Martin is spreading misinformation - interest rates kill
hiohaa
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Martin's misinformation
I am fed up of hearing Martin go on TV, as the so called 'voice of reason', bleating about how Student loans are perfectly fine, that they don't have to be paid back unless you're earning above a threshold, and even then it's a % of the threshold.
He coats it in fluff and make it sound as if student loans are perfectly acceptable things in society.
What he NEVER MENTIONS is the Killer interest rates that get applied from the moment you take them out.
I took out a £10k postgraduate loan. The interest rate clock started running on it from the moment the 1st payment was made - 4.6% at the time (16/17), going up to 6.1% for 17/18, and now it's at 6.3%.
By the time I had finished the course - i'd already clocked up £330 in interest. When I got the job i started to pay in £55/month, simply to cover the compounding interest.
Interest rate being used is a joke
3 month LIBOR rates are currently around 1%, it is possible to get unsecured loans for 3%, or car finance for 0% - and yet students are being charged RPI + 3%. 0% balance transfers are everywhere.
And yet the government cannot seem to procure cheap debt financing. (it could - but don't get me started on the whole Taxes fund government spending Myth - another thing that Martin misinforms, so much so that it's even in his textbook that is now being used in schools
Corporations can borrow for significantly less, and yet students having to consume education - because that is what it has now become, a consumer good, not something that is required for a civil society - are being charged significantly more - educated students which no doubt corporations need to produce goods and services.
but I digress - It is bonkers that this has just been accepted - and you never hear Martin mention the interest rates - Yes, you don't have to pay until you're earning, but never mentions the interest thats compounding whilst you are not able to pay the damn thing.
To top it all off
SLC closed what was clearly a loophole where you could make one-off payments using a credit card - this has now been stopped.
For whatever reason, I was randomly able to use a 0% balance transfer card which had a 0% promotional spending period on it, to pay £3k of my PGL debt off, giving me the time to pay £3k this year without the interest charge. I don't think it's possible to do that again, i just tried.
So you can't even try and re-finance the debt.
Nice one Martin :money:
I am fed up of hearing Martin go on TV, as the so called 'voice of reason', bleating about how Student loans are perfectly fine, that they don't have to be paid back unless you're earning above a threshold, and even then it's a % of the threshold.
He coats it in fluff and make it sound as if student loans are perfectly acceptable things in society.
What he NEVER MENTIONS is the Killer interest rates that get applied from the moment you take them out.
I took out a £10k postgraduate loan. The interest rate clock started running on it from the moment the 1st payment was made - 4.6% at the time (16/17), going up to 6.1% for 17/18, and now it's at 6.3%.
By the time I had finished the course - i'd already clocked up £330 in interest. When I got the job i started to pay in £55/month, simply to cover the compounding interest.
Interest rate being used is a joke
3 month LIBOR rates are currently around 1%, it is possible to get unsecured loans for 3%, or car finance for 0% - and yet students are being charged RPI + 3%. 0% balance transfers are everywhere.
And yet the government cannot seem to procure cheap debt financing. (it could - but don't get me started on the whole Taxes fund government spending Myth - another thing that Martin misinforms, so much so that it's even in his textbook that is now being used in schools
Corporations can borrow for significantly less, and yet students having to consume education - because that is what it has now become, a consumer good, not something that is required for a civil society - are being charged significantly more - educated students which no doubt corporations need to produce goods and services.
but I digress - It is bonkers that this has just been accepted - and you never hear Martin mention the interest rates - Yes, you don't have to pay until you're earning, but never mentions the interest thats compounding whilst you are not able to pay the damn thing.
To top it all off
SLC closed what was clearly a loophole where you could make one-off payments using a credit card - this has now been stopped.
For whatever reason, I was randomly able to use a 0% balance transfer card which had a 0% promotional spending period on it, to pay £3k of my PGL debt off, giving me the time to pay £3k this year without the interest charge. I don't think it's possible to do that again, i just tried.
So you can't even try and re-finance the debt.
Nice one Martin :money:
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The only circumstance in which you'd want to refinance the debt is if you're going to pay the full loan off before it's written off. With PGL that's more likely so I agree. But even then there is a 30 year write off on PGLs. Student loans are heavily subsidised through write offs. Other loans have to be paid off in full and therefore the interest rates on the two can't be compared.
As Ed-1 points out, a lot of these loans are written off. And a LOT of the people getting student loans would not qualify for any other form of loan.
The essential education is still free, yes you have to pay for university, but surely you get enough out of that to justify paying for it? Unless of course you took/are taking a Mickey Mouse degree.
What I would suggest is that you simply be grateful for the amount of free education you have had, especially when you look at other countries where plenty of people cannot afford to send their kids to school let alone university.
There aren't many/any other loans I can think of where the repayment terms are as flexible meaning many will never pay it off, so the interest element almost becomes irrelevant.
If you don't like the terms or having the debt hanging over you, then by all means borrow elsewhere and pay it off
What myth?
Of course taxes fund government spending. There is no magic money tree.
i think you'll find money has to be created and spent back into an economy before taxes can be paid back. Therefore you have it completely backwards.
Not only is it basic accounting - it is an identity -by definition, total spending has to equal total income, its how the national accounts are calculated.
i suggest you read the excellent paper produced by the bank of england explaining how money creation works in a fiat system:
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf?la=en&hash=9A8788FD44A62D8BB927123544205CE476E01654
and josh ryan collins excellent book on where money comes from.
then maybe you will have an idea of what youre talking about.
That said: Isn't Martin usually talking about undergraduate loans, not PG loans, which function differently from one another?
You’re presumably an adult, with a reasonable education, so you knew what you are signing, and thought the deal acceptable.
What changed?