'Student loans aren't a debt – change the name to avert a...' blog discussion

ACynic

...it amazes me how many people are sucked into the Labour spin.

It was Labour who brought in tuition fees (I remember because I went to university when they were introduced in 1998). Even when the economic climate was much more benign (and by definition the country was in a better position to absorb the set-up costs of a graduate tax), they weren't interested in any alternative.

And it is Labour (and the NUS) who are now spreading scare stories that poor students can't afford to go to University. If you are looking to somebody to blame for the impending "tragedy," try looking in the right direction...

1jacks64

Martin Lewis has written the same article in the Telegraph. It is quite interesting reading the 272 comments that have so far been made by other Telegraph readers at the end of the article. It is also interesting how Martin calls it "no-win no-fee higher education." That seems like a myth to me. Here is the Telegraph article link - http://www.telegraph.co.uk/finance/personalfinance/borrowing/loans/9558187/Martin-Lewis-Its-time-to-stop-calling-student-loans-debts.html

alinwales

Do kids these days (and for that matter for previous days) know why they are going to university and have a clear idea of how their degree will hopefully help them? I direct this more to people who do a degree in 'David Beckham' or 'the Spice Girls'.

When I was at university, there were people who had 4 hours of lectures a week, and spent the rest of their time smoking 'stuff'. When the message finally gets through about when they have to pay for the 'education' that they had, then university will be full of people like this, and priviliged kids who will go straight into very high flying jobs. Why? because if you know you're never going to pay the loan back then it's like free money, or you know you'll earn so much that it's easy to pay it back. For people with aspirations of middle income, then the decision becomes very difficult.

I went to university because a. I was quite bright, and b. it was almost expected of me because I was quite bright. And I don't regret it (only 4K left of my loan to pay off!). But, these days the brightest kids won't automatically think of university when making their career plans. And nor should they.

FATBALLZ

Tax or debt, it's a lifelong financial burden. So I propose we call it "University Attendance Lifelong Financial Burden". Trying to spin it to encourage people to take them out is probably unhelpful - did Martin ever have a student loan? I wonder if he understands the feeling of having a weight around your neck that you can't shake off that comes with it. I understand exactly how everything works and all the rest of it but Student Loans have these unique physchological burdens on those who take them out and that should not be ignored.

PharmaBoy

It is a debt that totally changes the risk profile when being considered for a house mortgage. While all attention is focused on tuition fees, the rise in interest rate from 1.5% to RPI + 3% is far more sinister. Students on 3-year courses will leave university with average debt of £60k. Since contributions from salary will not cover the interest charges for most of their working life, this debt rises to about £200k by the time it is wiped after 30 years. Trying getting a mortgage with that around your neck.

Errata

FATBALLZ wrote: »

Trying to spin it to encourage people to take them out is probably unhelpful - did Martin ever have a student loan? I wonder if he understands the feeling of having a weight around your neck that you can't shake off that comes with it. I understand exactly how everything works and all the rest of it but Student Loans have these unique physchological burdens on those who take them out and that should not be ignored.

University governors will spin it as they need to keep the student numbers up. Martin Lewis is a governor of a very high profile university.

danothy

PharmaBoy wrote: »

It is a debt that totally changes the risk profile when being considered for a house mortgage. While all attention is focused on tuition fees, the rise in interest rate from 1.5% to RPI + 3% is far more sinister. Students on 3-year courses will leave university with average debt of £60k. Since contributions from salary will not cover the interest charges for most of their working life, this debt rises to about £200k by the time it is wiped after 30 years. Trying getting a mortgage with that around your neck.

The amount you owe doesn't affect your credit worthyness. Since the repayments are fixed by earnings and not amount owed then the outstanding capital won't affect the risk profile.

