The con of the Student Loan

Lokolo

That could be a good idea, but then it doesn't really motivate people to get a job. People just do a degree then don't bother trying to do well in life etc.

Um and everyone says blah blah blah student loan is unfair. If people are that bothered about taking it out, you can take a gap year and earn some money. You can then work part time. You can do a sandwich course (which if you do well, means not only do you get paid, you will also have your final year fees paid for you). Its not like you are forced to take it.

The_One_Who

Exactly, no one is forcing you to take the loan. I understand in maths and subjects in which maths plays a large part universities would rather you didn't take a gap year so taking time out to earn money isn't a great idea, but for other courses it is perfectly feasible to take time off and earn money for university. There is nothing to say that you have to go to uni either straight out of school or after a gap year, you can take several years out to earn the money you need.

melancholly

just caught the end of 'Working Lunch' today and they had a section about the SLC and the interest rates. it's not on iPlayer yet, but i think it would be interesting to some people posting on here. sadly, the case study example they use is someone with a degree in media studies from barnsley college....... which isn't necessarily a degree that will easily line you up with a high paying job (like languages or maths etc which are more desirable for graudate recruiters). but the point is made that he didn't know about hte 4.8% interest rate, which is a very fair criticism of the system that didn't really get addressed. the interesting bit is the reply from government, who actually made the points quite well.

being geeky (and being in a work avoidance mood!), i've gone to ONS and looked at the RPI for the last few years, and it seems that students have been lucky in the past with average for a year versus taking the interest rate from march only (e.g. 2006 - average = 3.2%, march figure = 2.4%). for 2007 the average was 4.3% and march was 4.8%, so not so much of a difference as in 2006.

so for anyone else interested (quite possibly no-one , here's some of the figures (all to 1dp!). the SLC makes the changes each september for the following year based on the figure from march, so this isn't completely accurate because i haven't time lagged it or even done it by financial year (i.e. april-march), beacuse the general point i want to make is that although last year was bad, it evens out over time and you have to look at it long term. if students want to complain about the 4.8% being above the yearly average, then by the same 'fairness' idea the years when they paid lower than average would have to stop too.

Year Average RPI RPI March
2007 4.3% 4.8% students lose
2006 3.2% 2.4% students win!
2005 2.8% 3.2% students lose
2004 3.0% 2.6% students win!
2003 2.9% 3.1% students lose
2002 1.6% 1.3% students win!
2001 1.8% 2.3% students lose
2000 2.9% 2.6% students win!

(anyone else see a pattern there? )
EDIT - hope the table makes sense, there were spaces in there, honest!

Oldernotwiser

UnluckyPerson wrote: »

the only people that fully understand that student loans is a con, are the ones with student loans themselves. My brother earns £18,000, student loans company have been charging 4.8% interest per annum, today he recieves a letter from his employers that his wage has increased by only 2.5% as a result of inflation. NOw if he continues to pay student payment on this wage for the rest of his life he will never pay it off, as he will be paying half the interest per annum.

Since he got student loans before 2006, his debts wont clear till hes 65, while students who took student loans after 2006 will get their debts cleared within 25 years.

he took student loans thinking that the rate of inflation will be 2.5%, now its double thats very close to a mortgage.

Its bull!

current interest 800 pounds per annum, cant get on the property ladder. University is not worth it imho,

If your brother earns £18,000 he'll be paying back £22 per month, hardly an amount to stop him buying property! The interest charged is still at the rate of inflation but unfortunately inflation has gone up. If his income doesn't rise considerably then he may never pay it off, but does it matter if what he's actually paying back is so low?

And I do understand about student loans because not only do I advise about them but I have one myself and it will NEVER be paid back. And, quite frankly, I couldn't care less!

iMacThere4iAm

Oldernotwiser wrote: »

I have one myself and it will NEVER be paid back. And, quite frankly, I couldn't care less!

Don't forget, the loan is written off if you haven't finished paying it off after 25 years.

[Deleted User]

I thought the only way to write off your loan was to die/retire

Do all you people seriously think you won't earn enough to pay it off? That's quite a miserable thought.

Helix

ringo_24601 wrote: »

I thought the only way to write off your loan was to die/retire

Students that started after 2006 get the loan written off after 25 years. I think before then it was when you reached 65.

sarah_elton

UnluckyPerson wrote: »

My brother earns £18,000, student loans company have been charging 4.8% interest per annum, today he recieves a letter from his employers that his wage has increased by only 2.5% as a result of inflation.

You don't get pay rises by doing the same job year in, year out.

I graduated in 2003. Every time I've been in a job at pay review time, I've got max. 3% raise. However, with job moves (both promotion within a company and switching company) my salary has gone £26k > £32k > £37k > £43k.

There is no way I would have been this lucky and progressed to where I am without my degree. And I finish paying my student loan off in July this year (I've never made any over-payments). To be honest I never particularly noticed the money coming off my salary - it comes out with tax and NI, just another deduction. I never looked on it as money I had and had to put towards debt repayment, even though that's what it was. Instead, it'll just be a big bonus when I start getting £200/month more from August. When I took out my mortgage they asked about debts, I told them about the student loan, and they said that didn't count.

Oldernotwiser

Helix wrote: »

Students that started after 2006 get the loan written off after 25 years. I think before then it was when you reached 65.

Mortgage style loans are written off at 50 unless you were over 40 when you took them out, then it's 60.

whitfreak

I love the fact that current students can take out more loans because of the tuition fees loans but have signficantly less time to pay them back. I fully expect to still paying bits of mine off in 30 years time, as you've got to earn around 22k a year for your loan to standstill as a figure (yes i know in real terms the loan will have been reduced). I wonder if the governement ever planned on getting its money back. That said they arn't a con, its just that most people dont think through all the realities at the begining and then complain lots when they realise that inflation is higher than they thought. Maybe economics should be part of the national curriculem(sic).