Why haven't student loans become a huge mis-selling scandal like ppi?

bigadaj

Oliver1191 said:

bigadaj said:

OP what were the other better options that you could have used but didn't?

Not taking out the student loan at all. Working part time and paying as you go.

But no one stopped you doing that. Could you have got a prt time job at 18 in suitable employment? You say you've now paid debt off but investments have outperformed debt over the last decade or so, so you're probably worse off.
You need to be careful not to conflate issues.  The graduate premium existing up to the 90s was never going to be maintained once the ne=umber of graduates doubled or tripled so I would agree that many were misled. The value of a degree is hugely variable, very worthwhile with a stem degree for a russell group uni, but probably negative for the old colleges doing humanities or arts. The worth of the degree is a separate issue to student loans and how they are funded, for most people then loans are not a bad option because they operate as a graduate tax with debt wiped, whether the country's finances will stand that is a different issue in decades to come. Expansion of universities was a political act largely, Blair recognised this as it was valuable in the short term at least. Reduction in unemployment, everyone like's the idea that they, or their kids, are of graduate standard and the fallout comes years later when people recognise that they may have lost out financially. You can't blame the teachers, as you would't blame the staff selling PPI, it's the polticians and arguably senior university staff who are to blame, if there is any.

theoretica

When I was 18 I inherited some money from my Granny, and my parents encouraged me to talk to a financial advisor.  So I did have financial advice to take out the student loans rather than using my inheritance.

dunroving

This is a classic example of the victim culture. Move on with your life instead of expending valuable energy on blaming other people for "mistakes" you may not even have made.

afis1904

It's quite funny to see someone in a Martin Lewis forum not understanding student loans given how much work Martin Lewis puts into educating people about them.

masonic

Oliver1191 said:

Also, if it is to be viewed as a tax, should there not be a responsibility on the university to ensure that the degree actually leads to well-paid employment so that you are not disadvantaged?

If you don't enter well-paid employment, then you don't repay the loan. In other words it is free money for those who don't earn enough.

If you look into it, you'll find student loans you took out were the best way of paying for your university education, even if you were rich or had a decent income from working while at university. What is questionable is whether you were mis-sold your university education. If that's the case, then I agree with others that the people to blame for that were those trying to significantly increase the proportion of people who went to university.

afis1904

masonic said:

Oliver1191 said:

Also, if it is to be viewed as a tax, should there not be a responsibility on the university to ensure that the degree actually leads to well-paid employment so that you are not disadvantaged?

If you don't enter well-paid employment, then you don't repay the loan. In other words it is free money for those who don't earn enough.

And realistically it's free money for most people as only a minority ever pay it off completely.

steampowered

Oliver1191 said:

They also neglected to mention the timescale you would need to re-pay the debt and the level of stress this would involve.

As a child, no mention was given to emotional wellbeing and anxiety that people with debt can face.

In my case, the debt was paid off ages ago. The original debt was 15k, with interest i would have paid back around 30k i would have thought.

I would have been a lot better off getting work experience, getting paid and doing the degree part time.

This is all totally wrong.

Why would you get stressed about having a student loan? Student loans get taken off your salary through the PAYE system as a percentage of what you earn above an earnings threshold. By definition you can never be in arrears or be unable to pay. Just like income tax. Do you get stressed about having to pay income tax?

No, you would not have been better off paying fees up front. If you did that you would be guaranteed to pay the fees in full - whereas with a student loan you never repay the loan if you don't earn enough. Plus you would not benefit from inflation eating away at the debt over time. Plus you would have delayed your entry into the full-time jobs market, reducing your long term earnings. Plus you would have had £15k less saved for a house deposit so (assuming you bought a house before you paid off your student loan in full) you would have have found it more difficult to buy your first property.

You won't have paid anywhere near £30k. The interest on the Plan 1 loan you took was around the 1-3% mark between 2000 and today. If you take 2% as an average and compound that interest on £15k over 20 years, paying 1/20th of the capital each year, that gets you to about £18.5k. And remember that those repayments would have been worth less than when you took the loan out, because inflation erodes the value of what you owe over time. Could it be that you are confusing the higher interest rate on the new "plan 2" student loans with the lower interest rate on the "plan 1" loan you would have taken?

colsten

Oliver1191 said:

Well, they neglected to mention that interest started to accrue as soon as the loan was received.

I somehow doubt that. It was part of your paperwork. May be you forgot to read it?

Oliver1191 said:

They also neglected to mention the timescale you would need to re-pay the debt and the level of stress this would involve.

Again, repayment terms are part of your paperwork. What stress does the repayment involve? Can you elaborate on this?

Oliver1191 said:

As a child, no mention was given to emotional wellbeing and anxiety that people with debt can face.

You weren't asked as a child to take out a loan. There is also a massive difference between a student loan and other types of loans. Perhaps you should be working through Martin Lewis student loan education material.

Oliver1191 said:

In my case, the debt was paid off ages ago.

So what is your issue? 

Oliver1191 said:

I would have been a lot better off getting work experience, getting paid and doing the degree part time.

Better off in what sense? Financially? Emotionally? How do you even know that you would have had the stamina to hold down a job and complete a degree alongside it? How would you have financed that degree?

Yorkshire_Pud

Student loans haven’t become a massive mis-selling scandal like ppi because they are not.

respectmymonah

I don't think this is a savings and investments issue, it's more of a general point about how much university has been pushed on Millennials and now Zoomers  as the norm, "we're all going to uni" when it's basically a 3-4 year holiday camp with educational activities meanwhile my brothers were both in a position to buy their first home by 20 and I'm not jealous at all.
I'm taking a complaint to the PHSO because of the way repayments are calculated for employees with incomes that vary within the same tax year.