student loan mis information

sallyhar

Hi Martin

I am a fan but I think by constantly telling kids not to see the loan as a barrier to education you are not acknowledging the infairness of the system. My daughter is in her second year at St Andrews. We are a very normal family. My husband is a police officer and I am a Domestic Energy Assessor . My daughter will leave Uni with a £60000 debt . Most of her friends will leave with no debt at all. And this is my biggest problem with the student loan . Rich children leave with no debt. Their parents pay the fees and maintenance. Which is often much less than they were paying for private education. When my daughter starts to earn a good salary she will be paying 9% more tax on anything she earns over the threshold. So she will always be worse off than her cohort if she does well and the gap widens . Coming from a poorer family should not mean that you are worse off in your working life . I think that by telling kids to ignore the debt is not addressing the real issue of inequality in our society. And although the debt does not appear on your credit score it does affect the affordability of mortgages etc . So it does have an impact on the future of poorer children. This issue needs addressing. especially as the interest is so high on the loan. Inequality in education and life chances should always be at the forefront of Government policy.

[Deleted User]

It's not quite that simple. Children from richer families can't get the same level of loan so have to pay it all upfront, or not go to university. 

If you're from a lower income family, you can get a larger loan which, in the majority of cases, won't be repaid.

[Deleted User]

Martin doesn't use this site anymore, he sold it years ago and works as a consultant now. If you want to message him use his twitter account.

Loans are an issue sure but the student loan is a bit different given you don't have to pay it back until you earn a decent wage and it is written off regardless at some point. You also only pay a small % towards the balance depending on salary, most people I suspect will never pay it back

Dobbibill

The student loan is not viewed as a loan like other borrowing and is only paid if the graduate earns over the threshold. If she does indeed go on to hopefully become a high earner then at that point it may be worth saving and paying off a lump sum to reduce the capital & interest. On the flip side, if she is unable to gain employment in her desired field and is a low earner earning below the threshold, she will not pay anything towards her loan. Regardless of whether her loan amount is £60k or £160k, she will still only pay 9% on anything over the threshold as the rules stand atm.

phillw

sallyhar said:
I think that by telling kids to ignore the debt is not addressing the real issue of inequality in our society.

The alternative is to only allow people to go to university who can afford to. I'm not sure how that helps.

If you're arguing that we should somehow abandon the concept of money, then I think that is beyond the scope of the advice that can be given here.

You don't pay it back unless you earn enough. Some people can be better off not going to university, but you miss out on the lifestyle and you can't ever know whether it was really the right choice or not.

So don't worry about it.

[Deleted User]

phillw said:

sallyhar said:
I think that by telling kids to ignore the debt is not addressing the real issue of inequality in our society.

The alternative is to only allow people to go to university who can afford to. I'm not sure how that helps.

If you're arguing that we should somehow abandon the concept of money, then I think that is beyond the scope of the advice that can be given here.

You don't pay it back unless you earn enough. Some people can be better off not going to university, but you miss out on the lifestyle and you can't ever know whether it was really the right choice or not.

So don't worry about it.

I would flip that around - the fees came in as a result of the frankly idiotic idea that we need millions of graduates every year so needed to expand university courses and admissions, and raise money from that. Reducing the number of students doing degrees and limiting it to areas that need a degree while funding more technical courses (the old polytechnic style vocational things) / apprenticeships etc would allow for lower fees, grants etc and reduce people entering the jobs market with useless degrees and lots of debt

mcpitman

With those numbers it clearly explains why going to Uni has to have a financial pay off for the investment made.

Unless the degree you are doing puts you into the upper quartile of earners in the country (c80k pa+), within 5 years of graduation, it just isn't worth it.

18 year olds can make an informed choice, and if they graduate with debt, then that is a known factor at the start of the Degree journey that has to be considered.

Tokmon

mcpitman said:

With those numbers it clearly explains why going to Uni has to have a financial pay off for the investment made.

Unless the degree you are doing puts you into the upper quartile of earners in the country (c80k pa+), within 5 years of graduation, it just isn't worth it.

18 year olds can make an informed choice, and if they graduate with debt, then that is a known factor at the start of the Degree journey that has to be considered.

Well considering that if someone doesn't have a financial pay off and stays in a low paid job the debt is written off then you don't need to get a high paying job to make the debt worth it.

kaMelo

mcpitman said:

With those numbers it clearly explains why going to Uni has to have a financial pay off for the investment made.

Unless the degree you are doing puts you into the upper quartile of earners in the country (c80k pa+), within 5 years of graduation, it just isn't worth it.

18 year olds can make an informed choice, and if they graduate with debt, then that is a known factor at the start of the Degree journey that has to be considered.

Or it is a requirement for the role you wish to pursue. For some careers a degree is a necessary rather than a choice.

Earnings of £80,000 plus also puts you in a much smaller group than the upper quartile too. 

mcpitman

kaMelo said:

mcpitman said:

With those numbers it clearly explains why going to Uni has to have a financial pay off for the investment made.

Unless the degree you are doing puts you into the upper quartile of earners in the country (c80k pa+), within 5 years of graduation, it just isn't worth it.

18 year olds can make an informed choice, and if they graduate with debt, then that is a known factor at the start of the Degree journey that has to be considered.

Or it is a requirement for the role you wish to pursue. For some careers a degree is a necessary rather than a choice.

Earnings of £80,000 plus also puts you in a much smaller group than the upper quartile too. 

Then do the maths and choose a different career. I'm not saying there is a right or wrong choice. But there definitely is a financial choice to be made. To consciously choose a financial commitment and then moan about repaying it, just doesn't sit right with me.

£80k pa is about upper quartile earnings give or take a few grand. Please feel free to evidence otherwise.

[Deleted User]

mcpitman said:

kaMelo said:

mcpitman said:

With those numbers it clearly explains why going to Uni has to have a financial pay off for the investment made.

Unless the degree you are doing puts you into the upper quartile of earners in the country (c80k pa+), within 5 years of graduation, it just isn't worth it.

18 year olds can make an informed choice, and if they graduate with debt, then that is a known factor at the start of the Degree journey that has to be considered.

Or it is a requirement for the role you wish to pursue. For some careers a degree is a necessary rather than a choice.

Earnings of £80,000 plus also puts you in a much smaller group than the upper quartile too. 

Then do the maths and choose a different career. I'm not saying there is a right or wrong choice. But there definitely is a financial choice to be made. To consciously choose a financial commitment and then moan about repaying it, just doesn't sit right with me.

£80k pa is about upper quartile earnings give or take a few grand. Please feel free to evidence otherwise.

According to the IFS calculator, if you earn £80,000 a year you are in the top 2% of earners in the UK
Their numbers say if you earn more than £737 a week equivalent after tax, you are in the top 9% of earners

This is in line with the government numbers (from 2019) which says £78,500 before tax puts you top 5%

Top quartile is £37,800

Median disposable household income in the UK in 2017/18 was about £37,000 according to the ONS

Feel free to provide evidence to support your claim though, burden of proof fallacy and all that