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

nbldmum

Been following your discussions and like a few of you I have 1 who is about to face this next year and 2 others following.
Whichever way you look at it there are still uncertainties. It goes against all sensible money planning - sign and take something out without really understanding all the small print, stacking up shed loads of money to pay back later at not inconsiderable rates from monthly income. I have problems justifying this whole thing to my daughter when she is looking to me for advice.

Should I just say, "hey ho, the advice is that you probably won't pay it all back so why not just sign up for that 5yr course and ask for as much money as poss from the maintenance loans....and then whatever salary you get be thankful and pay back as needed (knowing that she is not eligible for any bursaries and it will all just add up to one almighty debt that she won't ever be able to pay back).

What alternatives are there? As one director of education locally said when trying to gain Building schools for the future money under pfi schemes....it is the only show in town! Unless anyone has this amount of money saved up or spare each year then i guess we are all going to have to travel up the creek without a paddle. £9k+ per year - ok for those used to private education fees.

Anyone know if there have been any freedom of info requests for estimates on how much this is expected to cost and how much is expected to be unpaid at the end of 30yrs?

arsenalbarnie

nbldmum wrote: »

Anyone know if there have been any freedom of info requests for estimates on how much this is expected to cost and how much is expected to be unpaid at the end of 30yrs?

£250 billion in 30years time outstanding seems to ring a bell in the recesses of my brain.:o

melancholly

nbldmum wrote: »

What alternatives are there?

Anyone know if there have been any freedom of info requests for estimates on how much this is expected to cost and how much is expected to be unpaid at the end of 30yrs?

sadly, for most people, precious few!

in terms of what this will cost the tax payer, there have been plenty of estimates from independent think tanks (it's impossible to predict too accurately because of the unknown effect of increased fees on student numbers!). here's a particularly negative view:

http://www.millionplus.ac.uk/press/press-release-taxpayer-and-exchequer-worse-off-under-fee-proposals-says-million

one thing that is worth mentioning is that a lot of people expressing concerns about the new system are underestimating the current system. plenty of recent graduates will never pay back their loans and a staggering number have not made any repayments yet (and that's with a lower threshold!). (can't find the article right now but there was a thread earlier in the year and i'll keep having a dig with the search function to find it!!).

the new system is clearly on worse terms than the current system. but the issues in the T&Cs aren't new..... fine the totals under the new system are more scary and there are issues with the increased interest rate in the first three years plus increased interest rates dependent on income - but the fundamental problems people are bringing up now have always been there.

one good thing about the increased fees is that people are now looking into what a student loan means. previously, people have signed the forms and taken the money without much thought as to the repayment terms....... and that's been very clear on this board with the number of really quite basic questions asked by graduates. the next intake of students are likely to be the most financially literate in years!

i just think those of us who have been through the loans system and seen all the many and varied incarnations in the last 15 years are just aware of what's really new and what's the same as previous loans. the preoccupation with the T&Cs and possible changes is surprising to me as that isn't new and has always been there. there are plenty of other changes that are concrete that are, imo, more concerning!

Lokolo

arsenalbarnie wrote: »

I suppose you could take your loan elsewhere if anyone will lend an unemployed graduate the money. I know other lenders can change their terms. Who is going to lend you £50k plus to pay off your loan if on a low income?I don't think people here would be so worried (as haven't on the old s loans)because the amounts involved were less and interest not being added at such a high rate. However, now substantial amounts of debt are now going to be involved, possibly £100k if doing 5 year degree, it is making more of us sit up and read the small print. I notice that the folks who are unhappy on here about the terms seem to be the parents of children still to go to uni, me included.

But looking at the capital amount is the most stupid thing you can do.

You can owe £100k, £200k, it doesn't matter. What does matter are the repayment terms. As you can see in the calculator, the majority of students will not pay off the loan, and it will be wiped. So only the repayment amounts will matter.

melancholly

after another 20 attempts of keywords in google, here's the article about how a third of current graduates on the new system (so everyone from 1998 entry onwards) haven't reached the £15K threshold to start repayments:

http://www.guardian.co.uk/money/2008/oct/06/studentfinance.education

384,300 of 1,237,300 graduates with loans hadn't made a single repayment.... now that proportion can only increase with the rise in threshold. the point is that a significant proportion of current graduates won't fully repay the loans, so will be paying back until they are written off (with a cut off of 65 in a lot of cases, although more recently it will be for 25 years after graduation).

i guess if a third of graduates from the previous decade haven't crossed the £15K threshold, it really does show what a small proportion of graduates will be earning big money! it probably also tells us a lot about how much many degrees really help with highly paid careers..... but there you go! (and plenty of important/valuable jobs aren't highly paid but that's a given!)

PaulW1965

arsenalbarnie wrote: »

£250 billion in 30years time outstanding seems to ring a bell in the recesses of my brain.:o

I found these figures in the Telegraph

Documents show that the amount of money loaned to students will reach a maximum of £191bn within 35 years of the scheme.

It is also more that the gross domestic product of countries such as Ireland, Hong Kong or Nigeria.

Under the current system, students owe around £35 billion to the Government.

http://www.telegraph.co.uk/education/educationnews/8769269/Government-will-take-35-years-to-recoup-tuition-fee-losses.html

and the following

30-40% of men will never repay their student loan (currently less than 10%)

http://www.publications.parliament.uk/pa/cm201011/cmselect/cmbis/writev/885/m16.htm



So that suggests a future government is going to write back £75bn ???

Does anyone really believe a future government is going to do that????

PaulW1965

I just came across this too

The Chartered Institute of Taxation has calculated that a student earning £22,000 will repay £5,829, just over a quarter of their salary. By the time their salary reaches £30,000 their repayments increase to £9,429 31% of their pay

http://www.bainesandernst.co.uk/news/student-debts-set-to-linger-for-30-years/

PaulW1965

Lokolo wrote: »

But looking at the capital amount is the most stupid thing you can do.

You can owe £100k, £200k, it doesn't matter. What does matter are the repayment terms. As you can see in the calculator, the majority of students will not pay off the loan, and it will be wiped. So only the repayment amounts will matter.

It isn't if you don't actually believe the government will write it off.....

Oldernotwiser

PaulW1965 wrote: »

I just came across this too



http://www.bainesandernst.co.uk/news/student-debts-set-to-linger-for-30-years/

Although you've quoted this accurately, by taking it out of context it make s it unclear that the repayment quoted is for a graduate's total career. The implication is that a graduate earning £22,000 will repay £5,829 each year when in fact they would pay only £10 pa.

I think that your use of this information in this way is very misleading,

arsenalbarnie

Lokolo wrote: »

But looking at the capital amount is the most stupid thing you can do.

You can owe £100k, £200k, it doesn't matter. What does matter are the repayment terms. As you can see in the calculator, the majority of students will not pay off the loan, and it will be wiped. So only the repayment amounts will matter.

Yes sure I know about the repayment terms being the same for everyone. I'm not being arrogant or looking for an argument here,but, what happens when the majority of students won't pay off the loan?? Someone will have to pay for it. I wonder who. Someone will further down the line.