MSE News: 'We need war against student fee confusion'

tuppenceabag

anselld wrote: »

It is also possible that prospective students fully understand all these issues and have still decided that they do not wish to be burdened by this much debt (however you spin it).

If you did a net cash flow calculation over 30 years accounting for fees vs expected increase in earnings from having a degree, there are probably many careers where gaining a degree no longer "pays back".

I really, really resent keep being told that vast numbers of the population, including me, must be unable to grasp the facts about student loans (i.e. financial chains around the neck, with no contract so the terms can be changed for the worse whenever an ill political wind may blow).

I DO understand the whole package and I DON'T like the idea of having to answer to the Student Loans Company for the rest of my life, being hounded by them and their frequently inept and unhelpful organisation to account for my earnings. Suppose I fancy living in the Amazon jungle for a few years or trekking across the Sahara? Of course I shall have to keep making prompt replies detailing my every move to Student Loans Company. Yes - a real chain around the neck for most of my life as far as I am concerned.

Another thing which really concerns me, as was briefly touched on in a BBC TV programme yesterday (but was poo-pooed when I mentioned it on a forum) - TAKING UP A STUDENT LOAN IS NOT THE SAME AS SIGNING A CONTRACT FOR A REGULAR BANK LOAN. THERE IS NOTHING REPEAT NOTHING TO GUARANTEE THAT THE GOVERNMENT WONT PLEAD POVERTY (WE'RE ALL IN THIS TOGETHER, BLAH BLAH) AT SOME STAGE IN THE FUTURE AND CHANGE 9% OF SALARY TO BE REPAID TO, SAY, 12%. OR 20%, OR WHATEVER IT DEEMS NECESSARY!!

ALSO, THERE IS NO CONTRACTUAL AGREEMENT THAT DEBT WILL BE WRITTEN OFF AFTER 30 YEARS - THE PENSION AGE HAS JUST BEEN CHANGED "BECAUSE WE ARE ALL LIVING LONGER"....WHO IS TO SAY THAT ARGUMENT WONT BE USED TO CHANGE THE WRITE-OFF TO, SAY, 40 OR 50 YEARS IN THE FUTURE? MAYBE A FUTURE GOVERNMENT WILL DECIDE THAT WE CAN NO LONGER AFFORD THE "LUXURY" OF NOT PAYING BACK UNTIL WE EARN £21,000. MAYBE THAT WILL BE REDUCED TO £10,000.

YES, ALL SPECULATIVE, AND YES, OPTIMISTS MAY SAY "THAT'S VERY UNLIKELY"...ARE WE ALL REALLY SUPPOSED TO HAPPILY ACCEPT THAT THE DETAILS WILL "PROBABLY" NOT GET EVEN WORSE??!! NO-ONE IN THEIR RIGHT MIND SIGNS UP WITH A FINANCIAL COMPANY FOR A LOAN WHERE THE REPAYMENTS/LENGTH OF TERM ETC. CAN ALL BE ALTERED AS AND WHEN THE COMPANY LIKES!!!

Generally, I think this website is really useful and well on-track with financial advice, but I find myself feeling very cynical as I find it impossible to swallow this student loan hard-sell and accept that there is nothing to worry about with these arrangements.

And another thing which is seriously bugging me...the advert constantly played on Heart Radio which says "From next year most students won't have to pay their fees upfront...." - it is all said in a jaunty "isn't it wonderful" kind of way - STUDENTS DIDNT HAVE TO PAY THE (MUCH LOWER) FEES UPFRONT BEFORE EITHER!!! WILL THE GOVERNMENT AND OTHER PARTIES WITH A VESTED INTEREST PLEASE STOP TRYING TO DUPE US WITH THIS RIDICULOUS "IT ISNT REALLY DEBT" RHETORIC. I DON'T BUY IT, AND I DON'T LIKE IT. I FEEL IT IS TANTAMOUNT TO RIPPING OFF THOUSANDS OF NAIVE YOUNG TEENAGERS WHO WILL LIVE TO REGRET THEIR NAIVETY AND WAKING UP EVERY MORNING UNTIL THEY ARE IN THEIR 50S OR BEYOND KNOWING THEY NEED TO ANSWER TO THE STUDENT LOAN CO.

END OF RANT.....:mad:

Lokolo

Caps Lock is not your friend.

I find it odd that for the past 10+ years, where the conditions have been the same (that the terms could change), that no-one is outraged, but suddenly now they are......

tyllwyd

Lokolo wrote: »

I find it odd that for the past 10+ years, where the conditions have been the same (that the terms could change), that no-one is outraged, but suddenly now they are......

