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Student Loans : That's Another Fine Mess you've Gotten us into
BACKFRMTHEEDGE
Posts: 1,294 Forumite
http://www.thesundaytimes.co.uk/sto/news/uk_news/Education/article1248867.ece?CMP=OTH-gnws-standard-2013_04_20The Treasury is quietly re-examining the £9,000-a-year tuition fee system because officials believe it is “financially unsustainable”. The trebling of fees led to demonstrations and a crisis in the coalition, but Whitehall is now understood to be concerned that almost 40% of the money lent to students by the taxpayer to pay for their courses will never be repaid.
The crisis has been caused in part by concessions made to help Nick Clegg, the deputy prime minister, secure the agreement of rebellious Liberal Democrat backbenchers. These included a reduction in the repayments that low-income graduates will be required to make.
The fall in student numbers has also been far smaller than expected, so more loans are having to be paid out than the Treasury had forecast.
The fear is that far from saving the treasury money, the cost to the public purse may go up
http://www.dailymail.co.uk/news/article-2312702/Four-students-default-loans-Treasury-fear-funding-unsustainable.html?ito=feeds-newsxmlFour in ten students may default on their loans: Treasury fear funding system is unsustainable
A journey of a thousand miles begins with a single step
Savings For Kids 1st Jan 2019 £16,112
Savings For Kids 1st Jan 2019 £16,112
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Comments
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BACKFRMTHEEDGE wrote: »
The incompetence of government never ceases to amaze me.
I have been making this point in pots since the start. Surprised it has only taken them 3 years to work it out.
It is just a ticking time bomb pushing the problem 20 years into the future.
Not only is the funding model unsustainable, the costs are too high, too many people are going, completing degrees that are unnecessary, that take too long to complete in this modern world. Propping up an academic system that archaic.
Everything else in life revolves around maximising value and total cost this scheme just balanced the books by loading up the cost of education.
What concerns me is that several years of students will already be saddled before they do anything about it. I would be surprised if only 4 in 10 don't repay in full."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
I'm no fan of the new loan system but I still can't understand where those thinking it will end up costing more are coming from.
The previous system was effectively a £9k loan on an incredibly low interest rate. If someone who takes out a £27k loan in the new system only manages to pay back £15k of the original amount (accounting for less favourable interest rate) before retiring then the cost the government is likely to be as low or lower. In return university funding has increased considerably without requiring more government funding.
Personally I'd rather they had dropped the 40% tax threshold by another ~£50-100 to fund education 'grants'. Having a well educated workforce is in the interests of everyone, and it strikes me as particularly unfair that policy makers and voters who were able to take advantage of grants etc, back when the country was far poorer, are now asking students to fund so much directly.Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...0 -
Guys i work with who took out the loans a when they were first introduced, currently only repay the interest. As time has gone on, the low rate originally offered has crept up, I think one guy is now paying around 4% interest, where it was originally a lot less, but his monthly amount repaid is around £100 a month
The other issue is, the course studied (drama) bares no resemblance to his chosen career (Financial analyst), which begs the question was it worth it? but that's a different conversation
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The previous system was effectively a £9k loan on an incredibly low interest rate. If someone who takes out a £27k loan in the new system only manages to pay back £15k of the original amount (accounting for less favourable interest rate) before retiring then the cost the government is likely to be as low or lower. In return university funding has increased considerably without requiring more government funding.
Funding has just been moved off balance sheet for now.
If less people went to university and those that did attained decent well paid jobs at the end then the money would have been recovered by higher levels of taxation. All graduates are unlikely to find well paid jobs and which suggests we are over supplying at a cost that cannot be afforded.
Personally I'd rather they had dropped the 40% tax threshold by another ~£50-100 to fund education 'grants'. Having a well educated workforce is in the interests of everyone, and it strikes me as particularly unfair that policy makers and voters who were able to take advantage of grants etc, back when the country was far poorer, are now asking students to fund so much directly.
Or just been honest about it and called it a graduate tax that applied to all graduates across the board.
The fact that a good number of graduates will go in to publicly funded jobs were current and future pay is/will be constrained makes repayment less likely."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »The incompetence of government never ceases to amaze me.
