Are degrees in the UK value for money?

Windofchange

So we're back down from 150k to 60k again? For around 800,000 18 year olds, every year, forever more - £48 billion annually just for 18 year olds. Oh, but we're going to save £10 billion of course. Back from cut student numbers from 5% of the population, to maybe 5 - 10% and now no cap and let them decide themselves?

And then we have cakeguts onboard the outrage bus and off into the distance about god knows what. And Economic and his python are going to solve all economic woes - the mind boggles.

I'm out. Can anyone else be bothered?

Cakeguts

SingleSue wrote: »

CCD is 88 UCAS points.

My conversion must have gone wrong. They accepted BTEC as well which is even worse. You really can't have unintelligent people nursing the most complex of illnesses. No wonder they can't cope.

I can see now why mental health is treated so badly. They have really stupid people doing the nursing. These are life threatening illnesses being nursed by the most unintelligent people. It is just awful.

Cakeguts

economic wrote: »

Totally agree based on my personal experience. All i was offered was CBT for my mental health issues. I was skeptical but gave it a chance. After the therapy was over i felt better but then after a few weeks i was back to my old self again. I am not sure if it was the therapist or the therapy but i have read that CBT is only really effective if the therapist applies it properly.

I also have my doubts on CBT generally. It maybe good short term, but after a year or two is the person really any better then they were before CBT? I am not convinced its a good use of money despite it being quite cheap relative to alternatives (CBT is a bulk mental health service basically).

http://www.dailymail.co.uk/health/article-2828509/CBT-scam-waste-money-Popular-talking-therapy-not-long-term-solution-says-leading-psychologist.html

The mental health treatments are just awful. Brain scans show that there is something actually wrong with the brain when someone has depression. It isn't just that they feel sad. The latest research has only just got as far as finding different types of depression. If that was cancer you would be getting talking therapy for cancer to make you feel more positive. You would also be nursed by someone who who wasn't bright enough to get any decent A levels and had been accepted onto a university course with 3 old O levels. Basically someone who can't learn very fast and you have a life threatening illness.

Cakeguts

Windofchange wrote: »

So we're back down from 150k to 60k again? For around 800,000 18 year olds, every year, forever more - £48 billion annually just for 18 year olds. Oh, but we're going to save £10 billion of course. Back from cut student numbers from 5% of the population, to maybe 5 - 10% and now no cap and let them decide themselves?

And then we have cakeguts onboard the outrage bus and off into the distance about god knows what. And Economic and his python are going to solve all economic woes - the mind boggles.

I'm out. Can anyone else be bothered?

The only difference what people do at university now that it will make to you will be higher tax on your private pension and no state pension because all tax payers both those who went to university and those that didn't will be having to pay off the written off loans of all the people who did useless degrees and went to university for the experience.

You and people younger than you are going to be paying for these 3 year holiday experiences of all of the degrees from the 75 or so universities that offer degrees that don't lead to jobs that pay enough to pay back the student loans. What with the interest this is going to be a huge financial time bomb which will start to go off in about 30 years from now.

GCSEs and modules in degrees will mean that it will be at least 3 goes before any paperwork is done correctly. Imagine buying a house where the legal secretaries don't have to get anything correctly typed the first time and you don't know which bit is wrong. Or your pension is incorrectly calculated because the students on finance courses are educated to the level of an 11 year old who wouldn't pass the 11 plus exam. Once dumbing down starts there is no way anyone can work out where it will go.

We already have people working in finance who are unable to complete a task correctly first time. At the moment there are still people working who did have to get things right first time but they are now reaching retiring age.

GreatApe

Windofchange wrote: »

So we're back down from 150k to 60k again? For around 800,000 18 year olds, every year, forever more - £48 billion annually just for 18 year olds. Oh, but we're going to save £10 billion of course. Back from cut student numbers from 5% of the population, to maybe 5 - 10% and now no cap and let them decide themselves?

£60k is the cost of the tuition and other living loans
~£100k is the lost earnings from age 16-21 if you decide to study rather than work

The excess cost of the loans are anything upto £24 billion per year but they can be sold at 100p in the £1 so there is no cost. In the same way a bank can lend out £24 billion in mortgages and sell it on for more than 100p in the £1

economic

GreatApe wrote: »

£60k is the cost of the tuition and other living loans
~£100k is the lost earnings from age 16-21 if you decide to study rather than work

The excess cost of the loans are anything upto £24 billion per year but they can be sold at 100p in the £1 so there is no cost. In the same way a bank can lend out £24 billion in mortgages and sell it on for more than 100p in the £1

For anyone to buy these loans for 100p on the £1 the interest rate would have to be quite meaningful given the expected default rate on these loans. (I take it whoever buys it are not covered for losses by the UK taxpayer?).

