MSE News: Confusion reigns as student fees fear takes hold

Lokolo

setmefree2 wrote: »

http://www.highfliers.co.uk/download/GMReport11.pdf

Thats only for graduate schemes though. Not all graduates go into graduate schemes.

Given that booklet states that there are only plans of 17k graduate scheme places..... pretty sure there are a LOT more graduates than that each year.

2sides2everystory

Lokolo wrote: »

Thats only for graduate schemes though. Not all graduates go into graduate schemes.

Given that booklet states that there are only plans of 17k graduate scheme places..... pretty sure there are a LOT more graduates than that each year.

I am sure that is a very important observation Lokolo.

I would guess that graduate recruitment outnumbers 'graduate scheme' recruitment at least 10 to 1 and it may even be a lot worse for graduates generally than that.

SkyeKnight

Lokolo wrote: »

Straight from university? I can assure you, thats not normal. A graduate would expect to earn £15-25k outside London, and £25-35k inside London to start off with.

Sorry, I didn't mean straight out of university - I meant once they had settled into their career, say after 10 years working. Someone suggested that the £21k threshold would also have increased after 10 years, but then of course, so would the £40k to £50k salary.

If you spend most of the thirty years earning in that range you should just about manage to pay back the loan. Just as a quick back of the envelope calculation all done in today's money: earning £40k average for 30 years means you would pay back just over £50k. That should just about do it - what do you reckon?

Lokolo

SkyeKnight wrote: »

Sorry, I didn't mean straight out of university - I meant once they had settled into their career, say after 10 years working. Someone suggested that the £21k threshold would also have increased after 10 years, but then of course, so would the £40k to £50k salary.

If you spend most of the thirty years earning in that range you should just about manage to pay back the loan. Just as a quick back of the envelope calculation all done in today's money: earning £40k average for 30 years means you would pay back just over £50k. That should just about do it - what do you reckon?

How much did you put for borrowing in your calculations?

melancholly

SkyeKnight wrote: »

Sorry, I didn't mean straight out of university - I meant once they had settled into their career, say after 10 years working. Someone suggested that the £21k threshold would also have increased after 10 years, but then of course, so would the £40k to £50k salary.

If you spend most of the thirty years earning in that range you should just about manage to pay back the loan. Just as a quick back of the envelope calculation all done in today's money: earning £40k average for 30 years means you would pay back just over £50k. That should just about do it - what do you reckon?

i suppose it's hard to predict the effect of the job market which is obviously rubbish right now, but hopefully should be a bit better when the cohort on higher fees graduate (that may be me clutching at straws!).

it's also hard to guess how many people take time out of working. presumably a substantial number of women take at least some time out to have kids, plus all the people who go into postgraduate education of masters and/or phds and don't earn above threshold during that period. or people who retrain to change careers later on or big earners who can afford grown up gap years in their 30s. there are a lot of scenarios for that. not getting a job immediately after graduation will make a big difference too as the effect of the interest will be more severe than close to the end of the repayment period.....

my guess is that for one reason or another, the vast majority of graduates don't end up earning that much continuously through their careers.

jrawle

lynzpower wrote: »

I do understand that bit

Another problem is, what is the limits of this level of debt? How easily will they be able to get a mortgage? What about a loan for a car? Would it restrict raising money to run a business?

After all, a few lenders took into account the 10,000 outstanding student loan I had, restricting what they would lend me 30k less (3x my exposure) and that was in the giveaway years.

Presumably that was an old-style student loan, i.e. before top-up fees came in. That was more like a "proper" loan from a bank.

With the present scheme, and the new one for next year, lenders will not take this into account apart from possibly deducting the monthly payment from your income (so if you earn £30,000 per year, they'd treat you like someone who earned £29,190). This is because there is no risk associated with it. Interest rates could go up to 100%, but you'd still only pay the same repayments. If your income goes down, you repay less.

So having one of the new-style student loans outstanding should have little effect on any of those cases you mention.

Oldernotwiser

setmefree2 wrote: »

Not really.....

Do you really think that most graduates earn this sort of salary, because I certainly don't.

jrawle

I know some people have prepared spreadsheets and done their own calculations, but I suggest everyone has a play with the site's own calculator at:
http://www.moneysavingexpert.com/students/student-finance-calculator

I tried it with details for a 4-year course, assuming high inflation, moderate salary and progression, and low rise in average earnings (i.e. fairly disadvantagous options when it comes to calculating the amout that would be repaid, as the £21,000 threshold rises with earnings, while interest is linked to RPI).

With those parameters, it says I'd be paying back just over £120,000 in total. That sounds like a huge amount, but the interesting bit is the box alongside that points out this is equivalent to around £45,000 in today's money - less than the amount borrowed - and that my salary would be £178,000 in 30 years' time!

I think that really puts the "total repayment" figure in perspective.

lynzpower

With those parameters, it says I'd be paying back just over £120,000 in total. That sounds like a huge amount, but the interesting bit is the box alongside that points out this is equivalent to around £45,000 in today's money - less than the amount borrowed - and that my salary would be £178,000 in 30 years' time!

Id have thought 178k is pretty ambitious salary!

Lokolo

jrawle wrote: »

I know some people have prepared spreadsheets and done their own calculations, but I suggest everyone has a play with the site's own calculator at:
http://www.moneysavingexpert.com/students/student-finance-calculator

I tried it with details for a 4-year course, assuming high inflation, moderate salary and progression, and low rise in average earnings (i.e. fairly disadvantagous options when it comes to calculating the amout that would be repaid, as the £21,000 threshold rises with earnings, while interest is linked to RPI).

With those parameters, it says I'd be paying back just over £120,000 in total. That sounds like a huge amount, but the interesting bit is the box alongside that points out this is equivalent to around £45,000 in today's money - less than the amount borrowed - and that my salary would be £178,000 in 30 years' time!

I think that really puts the "total repayment" figure in perspective.

Yes it does, which is why I keep saying that the actual amount is not a lot, why? Because in actual terms, its not!

By the end of it, you will actually have paid back what you took out, or most probably, less. Its just the fact inflation makes it seem a huge amount.