I have been making this point in pots since the start. Surprised it has only taken them 3 years to work it out.
It is just a ticking time bomb pushing the problem 20 years into the future.
Not only is the funding model unsustainable, the costs are too high, too many people are going, completing degrees that are unnecessary, that take too long to complete in this modern world. Propping up an academic system that archaic.
Everything else in life revolves around maximising value and total cost this scheme just balanced the books by loading up the cost of education.
What concerns me is that several years of students will already be saddled before they do anything about it. I would be surprised if only 4 in 10 don't repay in full.
In my opinion the incompetence started with Labour in trying to push 50% of people into university when a large number of jobs dont actually require degrees. Of course, jobs will now tell you they require a degree, but its not actually needed for a job. Its just used now to distinguish between candidates because so many people have degrees.
50% of school leavers going to university is going to be expensive - somebody has to pay but once again this stupid society for some reason thinks it has to be the government that pays.0 -
It would indeed be good to see some proper cash flow forecasts for the whole system.
Given student don't start repaying until they earn over 21k rather than the old system at 15k and the loans and grants are much bigger, then it's very hard to see how the cash flow will ever be positive.
It will all be changed again in after the next election.0 -
Whats the source for this story? It's just made up nonsense.
I know the people that model student loans for the government and they have known for years that only 60% of student loans ever get repaid, even under the old system it was low, like 70%. It's all included in the forecasts so this story about them 'reconsidering' it is rubbish.Faith, hope, charity, these three; but the greatest of these is charity.0 -
Whats the source for this story? It's just made up nonsense.
I know the people that model student loans for the government and they have known for years that only 60% of student loans ever get repaid, even under the old system it was low, like 70%. It's all included in the forecasts so this story about them 'reconsidering' it is rubbish.
I wonder if the the fees are priced high to take that "default" rate into account?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
BACKFRMTHEEDGE wrote: »
To be honest it seems like lazy sensationalist reporting of a non-story. Under both the old systems, it was accepted, due to the repayment criteria, that there would be a proportion of graduates who would not pay back the full amount because they didnt earn enough.
Even in the "apocalyptic" scenario, the Govnt recoups 60% of the bill, as opposed to loosing 100% of costs under a "free for all" system.
As the money is taken direct at source from wages, those earning enough cannot "default" - more Mail laziness.
I still repay my loan; would I rather have that £170-odd a month going into my bank? Yes. However, I benefitted from the time at University, so I feel absolutely that I should pay for it in some way.
The new system that the Coalition introduced was almost scandalously more favourable to the next generation of students than my own (Labour imposed) terms which is why i had zero sympathy with the thuggish rioting that took place. I agree with other posters - the problem was the 50% target for degrees.
I dont see any evidence that it is "another fine mess". What is the Left's answer then? Make universal education free up until the end of a first degree? Where is the cash coming from for that little nugget of economic cyanide?!
Regards,
D_S0 -
Devon_Sailor wrote: »To be honest it seems like lazy sensationalist reporting of a non-story. Under both the old systems, it was accepted, due to the repayment criteria, that there would be a proportion of graduates who would not pay back the full amount because they didnt earn enough.
Even in the "apocalyptic" scenario, the Govnt recoups 60% of the bill, as opposed to loosing 100% of costs under a "free for all" system.
As the money is taken direct at source from wages, those earning enough cannot "default" - more Mail laziness.
I still repay my loan; would I rather have that £170-odd a month going into my bank? Yes. However, I benefitted from the time at University, so I feel absolutely that I should pay for it in some way.
The new system that the Coalition introduced was almost scandalously more favourable to the next generation of students than my own (Labour imposed) terms which is why i had zero sympathy with the thuggish rioting that took place. I agree with other posters - the problem was the 50% target for degrees.
I dont see any evidence that it is "another fine mess". What is the Left's answer then? Make universal education free up until the end of a first degree? Where is the cash coming from for that little nugget of economic cyanide?!
Regards,
D_S
depends upon what you are comparing with what
the total number of people going to Uni is the main financial issue
the change from repayments starting at 15k to 21k obviously increases trhe goverenment need to borrow
the changes to the parents salary cutoffs for loans and grants has further increased costs0
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