The con of the Student Loan

stevewolst

I want to bring attention to the untold facts of the student loan. Ever heard that you don't have to pay off any money until you earn £15k? or interest rates are negligable?

Well when you've finished university here's what to expect:

The maximum loan you can now borrow is £6,475. If you stay at university for 3 years your loan after qualification will be £19,425. Your interest on this is currently 4.8%. Therefore to pay off the interest alone you need to earn £25,500. On this salary you will pay £78 / month just to pay off the interest! Even if you are extremely fortunate to earn £30k per year it will cost you £112 per month for the next 26 years to pay off.

If you do earn £15,000 per year, you may not have to pay off your loan but you will be accruing almost £1000 per year in interest.

Lokolo

And how else are students going to afford to pay £3000+ in tuitions fees, and then living costs on top of this Mr Brightspark?

stevewolst

My point is simply to bring attention to what thousands of students will have
to face on graduation. It is almost impossible to find this information on www.direct.gov.uk, the government's student loans information website.

Nenen

If I was horrified by student loans before this post, I am absolutely stunned beyond measure by the system with this additional knowledge! I still find it incredibly hard to believe that a Labour government (when most Labour MPs benefitted from a wonderful grant system themselves) could renege on their pre-election manifesto and introduce such a dire system. Talk about pulling the ladder up behind you! I really fear for my children's futures with this level of debt to service on top of everything else... e.g. the highest ratio of salary to house price ever seen and food and oil prices set to rise by ever larger amounts. My youngest son did want to go to university this year (his older brother graduated last year and sister in her final year)... however, I'm seriously thinking of trying to put him off! I can't believe I'm even contemplating doing that :eek::eek::eek:

Almo

You know, that's what I have against the government, they all got their flipping education for free!

Whilst the economics may well make this impossible now (I'm not necessarily saying uni should be free) I think it would be a gesture of solidarity for all Labour MPs to pay the cost of their educatin into the system. It irritates the h3ll out of me, given their election pledges way back when.

laurenzo99

i think you'll find they may hold money to end of the year but the interest is taken off as you expect (i.e when payment is taken from your wages). The reasons it is held on to and the deposotes once a year is for tax reasons

bestpud

I may be wrong here, but, if you pay £78 a month then that is actually coming off the original loan of £19, 425, isn't it?

It isn't like a normal loan whereby the 4.8% interest is added to the original loan every year?

So, if you pay £78 a month for a year, then your outstanding balance will have decreased from £19,425 to £18,489, or tha actual amount you have paid (if I've subtracted that correctly)?

So if you paid £112 a month for 26 years, you'd have paid over twice your original loan off? ie it would only take half that time to be free of it in reality?

You never actually owe more than than original sum if it goes up with inflation so you are not simply paying off interest at all, are you?

The_One_Who

How else are people going to pay for everything? Yes, they could take a few years out and get a job, but I have friends who did that and are now so used to earning that they can't bring themselves to go back to education.

Also, doesn't the loan get wiped after 25 years?

The student loan isn't like other loans in that it won't affect credit history etc. Other loans are top priority whereas this is something you don't really need to get in a tizz about as it comes off your salary and you won't be getting chased up for.

melancholly

stevewolst wrote: »

Another interesting fact is once you start paying off your student loan the payment is made directly from your salary. The government then keep your contribution and only deposit it to the Student Loans Company at the end of the financial year. Therefore if your paying off £100 month the government will keep your £1200 per year whilst you accrue interest and only pay this amount in April!

complete rubbish - please check facts first
http://petitions.pm.gov.uk/Student-loans/
http://www.national-student.co.uk/national_news/pointless_petition.htm

there is NO other loan you can get for that value that gives an interest rate linked to inflation and that determines the size of your minimum repayments by your salary.

i think all education should be free, but this kind of pointless, inaccurate post really helps no-one and actually compaining on wrong facts undermines the student lobby no end. access to education has improved and somehow this has to be paid for. the solution isn't perfect but does allow almost everyone to go to university without their personal wealth being a determining factor.

melancholly

stevewolst wrote: »

Secondly I think it is unlawful for the government to keep our loan re-payments for up to a year whilst we gain interest on our loan.

i think it is irresponsible to make such statements when you haven't even bothered to check whether they are true or not

stevewolst

Apologies if my second point was incorrect. I did not mean to mislead anyone.

My point of the post is simply to bring attention to the cost of re-paying a student loan!