£100,000 of student loan debt. Young crippled by debt burden

Lokolo

Idiophreak wrote: »

I don't think that's really the case. When you look at the cost of universities relative to other government outgoings...pensions, housing benefit, NHS, judicial system...it's really a tiny cost for the government, so it's not the case that they couldn't afford it (well, that they could afford it any less than all the other things they can't afford, anyway ) - they just decided it was a way to raise revenue.

Yes it was more of an educated guess as I couldn't think of any other reason they would.

Spend £1billion in university education

or

Spend £1billion in giving out student loans
Recieve back £200-600m back from student loan repayments

(numbers aren't exacts but they're just there to get my point across)

Personally, I'd prefer they were upfront about their spending issues and just increased PAYE a couple of percent, stopped with all this stealth and left our services as just that - services.

I wouldn't mind that either. Well kind of. I would prefer a graduate tax rather of x% than a extra y% for everyone.

TBH in the grand scheme of things I think student debt is less of a concern for the future of the country. I am 24 and I only know a couple of people my age who are contributing towards their pension and saving for a house deposit. But that's for another discussion.

Idiophreak

Lokolo wrote: »

I wouldn't mind that either. Well kind of. I would prefer a graduate tax rather of x% than a extra y% for everyone.

This is my main objection with fees. Why on earth should only graduates pay for universities?

That's making the massive mis-judgement that only students benefit from universities, which is far from the truth. There are local benefits in university towns - lots of income for HMO landlords, pubs and greasy spoons (treading carefully to avoid stereotypes ). Then there are wider benefits - the reduced crime rates more education brings...And wider still...Universities put so much good out into the country that *everyone* benefits from - not just graduates.

I'd be happy with a graduate tax as a model, but I'd expect non-graduates to pay to see a doctor, pay double to see a lawyer, pay to use the Internet, or indeed just pay extra every time they benefit from any technology developed at a university...

The only benefit to the graduate that seems worth taxing is their supposed increased income as a result of going there...And if they have an increased income, they'll pay more PAYE anyway - Job Done.

CLAPTON

Idiophreak wrote: »

Actually, it will add a lot to the total. That's kinda the point.

When I was paying back my loan (9k, around the smallest you could be given at the time), although you "started paying" your loan at £15k, you only "started paying *capital*" at something like £23k...

I imagine, with a £40k debt, people are going to have to be earning well upwards of £30k to cover their interest payments each month, before they even start on the capital. Wait for the interest rate to rise a couple of percent, then think about your "interest will add a little to the total"....

The interest paid can be reduced, of course, by paying more each month....But the government keep on increasing the amount you can earn before paying - meaning the amount you pay each month keeps reducing, meaning the amount of interest you pay keeps increasing - and the SLC are notorious for making it hard work to manage your loan in any kind of sensible manner - don't think that's an accident.

The point being made to which I replied was that it was 'crazy' to expect repayment of 40,000 over 30 years.
Interest obviously increases the total repayment but was not central to the point being made.


One does need to consider, whether anyone should go to Uni who is incapable of working out how the SLC loan works.

I don't share your view that there is a government or SLC led conspiracy to stop students repaying their loans early.

sheffield_lad

MrShazzyMan wrote: »

As a student at 20 years of age, paying £8000 using a tuition fee loan from the student finance or what ever they call it now (since they keep changing these names quite often I've noticed) I've calculated if I graduate in 3 years I'm going to be in £2400 and that not including the student loan (excluding the student maintenance grant which is never paid back) with the student loan added on for three years in full (as I am living away from home) it comes to a grand, pain in the bum total of £40,492

After calculating this whilst in a class/lecture I said to a friend next to me ''Realistically, what does this country think? That its student will be able to pay off £40,000 before 30 years are up?'' Me and him both laughed and said they're flipping crazy!!!

