at the moment. 20% tax, 12% NI and 9% student loan. It disgusts me.

You're ignoring the fact that, up to now, it's been virtually interest free.

pleasedelete

Well I have thought about it.

My daughter will be going to do a 4 year course and will become a teacher. If she becomes an assistant ht in a primary school she will earn about 40k in 5-7 years.

I have decided that she will not take on any debt. I have enough saved etc to pay £15k a year for her to go and can add some more each month.

I may make her take out the loans and I will repay them on graduation so that she can't take them out behind my back (which happened to a friend) this defeating thevpoint.

Any obvious flaws? I don't mind if I am paying more than she would repay. That's not an issue.

Oldernotwiser

pleasedelete wrote: »

Well I have thought about it.

My daughter will be going to do a 4 year course and will become a teacher. If she becomes an assistant ht in a primary school she will earn about 40k in 5-7 years.

I have decided that she will not take on any debt. I have enough saved etc to pay £15k a year for her to go and can add some more each month.

I may make her take out the loans and I will repay them on graduation so that she can't take them out behind my back (which happened to a friend) this defeating thevpoint.

Any obvious flaws? I don't mind if I am paying more than she would repay. That's not an issue.

The only thing I can think of is that you can no more "make" her take out the loans than you can "make" her pay them back on graduation.

melancholly

pleasedelete wrote: »

Well I have thought about it.

My daughter will be going to do a 4 year course and will become a teacher. If she becomes an assistant ht in a primary school she will earn about 40k in 5-7 years.

I have decided that she will not take on any debt. I have enough saved etc to pay £15k a year for her to go and can add some more each month.

I may make her take out the loans and I will repay them on graduation so that she can't take them out behind my back (which happened to a friend) this defeating thevpoint.

Any obvious flaws? I don't mind if I am paying more than she would repay. That's not an issue.

i guess it's worth discussing it with her rather than dictating to her... she is the one who will sign all the forms and take responsibility for the student loan and it's important that she understands what's going on. ultimately, it is her decision.

honestly, tough as it sounds, if you don't trust her not to tell you about taking out a loan or not, then something sounds a bit wrong. it's important to remember that while she's still a 'child' officially now, the shift to being a university student is also a shift into her being an adult. it rarely ends well when a parent tries to financially control students - there's a big difference between helping someone make an informed choice and taking control of the student loan money.......

the only other thing it's worth mentioning is that expecting to be an assistant HT so soon after graduation is quite ambitious. it's possible, but i wouldn't bank on it. the average teacher's salary is less than £40K so while it's a sensible 'best case scenario', it's worth considering other options. for example, plenty of people change their mind entirely about a career while at uni and plenty do a couple of years of teaching and decide it's not for them. be prepared for lots of things to change.