Student debt - what you should really know

savvy

Dora_the_Explorer wrote:

Oh dear - I seem to have stirred up a small hornet's nest. I understand the plight of nursing students, sadly caused by the requirement that nurses now need a degree which for some inexplicable reason has resulted in the general public feeling that nursing standards are lower now than they once were. Medics don't count, they can afford to invest in a lot of debt to secure their future quite substantial earnings.
Having read through the thread, it seems that people are intelligent enough to read for a degree but not intelligent enough to understand money. Quite a curious state of affairs.
Perhaps we've reached a point where debt is normal and people feel they are entitled to a particular standard of living despite their income rather than because of it. As my old granny used to say 'Fur coat and no drawers'.
I shall now put my tin hat on and retire to the nearest bunker.

Hi Dora, I desperately didn't want a student loan and asked if I could just have the maintenance grant and income support for mature students with kids. It had all changed at the time I went to uni, and I was told I HAD to take the FULL student loan before I could have any maintenance grant money! I was fuming but had no choice as would have no income for me and my kids, hence £12k of debt before I even think of my credit cards

jamminjamaica

i think not enough is told to students when applying for these loans. i got 3 student loans which are still hanging around my neck 6 years later. at the time i didnt think about how hard it would be to pay off.

Goldilox

I'm being charged £30 a month interest from my student loan and there is no way i'll be earning less than £15,000 a year for the whole of my life so I'm paying as much off as i can as soon as i can so i don't get a mountainous cost just from the interest each month too! Thats like you student loan increases by £360 per year!!!!

lilsweety

I thought getting the student loan would be simple enough...borrow the money and gradually pay it off when working.

But...........what I didnt realize or give enough thought to (stupidly :sad: was the interest, (to which I consider to be a significant amount), would continue to be added every month until every single penny of the student loan is paid back...... :undecided Which means it will take ages to pay it off.
Even though you only need to start paying it back once you start earning 15k/yr......its still debt and the debt will continue to grow...which ever way you choose to look at it.

Say you decide to move to a different country...try living there for a year or so. But then a year or two later you decide to move back here. The amount to be repayed would be even higher......after a year say...approx £300 would be added to that balance...end of 2 years say approx £600 would be added to the balance...hmmm.

To be in debt so early on in life is so hard. I will have to use my life savings to make the extra payments, to try and get rid of this unwanted debt as soon as possible. I made a mistake of getting this loan, as I think I could have got by without it....perhaps only just.

My point is...is if I were to start over I would not have got this loan out in the first place.................I think its ripping us students off...and in a big way.

Does anyone else agree?

[Deleted User]

lilsweety - no one forced you to go to university. Consider how much more a month you'll earn being in a graduate job compared to a 'non-graduate' job.

Did you not bother reading about the loan before taking it out? It's hardly a rip off, you only have to pay it back if you can (i.e. you earn > £15K) and then it's only 9% of your income over that value. That's not much really. Also, no one is stopping you paying it back quicker.

Goldilox - if you never earn over £15K a year, you'll never have to pay it off. Once you hit retirement age your debt is cancelled. If you hit the heady hights of £16K you would only be paying £7 a month.

The SLC is the least of your worries, i'd get more concerned about your credit cards and student overdrafts - pay them off first before over paying your loan off.

I do wonder if people taking 'a year out' after their degrees consider it could cost them several hundred pounds in loan interest.

Savvy_Sue

ringo_24601 wrote:

Did you not bother reading about the loan before taking it out?

I can't speak for lilsweety, but DS1 didn't realise interest was charged until I told him! I really don't think that's stressed enough: it's all marketed as 'easy money, don't have to pay it back until you're earning' etc, but very rarely is the interest accruing mentioned, as far as I can see. And I don't think 'the youth of today' have the working of compound interest drilled into them as we did! :rotfl:

melancholly

Dora_the_Explorer wrote:

Perhaps we've reached a point where debt is normal and people feel they are entitled to a particular standard of living despite their income rather than because of it.

well that's such a true statement - students and everyone else too!

as far getting into debt as a student, even when you work, you don't get all the money for a year in one hit, so you only accumulate what you need after you've paid it.... so a loan is important to bridge the gap.

culinarydave

Dora_the_Explorer wrote:

Can any student tell me why they have to get into debt? If they work full time during the holidays and part time during term time surely this generates enough income to live on throughout the year? I studied as a mature student, with no grants, worked at the same time, paid my way and incurred no debts whatsoever.

That's great for you Dora, but sadly there aren't enough jobs to go around. I come from a place that's a bit of a backwater, where there's little chance of finding full-time summer work (especially as my final term seems to finish nearly a month after everyone else I know from the same town) and I go to a uni that discourages part-time work. I get no help from my parents and the pitiful amount I earn over the summer isn't even enough to pay my rent. I reckon if the SLC didn't exist, I wouldn't have the opportunity to go to a great university.

I have no real qualms about going into debt (interest-free overdrafts and SLC) because they're economical options that are available to me and I know that I'm not reckless with money. The overdraft isn't costing me anything and my student loan just a small amount (and I intend to pay it back pretty quickly), so they're a means to an end. But much like a doctor, my degree (Maths) is an investment. I've signed a contract for a firm starting in September with a very healthy salary. I guess I'm quite lucky that using debt as a medium-term solution to financing my higher education has paid off.

[Deleted User]

I was bored (really bored, i'm travelling for work and i'm stuck in a hotel room) so i thought I'd make a 'student loan repayment calculator' that worked in the cumulative interest and all that stuff.

It was fun to work out that if you have 10K of student loan debt and you earn 18K a year (assuming no pay rises though) you'll probably never pay back your debt as your loan repayments of ~ £25 a month would never pay back your £320 of interest in your first year.

Ok, I got REALLY bored and played around a bit more. If you started out with a 10K debt on a salary of 18K, and your pay increased at 4% a year you would be repaying your loan for 16 years and pay back a total of ~14K.

I thought that would cheer you lot up.

jr666

i calculated what you earn using the isa method to store your loan... doesnt look good either...

http://forums.moneysavingexpert.com/showthread.html?t=185964