I must admit, I hadn't ever complained about the old system but then I hadn't ever looked into it in detail before and hadn't realised exactly what people were signing up to - as far as I'm concerned, it was a flawed system before and its a flawed system now. But the overall figures are so much higher after 2012 than before, any risk involved is multiplied, and that is why people are more concerned about potential changes. And maybe it's a political thing as well - lots of things have changed since the General Election, people are very unsettled and wary of trusting what politians are promising us.

kayr_2

Lokolo wrote: »

Caps Lock is not your friend.

I find it odd that for the past 10+ years, where the conditions have been the same (that the terms could change), that no-one is outraged, but suddenly now they are......

I think that's because the deal for the last 10 years has been pretty good! So the fear of changes in T&Cs was not so worrying for people? And the sums involved were smaller so less scary. I was a bit concerned as I read through my son's "contract" when he signed it but being one of the optimistic people (I value my quality of life) I am not too worried. If things do change a lot, I think it will be a reflection of massive economic woes and we'll be stuffed anyway; SLs will be just one part of our problems. I believe this is quite possible but would go mad if I assumed it definitely would happen. I think why people are upset about this now - apart from the sums involved - is because they have witnessed some duplicitous behaviour recently - just think of the LibDems and their tuition fees pledge - so we are more cynical about statements from the government.
I am happy with my 2011 son's deal (given he can't have free tuition like I did! - in any case the teaching he's getting at the moment is a bargain at £3K a year) but am not happy with the new deal - a different beast - which my next child will get. That is why I am considering helping him opt out to some extent.

Unfortunately there is very little we can do to change things (keep writing to the MPs!) so we have to examine the facts and make the best decisions we can.

Lokolo

tyllwyd wrote: »

I must admit, I hadn't ever complained about the old system but then I hadn't ever looked into it in detail before and hadn't realised exactly what people were signing up to - as far as I'm concerned, it was a flawed system before and its a flawed system now. But the overall figures are so much higher after 2012 than before, any risk involved is multiplied, and that is why people are more concerned about potential changes. And maybe it's a political thing as well - lots of things have changed since the General Election, people are very unsettled and wary of trusting what politians are promising us.

I see what you are saying that the risk is higher, but given that they can change what they want - and yet they haven't, means surely its worrying about very lttile?

An example of this is the interest rate, for me I am on the post 1998 system, so I have March's RPI/Base Rate deal, yet they've now introduced the new RPI + 3% and earnings relationship. BUT, they haven't retrospectively changed it to be the same for the older loans, they are being kept the same.

I don't think anyone trusted politicians before today but I don't see why people suddenly worry when if they were going to f*** us (I mean those who have student loans) over before they could have done by now.

I'm not say don't worry what so ever.... but I think some of the posts on here make it sound as though getting a student loan means you are signing up for a death warrant! (example - the cap locks dude above!)

melancholly

tyllwyd wrote: »

I must admit, I hadn't ever complained about the old system but then I hadn't ever looked into it in detail before and hadn't realised exactly what people were signing up to - as far as I'm concerned, it was a flawed system before and its a flawed system now.

you see i'd like to see more of a comparison of old to new. i think a lot of the issues being raised with the new system were just as present in the old system but people weren't as aware (i'm sure a massive proportion of students had no idea what they signed up to - posts on this board have always indicated that!). i think some addition of what current students pay and for how long (and under what terms!) would help understand what's different.

it seems to me that a lot of the complaints about the 'new' system are actually just about student finance as a whole, as it has been for some time. i'm not saying that they're not valid concerns, but it might help to separate out what's new and what's not. it would help people new to the system realise what's different for them compared to previous years. a lot of aspects of loans being criticised (and again, not necessarily unfairly) have been applied for years. clarity on these issues might improve the image that the 2012 entry has (which, don't get me wrong, is a worse deal than for 2011 entry, but not by the amounts being suggested with respect to T&Cs - and argueably also with repayments which will be lower - the counterargument of higher totals stands and i'm not trying to ignore that!).

melancholly

Lokolo wrote: »

I see what you are saying that the risk is higher, but given that they can change what they want - and yet they haven't, means surely its worrying about very lttile?

although did i imagine it or did the previous T&Cs require an act of parliament to change and the new system will only need the say-so of the minister? i know it was suggested at one point last year but i honestly have no idea about how that stands in the current incarnation! that would seem more sinister to me (although clearly i agree that the risk remains very small).

flimsier

melancholly wrote: »

you see i'd like to see more of a comparison of old to new. i think a lot of the issues being raised with the new system were just as present in the old system but people weren't as aware (i'm sure a massive proportion of students had no idea what they signed up to - posts on this board have always indicated that!). i think some addition of what current students pay and for how long (and under what terms!) would help understand what's different.

it seems to me that a lot of the complaints about the 'new' system are actually just about student finance as a whole, as it has been for some time. i'm not saying that they're not valid concerns, but it might help to separate out what's new and what's not. it would help people new to the system realise what's different for them compared to previous years. a lot of aspects of loans being criticised (and again, not necessarily unfairly) have been applied for years. clarity on these issues might improve the image that the 2012 entry has (which, don't get me wrong, is a worse deal than for 2011 entry, but not by the amounts being suggested with respect to T&Cs - and argueably also with repayments which will be lower - the counterargument of higher totals stands and i'm not trying to ignore that!).