The only reason why I came to university knowing I would be in a lot of debt with student finance was because there simply is no jobs as I have applied for a million and one jobs even my Dad said why go university just work I goes there is no work if there was I would happily work as I would just love to work and earn a honest weeks wage each week.

http://www.moneysavingexpert.com/students/student-finance-calculator

say you start on a salary of £23k you will end up paying back around £32k inc interest. £180 in first year pay back not exactly earth shattering

Idiophreak

CLAPTON wrote: »

The point being made to which I replied was that it was 'crazy' to expect repayment of 40,000 over 30 years.
Interest obviously increases the total repayment but was not central to the point being made.

One does need to consider, whether anyone should go to Uni who is incapable of working out how the SLC loan works.

I don't share your view that there is a government or SLC led conspiracy to stop students repaying their loans early.

I quite agree that it's not "crazy", but to say the interest will add "a little" is somewhat misleading where (as is the point of the report) the interest may well end up being 200% of the original loan amount. At the repayment rate you suggested they'd never clear the loan. In order to clear the loan in 30 years, they'd need to pay something like £4,200/year - over triple the "used to be" you mentioned.

Based on the £21k threshold, above, that just means they have to earn an average of £68k over those 30 years and they're sorted.

I didn't mean to infer that there's a "conspiracy" - I was just pointing out that it's not in the government's (or SLC's) best interest to break their backs making the loans easier to pay back - so they don't.

howee wrote: »

http://www.moneysavingexpert.com/students/student-finance-calculator

say you start on a salary of £23k you will end up paying back around £32k inc interest. £180 in first year pay back not exactly earth shattering

So he borrows £40k and repays £32k, inc interest? That sounds like a pretty good deal...

sheffield_lad

Idiophreak wrote: »

I quite agree that it's not "crazy", but to say the interest will add "a little" is somewhat misleading where (as is the point of the report) the interest may well end up being 200% of the original loan amount. At the repayment rate you suggested they'd never clear the loan. In order to clear the loan in 30 years, they'd need to pay something like £4,200/year - over triple the "used to be" you mentioned.

Based on the £21k threshold, above, that just means they have to earn an average of £68k over those 30 years and they're sorted.

I didn't mean to infer that there's a "conspiracy" - I was just pointing out that it's not in the government's (or SLC's) best interest to break their backs making the loans easier to pay back - so they don't.



So he borrows £40k and repays £32k, inc interest? That sounds like a pretty good deal...

click the link and check it out or listen to Martin Lewis students have a good deal once they actually look at the deal.

ess0two

Too many average people and average degrees.

Uni should be limited to specialist studies and clever people.

grizzly1911

CLAPTON wrote: »

It used to be the case that 40,492 divided by 30 (years) was about 1,350.
I'm not sure why repaying such a sum per year is considered crazy. (and yes I know interest will be added which will add a little to the total)

On a normal repayment basis wouldn't it nearly double it?

Whether you actually earn enough to ever repay it is another matter. Lots of write offs at the end methinks that haven't been fully accounted for.

Idiophreak

howee wrote: »

click the link and check it out or listen to Martin Lewis students have a good deal once they actually look at the deal.

It's not a *great* deal, overall...They don't pay much because they're not earning much. Most people have aspirations in life beyond minimising their loan repayments.

grizzly1911

Idiophreak wrote: »

The only benefit to the graduate that seems worth taxing is their supposed increased income as a result of going there...And if they have an increased income, they'll pay more PAYE anyway - Job Done.

I personally think it should just be a straight collection as a tax through PAYE, perhaps with a slight premium rate.

The government can't o that as it is desperate to get the debt of the balance sheet and into an individuals name, effectively massaging the books. Fine and dandy until they start writing off the unpaid loans.

I do find it ironic that the top rate of tax is 45% and there are complaints about it whereas graduates on the new scheme, who manage to obtain worthwhile positions will be paying that rate all too soon. ( Salary>£42k, student loan 9% on £21K - 4.5% effective additional tax, simplistic and not entirely correct I know.)