MSE News: Confusion reigns as student fees fear takes hold

setmefree2

Lokolo wrote: »

Your example unfortunately is full of floors.

...I think you meant flaws....which actually is pretty funny...

Lokolo

setmefree2 wrote: »

...I think you meant flaws....which actually is pretty funny...

LOL Yes! I was on the train at the time Long day!

(p.s. would you have believed me if I said I did it on purpose in an ironic way?)

setmefree2

Lokolo wrote: »

The 2016 date isn't that too far away, so £21k won't be woth considerably less at all. Less? Yes. Considerably less? No.

It's Apr 2017 and yes with inflation high the threshold of £21k is worth considerably less...

Lokolo

setmefree2 wrote: »

It's Apr 2017 and yes with inflation high the threshold of £21k is worth considerably less...

Yeh don't forget those on 2 year courses though. Inflation won't be that high for the next 4/5 years anyway, if it is, I think student loans will be the least of our problems!

setmefree2

Lokolo wrote: »

Yeh don't forget those on 2 year courses though. Inflation won't be that high for the next 4/5 years anyway, if it is, I think student loans will be the least of our problems!

You've been saying that for a year and it still hasn't come down - don't forget the quickest way for a government to get out of a debt crisis is to inflate its way out....:)

Lokolo

setmefree2 wrote: »

You've been saying that for a year and it still hasn't come down - don't forget the quickest way for a government to get out of a debt crisis is to inflate its way out....:)

I've only been saying it for the past 9 months! It won't go away until early/mid next year (although to be fair I did think it would have lowered a little by now!)

gadgetmind

Lokolo wrote: »

Edit 2 (hope you notice this!) - I can't make my figures match yours. I am using 5% wage inflation. 3% inflation. And 9% above the theshold. I can get to £87k (starting on £24k) but with that method I haven't increased the threshold year on year. Did you do this in your calculations?

The £21k threshold? I have it at £21k in 2015 and have increased it by CPI (3%) every year. I have also allowed for the interest rate changing from RPI to RPI+3% between the two levels.

I have, however, just found an error. I started with a workbook that assume a five year course (most likely scenario for my daughter) and pushed it around to handle three years. I missed putting in repayments in 2015 and 2016. Even though these will be small repayments, in does change all the figures.

I also had a few years where I was subtracting a hard-wired £21k rather than the CPI adjusted lower band when calculating the repayment. More coffee needed!

Here are my new numbers.

Salary assumption 1: Starting salary of £24kpa with a 5% pa escalator.
Result 1: final debt in 2045 = £95k, total repaid = £58k

Salary assumption 2: Starting salary of £30kpa, everything else the same.
Result 2: final debt = £60k, total repaid = £96k

Salary assumption 3: Starting salary of £30kpa, salary escalator tweaked to 8% pa.
Result 3: debt repaid by 2038, total repaid = £115k.

Of course, this does assume those bands will move with CPI.

Lokolo

gadgetmind wrote: »

The £21k threshold? I have it at £21k in 2015 and have increased it by CPI (3%) every year. I have also allowed for the interest rate changing from RPI to RPI+3% between the two levels.

I have, however, just found an error. I started with a workbook that assume a five year course (most likely scenario for my daughter) and pushed it around to handle three years. I missed putting in repayments in 2015 and 2016. Even though these will be small repayments, in does change all the figures.

I also had a few years where I was subtracting a hard-wired £21k rather than the CPI adjusted lower band when calculating the repayment. More coffee needed!

Here are my new numbers.

Salary assumption 1: Starting salary of £24kpa with a 5% pa escalator.
Result 1: final debt in 2045 = £95k, total repaid = £58k

Salary assumption 2: Starting salary of £30kpa, everything else the same.
Result 2: final debt = £60k, total repaid = £96k

Salary assumption 3: Starting salary of £30kpa, salary escalator tweaked to 8% pa.
Result 3: debt repaid by 2038, total repaid = £115k.

Of course, this does assume those bands will move with CPI.

Thanks, now these seem much more realistic. Now yes, although it gets quite high at assumption 3, I think that these people are extremely rare (if I get a 8% salary increase year on year I would be top of the world happy). I am sure your daughter (pretty sure its your daughter?) want to do well and earn loads, shes going to have to be very lucky to get on those sort of terms.

The average is around £24k as it is, so you haven't done students which are less than average (50% of them!) which should be considered.

The rich pay more to counter the poor. Now I don't agree with tax rises as it is, but that matter aside I don't see why someone who is earning a lot more (talking about assumption 3), should complain about having to pay the amount they do. The amount they repay will be approximately the amount they took out in todays terms.

gadgetmind

Lokolo wrote: »

I am sure your daughter (pretty sure its your daughter?) want to do well and earn loads, shes going to have to be very lucky to get on those sort of terms.

Indeed, but she's pretty bright and a *very* hard worker.

The average is around £24k as it is, so you haven't done students which are less than average (50% of them!) which should be considered.

I was specifically looking at the levels of earnings and increments that would result in the debt being cleared early. Without additional voluntary contributions, it's not going to be very common IMO.

I don't see why someone who is earning a lot more (talking about assumption 3), should complain about having to pay the amount they do.

I think they have every right to complain if they aren't allowed to pay more to clear it early.

The amount they repay will be approximately the amount they took out in todays terms.

I get it being over 50% more for case 3. BTW, thanks for raising this as I didn't have "total repaid in future money terms" in my spreadsheet.

I'm starting to think that I need to increase the complexity of my future earnings model to have larger rises during 20s to 40s but then to tail off.

Oldernotwiser

gadgetmind wrote: »

The £21k threshold? I have it at £21k in 2015 and have increased it by CPI (3%) every year. I have also allowed for the interest rate changing from RPI to RPI+3% between the two levels.

I have, however, just found an error. I started with a workbook that assume a five year course (most likely scenario for my daughter) and pushed it around to handle three years. I missed putting in repayments in 2015 and 2016. Even though these will be small repayments, in does change all the figures.

I also had a few years where I was subtracting a hard-wired £21k rather than the CPI adjusted lower band when calculating the repayment. More coffee needed!

Here are my new numbers.

Salary assumption 1: Starting salary of £24kpa with a 5% pa escalator.
Result 1: final debt in 2045 = £95k, total repaid = £58k

Salary assumption 2: Starting salary of £30kpa, everything else the same.
Result 2: final debt = £60k, total repaid = £96k

Salary assumption 3: Starting salary of £30kpa, salary escalator tweaked to 8% pa.
Result 3: debt repaid by 2038, total repaid = £115k.

Of course, this does assume those bands will move with CPI.

Why are all your salary assumptions so high?