I sort of agree with this. The system has been changed to be a lot worse for students than when I was at uni (and I remember ML as General Secretary of my SU fighting against fees) - so taking the current system as a benchmark already concedes a lot of ground to the government.

The issue is that this is another example of it getting "worse" for students (and I really do believe it's "worse" - and if it works out not to be will be changed to ensure it is and students pay more). Every few years for the last 20 or so, because we "can't afford it" the deal gets worse, and it means that the poorest end up with no way through.

wozearly

Lokolo wrote: »

Caps Lock is not your friend.

I find it odd that for the past 10+ years, where the conditions have been the same (that the terms could change), that no-one is outraged, but suddenly now they are......

In fairness, the previous loans were a lot smaller, so had the T&Cs been changed to make repayment percentages higher and/or make people continue to be liable for longer then the impact would have been relatively contained. The interest rate link was also committed to clearly, and this wasn't subject to easy changes - so the amount of debt committed to was predictable and only primarily changing due to inflation in the wider economy.

Under the new system, knowing you might have to actually pay back the full loan might make a difference to people's decisions about where to study, what to study and whether to study. So changes are of greater concern.

However, its unlikely that the tranche of students on this loan approach (its bound to change at some point in the future, either for better or for worse) would be singled out unfairly. No previous group has been.

Ultimately, the government can rewrite the rules on eligibility for anything - student finance, state pensions, state benefits, the NHS, anything they like. If they want to take 90% of everyone's income in tax then they can (albeit a government doing that wouldn't be likely to survive the end of their term in office).

Its possible as individuals to opt out of reliance on pretty much all of the above, but there's a cost attached - usually a significant one. And if the level of uncertainty about future changes is really putting people off the new system, then that's a very clear point to lobby for changes.

Even with my cynic's hat on, I doubt the government is intending to use this as an opportunity to screw students on the new system in a few years - or intentionally paving the way for that to happen further down the line. If its a genuine concern, I expect they'd be open to limiting their powers to make changes for clarity - financial services companies often do that to be compliant when it comes to potentially unfair terms and conditions in contracts. It doesn't seem like a massive ask to me...

wozearly

kayr wrote: »

I am happy with my 2011 son's deal (given he can't have free tuition like I did! - in any case the teaching he's getting at the moment is a bargain at £3K a year) but am not happy with the new deal - a different beast - which my next child will get. That is why I am considering helping him opt out to some extent.

Unfortunately there is very little we can do to change things (keep writing to the MPs!) so we have to examine the facts and make the best decisions we can.

That could potentially be very expensive on your part without necessarily resulting in any actual gain for your second son.

Assuming the course fees are £9,000 per year, that's £21,000 you'd need to put forward to negate them, then there's the living costs (and any other expenses associated with the degree).

Also bear in mind that the loan may never need to be repaid in full, as its totally dependent on your son's future salary over 30 years. But if you put the money forward up front then its definitely lost for good.

At risk of turning into a stuck record, the total amount repaid is almost a side-issue. If you're happy with the principle of a 30-year tax of somewhere between 0%-7% of your salary being used to pay for your degree, then its a good investment. Because if you don't gain more money from it, you don't pay much tax. If you do earn a lot of money then yes, you pay more tax, but you also earn a lot of money.

It might be worth considering an alternative, such as taking the full student loan, but act if and when your son hits a salary point where its clear that he's going to come close to paying off the whole loan (or near enough) rather than only some of it. Bear in mind that this could require a high salary - for a £9,000 fee course and around £5,500 in maintenance loan (both per year) then you'd need a 30-year salary averaging around £41,000 (in today's terms). If that happens, then support him in paying it off early at that point to avoid further interest buildup.

And if that never happens, because you hedged your bets then you still have that chunk of money that you've set aside, that's gained interest (hopefully), and that you can decide what you want to do to best support your son(s) because it hasn't been passed wholesale to the government to fund the tuition fees up-front. And with the way mortgage applications are at the moment, being able to use it for something like a deposit on a future house could be of far more practical value.

If the worry is the catch that the t&cs of the loan might change and mess about with that alternative, the key question is whether a future government would change them without giving people any window at all to react before those changes came into effect - unlikely, because I'd find it hard to believe that a future government would completely take leave of their senses and act instantaneously with no warning and/or debate about the issue.

...it might be worth thinking about, in any case.