I think its what 3% above inflation? If 2/3rds are expected to be written off, then how will they make any money on these loans in real terms?

In fact not only will it be a real loss, but it would be a nominal loss:

Say £100 total loans bought.
£100 * 1.03^30 * 0.33 << £100

Plus this is conservative as most of the third of loans would be repaid before 30 years and hence less interest received by the owners of the loans.

Cakeguts

economic wrote: »

For anyone to buy these loans for 100p on the £1 the interest rate would have to be quite meaningful given the expected default rate on these loans. (I take it whoever buys it are not covered for losses by the UK taxpayer?).

I think its what 3% above inflation? If 2/3rds are expected to be written off, then how will they make any money on these loans in real terms?

Yes that is how I know that they are eventually going to be paid off by the taxpayer.

economic

economic wrote: »

For anyone to buy these loans for 100p on the £1 the interest rate would have to be quite meaningful given the expected default rate on these loans. (I take it whoever buys it are not covered for losses by the UK taxpayer?).

I think its what 3% above inflation? If 2/3rds are expected to be written off, then how will they make any money on these loans in real terms?

In fact not only will it be a real loss, but it would be a nominal loss:

Say £100 total loans bought.
£100 * 1.03^30 * 0.33 << £100

Plus this is conservative as most of the third of loans would be repaid before 30 years and hence less interest received by the owners of the loans.

Actually the above also assume all the defaulted loans have 0% recovery and are defaulted on day 0. (but also assumes no amortization of loans). Its quite a complex thing to model as there's a few moving parts so a back of the envelope calculation is kind of pointless.

GreatApe

economic wrote: »

For anyone to buy these loans for 100p on the £1 the interest rate would have to be quite meaningful given the expected default rate on these loans. (I take it whoever buys it are not covered for losses by the UK taxpayer?).

I think its what 3% above inflation? If 2/3rds are expected to be written off, then how will they make any money on these loans in real terms?

In fact not only will it be a real loss, but it would be a nominal loss:

Say £100 total loans bought.
£100 * 1.03^30 * 0.33 << £100

Plus this is conservative as most of the third of loans would be repaid before 30 years and hence less interest received by the owners of the loans.

The student loans are time limited and backed by nothing
These loans can be not limited by age or time and are backed by a property

Take the most extreme case, £60k on a kid to do media studies who dies 1 month after graduating that is £60k down. His twin buys a home instead of an education and dies in the same accident. Almost full recovery of the loan via sale of the property

The loans also need not be on the same terms. It can be a higher percentage of earnings from a lower base. So maybe 20% of all earnings over £5k rather than 9% of earnings over £25k for students lecture loans.

So more recovery faster.

Also do not assume that the kids will take out these loans with no equity of their own. A kid might use their £60k loan and have saved £60k and bought outright a three bed terrace for £120k. The £60k is then secured on a property worth £120k

GreatApe

economic wrote: »

Actually the above also assume all the defaulted loans have 0% recovery and are defaulted on day 0. (but also assumes no amortization of loans). Its quite a complex thing to model as there's a few moving parts so a back of the envelope calculation is kind of pointless.

There is no reason at all to suppose the housing loans would have similar default rates as the student loans.

The housing loans would be secured against a property so for a start you need a house price crash to lose anything. And since those happen less than 1 in 10 years straight away 9/10ths of your loans are backed by property

The less than 1/10 years that do see falling prices often see only very weak nominal falls. eg huge recession in 2008 and uk house prices fell just 10% nominal.

How many of the young adults would hand their house back because prices fell 10%? What they going to do go live in their car or move back in with mom? Close to zero especially considering property transaction cost and hassle is high. But lets say someone does default on their loan due to a 10% property correction that does not mean the loan goes to zero and you lose the whole £60k. It means you lose 10% of that.

So 9/10 loans do not default as there is no house price correction. If 10% of loans default resulting in a 10% haircut then the overall loss is 1/10 x 1/10 x 1/10 = 1/1000th or 0.1%

The housing loans can also be made to start repayment at lower wages and pay a higher percentage of earnings. Eg 25% of earnings above £5k therefore someone earning £25k will pay down the loan at £5k a year.

Overall default rate will be extremely low

Whats more the worst students doing the worst courses at the worst universities are more likely to be tempted than a medicine student at oxford. So you are probably converting 100% defaulted loans to 0.1% defaulted loans the difference is a saving to the taxpayer (also the additional taxes paid from more worked years and less reliance on the state)