It's only the fact that you have to pay 9% of everything over ~£15k earned that affects the affordability of other credit. This reduction in affordability would be the same for two people on the same wage even if they had vastly different loan amounts.

purepink

If something needs to be repaid, then it is a debt. If I lend my children money, I expect it to be repaid as and when they can afford it. I class this as a loan and the children have a debt to repay! If my daughter has borrowed money from me, she stresses about it until she repays it. She doesn't feel comfortable owing anyone anything! I have two children in Uni and one who is currently in yr 11, whom I am trying to persuade not to go to uni. because her debt on leaving will be massive! Can people not see the irony in some of the comments which have been posted on a site which encourages people to free themselves from debt? As for repayments - in years to come, inevitably, some of the students paying these high tuition fees will be divorced, with some undoubtedly paying 20% of their income to the CSA. I wonder whether this percentage will be calculated on the income after the SLC deduction has been made? I know several men who currently struggle to make ends meet after paying the CSA, rent, utility bills, etc - men who work full time on a reasonable salary, but still struggle! SLC repayment will just make it harder for people like them. With regard to married couples, will joint income be taken into consideration when calculating the repayments? I believe that tuition fees are too high and that common sense should prevail. Fees should vary, according to the subject being taught and the amount of tuition given. One of my children rarely sees the tutor and has very few lectures each week. In fact, very little actual 'tuition' is given! I strongly believe the whole system should be overhauled. For £9000 I would expect to receive excellent tuition and to have lectures daily! I'm sure degrees could be attained in 12-18months!

FATBALLZ

purepink wrote: »

If something needs to be repaid, then it is a debt. If I lend my children money, I expect it to be repaid as and when they can afford it. I class this as a loan and the children have a debt to repay! If my daughter has borrowed money from me, she stresses about it until she repays it. She doesn't feel comfortable owing anyone anything! I have two children in Uni and one who is currently in yr 11, whom I am trying to persuade not to go to uni. because her debt on leaving will be massive! Can people not see the irony in some of the comments which have been posted on a site which encourages people to free themselves from debt? As for repayments - in years to come, inevitably, some of the students paying these high tuition fees will be divorced, with some undoubtedly paying 20% of their income to the CSA. I wonder whether this percentage will be calculated on the income after the SLC deduction has been made? I know several men who currently struggle to make ends meet after paying the CSA, rent, utility bills, etc - men who work full time on a reasonable salary, but still struggle! SLC repayment will just make it harder for people like them. With regard to married couples, will joint income be taken into consideration when calculating the repayments? I believe that tuition fees are too high and that common sense should prevail. Fees should vary, according to the subject being taught and the amount of tuition given. One of my children rarely sees the tutor and has very few lectures each week. In fact, very little actual 'tuition' is given! I strongly believe the whole system should be overhauled. For £9000 I would expect to receive excellent tuition and to have lectures daily! I'm sure degrees could be attained in 12-18months!

Very good post.

Only thing I'd suggest is that rather than try to convince your kids not to go to Uni, if they are genuinely smart enough it may be worth them looking at other Unis abroad, eg France, Germany, where tuitions fees are in the hundreds, not tens of thousands. That's currently what I'm thinking about for my child should the situation not change, although I haven't fully researched the viability of it seeing as it's a good 15 years til she's old enough to go

Dunroamin

purepink wrote: »

As for repayments - in years to come, inevitably, some of the students paying these high tuition fees will be divorced, with some undoubtedly paying 20% of their income to the CSA. I wonder whether this percentage will be calculated on the income after the SLC deduction has been made? I know several men who currently struggle to make ends meet after paying the CSA, rent, utility bills, etc - men who work full time on a reasonable salary, but still struggle! SLC repayment will just make it harder for people like them. With regard to married couples, will joint income be taken into consideration when calculating the repayments? I believe that tuition fees are too high and that common sense should prevail. Fees should vary, according to the subject being taught and the amount of tuition given. One of my children rarely sees the tutor and has very few lectures each week. In fact, very little actual 'tuition' is given! I strongly believe the whole system should be overhauled. For £9000 I would expect to receive excellent tuition and to have lectures daily! I'm sure degrees could be attained in 12-18months!

I'm afraid that, even with children in the system, you know woefully little about the purpose of higher education or the loan system that now funds it.

Perhaps it might be better if people put more effort into keeping their marriages intact rather than avoiding degree level study if CSA and student loan repayments are going to clash!