student loan shake up 24 Feb 2022

silvercar

Here is a link to the MSE news article on the student loan shake up announced today:

https://www.moneysavingexpert.com/news/2022/02/student-finance-loans-changes-education/

TLDR: loan repayments continue for an extra 10 years, thresholds frozen, estimated that 52% of students will fully repay loans. 

TheAble

Painful stuff. I remember my own £10k's worth of student loan took me an age to pay off. Today's kids should think long and hard about taking on 50k, in my view.

silvercar

TheAble said:

Painful stuff. I remember my own £10k's worth of student loan took me an age to pay off. Today's kids should think long and hard about taking on 50k, in my view.

The point is that it should be considered a tax rather than a loan. No penalties for not repaying it all. If it leads to better career opportunities there is no reason not to take it. 

TheAble

silvercar said:

TheAble said:

Painful stuff. I remember my own £10k's worth of student loan took me an age to pay off. Today's kids should think long and hard about taking on 50k, in my view.

The point is that it should be considered a tax rather than a loan. No penalties for not repaying it all. If it leads to better career opportunities there is no reason not to take it. 

If it's going to lead to a lucrative career then yes sure. Medicine being an obvious example where you have to have the qualification. 

On the other hand though, if you're going to come out of uni with a relatively low paying profession where you might be chipping away at this loan for the rest of your working life then I would question whether it's worth it. You don't need a £50k degree to get a £25k-£30k a year job.

silvercar

TheAble said:

silvercar said:

TheAble said:

Painful stuff. I remember my own £10k's worth of student loan took me an age to pay off. Today's kids should think long and hard about taking on 50k, in my view.

The point is that it should be considered a tax rather than a loan. No penalties for not repaying it all. If it leads to better career opportunities there is no reason not to take it. 

If it's going to lead to a lucrative career then yes sure. Medicine being an obvious example where you have to have the qualification. 

On the other hand though, if you're going to come out of uni with a relatively low paying profession where you might be chipping away at this loan for the rest of your working life then I would question whether it's worth it. You don't need a £50k degree to get a £25k-£30k a year job.

If you have a definite career in mind then fine, but otherwise having a degree can be useful to get on the career ladder and in the future. Also, for a lot of people going to university helps you mature. It's also an experience - you spend a long time working, I don't see anything wrong with studying and becoming independent first. The way the job market can turn, and with a lot of applicants having a degree I see it as an advantage in the work place. Of course it isn't for everyone, but I wouldn't dismiss it just because it will lead to a graduate tax in years to come.

Tucosalamanca

Bumping this thread after yesterday's announcement to lower the threshold to £25,000.

My son is likely to be starting Uni in 2023/24.
He's looking at four year courses at well regarded universities, we're hopeful that he'll be earning good money at some point.

Basic assumptions.
Tuition fees £9,250 x 4
Maintenance loan £7,000 x 4.

That's a minimum £65,000 debt, with interest (RPI) far in excess of wage growth.

As a parent, the potential costs (compound interest effect) are horrifying and giving me sleepless nights.

I'm aware of the graduate tax/might not pay off arguments but it still doesn't sit well with me.
We're not rich, far from it, but will sacrifice a lot for the best outcome.

Don't know whether to pay, make contributions to an ISA for potential payment later on, or to put £4,000 into a LISA each year.
I'm confident that it will all work out but also mindful that decisions today could vastly alter his situation later on (particularly when compound interest and/or inflation are taken into consideration).

I'm possibly overthinking it - what are other people's thoughts??

TheAble

Tucosalamanca said:

Bumping this thread after yesterday's announcement to lower the threshold to £25,000.

My son is likely to be starting Uni in 2023/24.
He's looking at four year courses at well regarded universities, we're hopeful that he'll be earning good money at some point.

Basic assumptions.
Tuition fees £9,250 x 4
Maintenance loan £7,000 x 4.

That's a minimum £65,000 debt, with interest (RPI) far in excess of wage growth.

As a parent, the potential costs (compound interest effect) are horrifying and giving me sleepless nights.

I'm aware of the graduate tax/might not pay off arguments but it still doesn't sit well with me.
We're not rich, far from it, but will sacrifice a lot for the best outcome.

Don't know whether to pay, make contributions to an ISA for potential payment later on, or to put £4,000 into a LISA each year.
I'm confident that it will all work out but also mindful that decisions today could vastly alter his situation later on (particularly when compound interest and/or inflation are taken into consideration).

I'm possibly overthinking it - what are other people's thoughts??

Does he need to do a 4 year course? 3 wouldn't suffice?

What subject is he considering out of interest?

Tucosalamanca

He wants to study Natural Sciences (Chemistry/Maths) at Cambridge.
If the application is successful and he achieves A*A*A, then it's a four year course.
Should he 'only' get three As, then a three year course is certainly more likely.