Student Loan interest rates - The Future

MercilessKiller

Just listened to a VERY disturbing interview on BBC Radio 4. (when i say just, it was this morning and can be listened on listen again).

It was a debate between someone in government and someone else. Not sure who. But apparently the idea for the future is to give less to rich students, and mroe to poor students.

not only that, they're going to give studnet loan accounts STANDARD bank interest rates instead of the low ones we get now!

!!!!!!?!?!?! Are they idiots or something?

Broke_Student

MercilessKiller wrote: »

It was a debate between someone in government and someone else. Not sure who. But apparently the idea for the future is to give less to rich students, and mroe to poor students.

And what's wrong with this? I think it's an excellent idea.
If the student is rich then by definition they shouldn't need non-repayable grants.
If the student is poor then by definition they would need non-repyable grants.
I'm not sure what your/their views are on the students who lie in the middle of these two extremes.
I assume you are talking about grants+bursaries and not student loans as no one is 'given' loans - everyone is 'leant' them (though some get leant more than others).

MercilessKiller

who mentioned grants? Thought that my title implied my post was relating to student loans, not grants.

Broke_Student

MercilessKiller wrote: »

who mentioned grants? Thought that my title implied my post was relating to student loans, not grants.

LOL I got abit caught up thinking about my response. My point still remains. 'Rich' students shouldn't need loans. 'Poor' students would need loans. If the amount of loan money to be distributed is limited, it is only right that more gets put in the direction of poor students. All of the loan should eventually get repaid anyway.

Bamber19

Considering next years interest rate for Student Loans is going to double from the 2.4% it is just now(i think) to 4.8% then the idea of "the low ones we get now!" will be lost anyway.

MercilessKiller

Broke Student

Put 2 and 2 together though. The big argument is more money for poorer students, with higher interest rates makes what for after uni? Thats right you guessed it, even larger amounts of debt to their name!

Gemmzie

This problem was always going to happen and the main reason is the people who deliberately dodge ever paying back the loans, by leaving the country or only working jobs under £15k.
Ergo, the government aren't getting any return on their investment so they have to put interest rates up on the ones who do pay.

Broke_Student

MercilessKiller wrote: »

Broke Student

Put 2 and 2 together though. The big argument is more money for poorer students, with higher interest rates makes what for after uni? Thats right you guessed it, even larger amounts of debt to their name!

Good point. I was thinking about each arguement as a seperate point and didn't think about the overall effect. I was probably argueing a point different to the one you intended to make.
I think the current system, though not perfect, is as fair as we can reasonably expect.
I would now agree with you in that they are idiots if they are suggesting lending more to poor students AND charging commerical interest.

Broke_Student

Gemmzie wrote: »

This problem was always going to happen and the main reason is the people who deliberately dodge ever paying back the loans, by leaving the country or only working jobs under £15k.
Ergo, the government aren't getting any return on their investment so they have to put interest rates up on the ones who do pay.

I would just like to point out that the government only tells you what it wants you to hear and clouds alot of what is really happening.
It is really hard to calculate cash flows in the economy but the government already gets some of it's loan money or 'investment' as soon as you are given it. Have you thought about these effects of a cash injection in the economy (i.e. your loan)?
- If you spend the loan the government already takes 17.5% back as VAT.
- The money you spend will be profits to a business. These profits will be taxed.
- Some of it will go towards paying wages for staff in the shop where you spend your money. That person will be having their income taxed.
- If either you, or the business where you spend money, invest the money then there is potentially capital gains tax to be paid.
- If you just 'save' the loan then the bank will be making money whilst you earn interest. The bank will be being taxed on profits. You will also pay tax on your savings interest when you get a job.
-etc...

On top of all this, most graduates will start to pay back the loan amount and many will repay the full amount early. Alot of graduates will have higher paying jobs due to their degrees and will be potentially earning more and paying more income tax!

Tax tax tax tax tax!
The government does get a return on it's 'investment' no matter what they tell you

MercilessKiller

Broke_Student wrote: »

Good point. I was thinking about each arguement as a seperate point and didn't think about the overall effect. I was probably argueing a point different to the one you intended to make.
I think the current system, though not perfect, is as fair as we can reasonably expect.
I would now agree with you in that they are idiots if they are suggesting lending more to poor students AND charging commerical interest.

I'm sometimes bad at getting the point across but glad you've got there

The debate was regarding this point exactly. Hwo higher loans + higher interest rates for poorer students is going to worsen their situation for the future! Unless of course they land on their feet after uni!