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

abster31

Lokolo, thankyou for your helpful replies.:)

I think you have mis interpreted my post, or I have not made it clear enough.

The whole point of my post is that I feel Martins article is misleading.

It says in his article many will not earn the 21k therefore will lose. But my opinion is that many will earn 21k if they are on course specific jobs.

I understand there is a recession and that jobs are scarce, believe me I have been looking for ten months and finally got a trainee role on minimum wage which I am delighted about as at the end of my degree I will be more employable having had experience to go with the skills.

But to generalise stating that many will not earn 21k is not correct, we do not hold a crystal ball, so we cannot correctly ascertain what the job market will be like.

I was also trying to get across the point that as I had my children and would not be taking a career break I will pay for the 30 years before it is wiped off.

The figures I got from MARTINS article. Have a look at scenarion 3. Just paying back the 27k is going to cost 41k and thats WITHOUT inflation.

The terms and conditions have not been set. I know this because I have applied and they have given me the terms and conditions with two scenarios and stating government legislation has not been finalised. So they are effectively selling loans without T&C's.

And I think you have misread my post. I am going to Uni this september and AM taking out the loan as I don't have a choice.

I understand that fees needed to increase. But they have almost trippled, and to add to this, I cannot be told what I will pay back as there is no cap which is the point I was trying to make.

There is also nothing stopping future governments changing these T&C's. A loan company of any other sort just would not be able to do this.

And I do know what I am talking about. I still feel the government is penalising future generations.

If you don't earn 21k you don't pay, so great. But if you do, the cost of the loan is extremley high.

Yes your right. I may die, I may end up disabled, homeless, anything could happen. What I am trying to get across is that I feel there should be a cap. Otherwise, the students that do earn will continuously pay.

There could also be an incentive for people to either make sure they don't earn over 21k to escape the payments or elude SF abroad. And I have heard of this in many other posts and forums. For me, it then feels as though because I have worked hard for an education, I will be penalised for those who chose not to earn over the threshold.

Effectively it will be those that do earn the wages keeping the whole faisco afloat.

These are just my opinions which I am entitled to.

melancholly

abster31 wrote: »

If you don't earn 21k you don't pay, so great. But if you do, the cost of the loan is extremley high.

If you do, the cost will be a fixed percentage of your income above the threshold, which is a very manageable sum. The cost to you on a monthly basis will not be extremely high and will be on the best terms available; no commercial lender would give these terms. Either way - that's the system that we have...... if the only other options are find the money elsewhere (not an option for most people) or not go to uni, then it's a case of understand what the loans are and suck it up!

tyllwyd

For most people it will be like a graduate tax on top of the normal income tax rate - when you start work you pay tax at a certain rate and with certain thresholds, but we accept that these will inevitably change over our working lifetime as governments come and go and the economic sitation changes. It's going to be pretty much the same situation with loans for the majority of people, so it is going to depend on whether you are willing to sign up on that basis.

wintersunshine

Dunroamin wrote: »

Lots of graduates don't earn £21,000

.

They must be thick

psymyk

I'm paying my son's Uni fees up front - but at only 1,771 Euros a year that's less than £1,500 compared to £9,000 in the UK.

My son is studying Economics at Erasmus University Rotterdam where the Dutch government subsidises EU citizens resident in the country. The course is taught in English, the university is highly rated and he's only a short flight or ferry away.

docmatix

I've looked at the loans business very carefully as my daughter will be starting university in September 2103. Fortunately I have a good salary and some investments, which I had planned to use to help her get started in life. Some of this will now have to be spent on paying her course fees instead: we will also be paying her living costs. Let me explain why I disagree with Martin's advice.

It's impossible to estimate a graduate's salary or career earnings in advance, even in a very regimented profession such as medicine. It's also impossible to estimate inflation, the RPI and other economic variables. So it's impossible to determine in advance whether the student and parents will lose or gain financially by taking out a loan.

Of course the bankers who run the loan company are guaranteed to make a profit as they are paid interest at inflation plus 3% and after 30 years the loan - plus anything that remains of 30 years worth of compound interest - will finally be repaid by the taxpayer.
I can't imagine how the Chancellor of the Exchequer in 2042 will cope with this demand upon his budget but our current crop of politicians don't care as they will no longer be in office.

Low earning graduates might pay back a lower amount than they have borrowed, especially if they take career breaks. Higher earners will pay back more but their loan will be repaid relatively quickly. The highest total repayments will fall on those whose career earnings are more than average, around £40 - £50 K in mid-career at current prices, for whom the loan might just about be repaid by the end of 30 years. For these graduates the loan will be a millstone. I anticipate that my daughter might fall into this group; earning a good but not excessive salary. She will be saddled with 30 years worth of debt repayments which will reduce her ability to repay a mortgage, buy a car, pay to support her own children etc.

Because of this I've decided, with reluctance, to pay the fees upfront - and I know that I'm lucky to be able to do so. That's because I'm a graduate working in a well paid profession; my parents contributed towards my education altho they could barely afford to do so.

I think that Martin could do more to point out that some people will be big losers under this loans system. I hope it's not the case but his advice to take out a loan might possibly be influenced by his position. I'd be interested in reading any response he might care to make.

Lokolo

docmatix wrote: »

She will be saddled with 30 years worth of debt repayments which will reduce her ability to repay a mortgage, buy a car, pay to support her own children etc.

Although it will effect it, it won't massively impact it. For example, on £40k a year, take home would be £2480 without student loans, £2300 with. And £40k is quite a large salary.

On say £21k, you wouldn't pay anything back in student loan repayments.

setmefree2

docmatix wrote: »

Because of this I've decided, with reluctance, to pay the fees upfront

Whilst I get where you are coming from, if your daughter takes time out of the work force in the future to look after children or to go travelling then she may well be better off taking out the student loans (tuition and maintenance) and for you to give her the money - say for a house deposit.

Also remember that the student loans can be repaid at any time without penalty when your daughter's situation becomes clearer.

setmefree2

docmatix wrote: »

Of course the bankers who run the loan company are guaranteed to make a profit as they are paid interest at inflation plus 3% and after 30 years the loan -

The student loans attracts interest at RPI plus 3% until the student graduates - after that, the interest rate is uprated gradually from just RPI to RPI + 3% when the graduate earns £41k. So unless your daughter is going to start on a high salary her loan won't be attracting interest at RPI+3% in the early years of her career. Remember that this is also being partially offset by the interest earned on the money you have not used to pay the fees and living costs upfront.

setmefree2

docmatix wrote: »

plus anything that remains of 30 years worth of compound interest - will finally be repaid by the taxpayer.
I can't imagine how the Chancellor of the Exchequer in 2042 will cope with this demand upon his budget but our current crop of politicians don't care as they will no longer be in office.

Government's will write off anything that they think they won't get back from the get go. It is, however, possible (and most likely!) that they will overestimate how much they will get back - but this will become apparent reasonably quickly and will be written off as and when - they won't have to wait 30 years to find out (or write off the amounts that are irrecoverable)