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student loan interest rate rising to 3.2%
Comments
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Is it me or are the Government trying to impose another 'stealth tax' ???
The IR on student loans is based on RPI and not the 'new' measure (which is .5% lower) ... and the RPI itself is sensitive to items (i.e. petrol) where a significant amount of the price increase is due to taxes (and in the case of VAT on petrol - tax on tax!)
I borrowed £6.5k while I was at uni (from 2000-03) on student loans and now regard them as an extra 'tax' on income - but monitoring the situation... i did think i was going to save the money and get some return... but alcohol prevailed..... (I wonder how much of my SL went on alcohol taxes.. lol)
Mark0 -
raino144 wrote:Is it me or are the Government trying to impose another 'stealth tax' ???
The IR on student loans is based on RPI and not the 'new' measure (which is .5% lower) ... and the RPI itself is sensitive to items (i.e. petrol) where a significant amount of the price increase is due to taxes (and in the case of VAT on petrol - tax on tax!)
I borrowed £6.5k while I was at uni (from 2000-03) on student loans and now regard them as an extra 'tax' on income - but monitoring the situation... i did think i was going to save the money and get some return... but alcohol prevailed..... (I wonder how much of my SL went on alcohol taxes.. lol)
Mark
You are right, it's another case of the government using the most convenient measure of inflation for itself rather than to be consistent.
From Sept '02 to Sept '03 the interest rate on Student Loans was 1.3%. The govt then decided this measure of inflation wasn't good enough (i.e. high enough) and changed it to the RPI measure - Result: interest rate on SL's from Sept '03 jumped to 3.1%...
You can always trust Labour to look after the poorMidas.0 -
I wouldn't vote for the tories if they proposed that but then again I wouldn't vote for them anyway however, "current rates" is below 3.2% in some places, but I agree it would be impossible for rates on all student loans to go below the rate of inflation so students will end up paying more just I guess if commercial rates were proposed the government could save some money.
I have no idea how student loans are structured. Anyone care to enlighten me and comment on whether any of the above is likely?0 -
oh lordy this is ridiculous I have £10K student loan and before I get any sarky comments from those out there who think students are lazy layabouts etc etc - I did not blow the lot on booze/drink/drugs or anything more outlandish than simply paying rent and bills and buying food etc, and yes I did have a job as well and worked about 25 hours a week which also helped. I didn't get any help from parents - they couldn't afford it and anyway its my education so why should they help. the reason I did a degree is because these days its nigh on impossible to get any job without one. Also why is it that when my sister did her degree about 1992 she not only got student grants to help with everything, but the graduate jobs also paid decent money now "graduate" jobs start at about £12K along with all the other jobs so basically you put yourself throught 3-4 years of extra exams, struggle financialy through all that, come out the other end with huge debt, get a job that doesn't necessarily need a degree educated person to do it, (but you have to have a degree cos everyone else has one) and then the government charge you lots of lovely interest for the privilege - excellant!
Let the backlash begin!DON'T WORRY BE HAPPY
norn iron club member no.10 -
Yup - Student loans are linked to the old RPI measure of inflation, as are all the benefits, pensions out there and most public and private sector wage settlements.
If you have student loans outstanding you will have to find £50 more per year in interest.
but.......
You salary should rise by at least the £50 to keep up with inflation so there should be no real change in the cost to you.
As to whether student loans are a good or bad thing it depends on your attitude to taxation.
Should tax payers who didn't go to university pay for those who do to fund grants and tuitition, even though taxes would have to rise significantly as more and more students go to university?
Should students pay for their own higher education, when they can afford to in return for the higher salary they will earn, as long as there is a safety net so if they don't earn a reasonable amount the loan never gets paid off?
Should all graduates pay a higher graduate tax for their entire life rather than a repayment linked to their loan?
R.Smile, it makes people wonder what you have been up to.
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exactly... it's only when i explain it in terms of the price of a mars bar that my girlfriend understands that whatever the interest rate, as long as it's tracking the inflation rate, we pay back the same as we borrowed at a 0% real rate near to nothing. Therefore, it's in our interests to pay it back as slowly as possible. Why rush to pay back £11000 of loan at the inflation rate when you might need to borrow 5000 at XX% in the future?
A friend of mine is overseas earning £50k last year and on target for around £70-80k this year (banking), and he still hasn't paid a penny back of his loan as he landed a job overseas after graduation :-)0 -
first of all most graduates I know are not on a salary that is higher than non-graduates, secondly its becoming increasingly diffcult for graduates to get jobs linked to their degree and thirdly jobs that previously didn't require degrees now magically do.
So if you don't do a degree these days you will find it difficult to get a job simply because of the amount of graduates going for all jobs (therefore making it hard for those without degrees to get these jobs)
And if you do do a degree you end up in a job thats nothing to do with your degree and that pays the same as if you didn't have one (although you couldn't get the job without a degree!!) and you end up in lots of debt and the gov't raises interest rates. and no my job hasn't given me any raise.
And also there are loads of students who don't earn above the £14K per year threshold for paying off loans so they aren't paying off their loans immediately so the interest just keeps on being added - wonderful!!DON'T WORRY BE HAPPY
norn iron club member no.10 -
if it's true that graduates have a higher earning potential then surely they're putting plenty into the pot later on in their lives, why not help them out a bit during the student years ... when i was at uni 10 years ago i got a small grant and a loan and of course i also needed a job to pay the rent - if i'd been on the dole i'd have had twice as much money to live on though. plenty of people dropped out and went onto benefits, or just went onto benefits and never tried uni - why are the students getting bashed for asking for funding for 3 yerars of their life when the others are still on benefits ten years later?52% tight0
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andrew_b6k wrote:A friend of mine is overseas earning £50k last year and on target for around £70-80k this year (banking), and he still hasn't paid a penny back of his loan as he landed a job overseas after graduation :-)
Be very, very careful doing this. The SLC are well within the terms of their loan to apply penalty interest if you work abroad and don't arrange to make regular repayments. The wiping out of debt on death/retirement/disability also becomes invalid if you've not kept them up to date with repayments when abroad. Hence your friend could end up retirering to the UK with a massive debt that would be paid from his estate.0
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