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  • Former MSE Dan
    Yep, its been confirmed these are paid at the start of each of the three terms for most students
    • MrsAverage
    • By MrsAverage 24th Aug 11, 1:38 PM
    • 42 Posts
    • 62 Thanks
    MrsAverage
    Calculator
    Excellant tool MSE - thank you.
    Some interesting results
    • MrsAverage
    • By MrsAverage 24th Aug 11, 1:47 PM
    • 42 Posts
    • 62 Thanks
    MrsAverage
    Amount of loan
    I was interested to see results if student from poorer background takes advantage of the lower fees and bigger maintenance loans offered by most Unis, and they repay exactly same as student on full fees and maintenance if on averge job. For poorer student to benefit they would need pay tuition fees of under 3000. Anything more and they are on par.

    Why have Government made everything so complicated and so difficult to work out?
  • rollomcfluff
    The bottom line
    It's a great tool and it throws up a number of anomalies.

    For instance have you noticed that middle earners pay far more than high earners (or low earners). I assume high earners pay less over time because they pay their loans off at a faster rate. But doesn't it seem wrong that the highest earners pay less than moderate earners?

    Are you able to get me the answer to a few other issues:

    1. When two graduates marry and then divorce, does the graduate debt stay with the originator of the debt? I can anticipate real trouble with this if say the woman had given up work to raise kids while the man continued to pay off his loan as he continued to work. The woman would then be left with her student debt burden.

    2. What is the effect of cumulative interest in the early years after university when you are likely to be earning less - perhaps continuing academic study with a Masters or PhD programme - or during time away from work - for instance for bringing up children.

    3. If, say, one graduate partner in a marriage is not working and the other is, does only one debt get paid down - or is the household income taken into account?

    4. If a pair of graduates marry and have combined student loans of say 80,000 (two loans of 40,000) what effect will this have on their ability to get a mortgage? If they were on joint incomes of 50,000pa then they might expect to be able to borrow 200,000 under normal circumstances - but they would already have a working life commitment to repay 80,000; wouldn't lenders deduct that from their potential borrowing amount?

    I can see the possibility for the student loan system to have some terrible unintended consequences: eg penalising divorced women; reducing graduates' abilities to buy their own homes; discouraging continued academic pursuit or delaying starting families.

    Hope you can help.
  • Former MSE Dan
    Hi rollomcfluff,

    Here are some partial answers to your questions - for full explanations though read our dedicated guide: http://www.moneysavingexpert.com/family/student-loans-tuition-fees-changes?purge

    1) Debt is tied to one person - so a divorcee who hadn't worked wouldn't have paid down debt (and it would have accrued interest at the rate of RPI inflation). Any unpaid balance after 30 years gets wiped.

    2) In general, years you don't pay for mean the loan accumulates interest behind the scenes, but the repayment system means your monthly repayments when you do restart repaying won't be any bigger (9% of everything above the lower earnings threshold). It will mean you take longer to pay off the whole amount though, or never manage to before it wipes.

    3) No, debt is separate from each other, it is taken from an individuals pay by PAYE system

    4) For a longer answer re: impact on mortgages, read answer 14 in this guide: http://www.moneysavingexpert.com/family/student-loans-tuition-fees-changes
    • Lokolo
    • By Lokolo 24th Aug 11, 3:44 PM
    • 20,216 Posts
    • 15,399 Thanks
    Lokolo
    1. The student loan is on an individual basis. Nothing to do with couples marrying and divorcing.

    2. Not sure about this one, I can't remember if the 30 years starts from when you take the loan or when you graduate, but its one less year of payment.

    3. As with question 1, it's individual. The only time partners come into it is when you are being assessed for grants or extra loan.

    4. I doubt it will make any bit of difference, the repayments are small. For example, currently on 33k you'll pay back 135 a month, with the 2012 it'll be even less (90 a month).

    edit - :@ Dan
    • Dustykitten
    • By Dustykitten 24th Aug 11, 8:04 PM
    • 16,409 Posts
    • 281,332 Thanks
    Dustykitten
    Thanks for the tool very interesting to play around with. Interesting that the amount you borrow doesn't make any difference to how much you pay back unless you are one of those who clear the debt in less than 30 years. I wonder what percentage of those taking out the loans this will be?

    The birds of sadness may fly overhead but don't let them nest in your hair
  • eggy1
    Inheritance ... gifts ... savings ...
    Hi all - noticed in Martin's blurb that 'You have additional sources of income -If you have additional income of 2,000+ from savings interest, pensions or shares and dividends, then this will also be treated as part of your income for repayment purposes and you'll need to repay 9% of that too via Self Assessment (based on the current rules according to the Student Loan Company website, similar likely for 2012 starters). So ... even savings are taken into account - no point in our young generation is sourcing excellent % rates for their savings then! What about these students receiving any inheritance payments or future funds? Im therefore assuming these wont escape the calculations but will come into the pay-back equation?? That will surely make the annual salary amount rise. So little ol' grandma's money to grandchild will start to reduce by 9% too.
    • Lokolo
    • By Lokolo 24th Aug 11, 10:30 PM
    • 20,216 Posts
    • 15,399 Thanks
    Lokolo
    Hi all - noticed in Martin's blurb that 'You have additional sources of income -If you have additional income of 2,000+ from savings interest, pensions or shares and dividends, then this will also be treated as part of your income for repayment purposes and you'll need to repay 9% of that too via Self Assessment (based on the current rules according to the Student Loan Company website, similar likely for 2012 starters). So ... even savings are taken into account - no point in our young generation is sourcing excellent % rates for their savings then! What about these students receiving any inheritance payments or future funds? Im therefore assuming these wont escape the calculations but will come into the pay-back equation?? That will surely make the annual salary amount rise. So little ol' grandma's money to grandchild will start to reduce by 9% too.
    Originally posted by eggy1
    I wish you wouldn't change the colours.

    If you quoted correctly, you would need a lot of money to get 2,000 of savings interest.

    At 3% (current interest rate in savings) you would need 67k in savings....! Not exactly the norm!
  • Rapier
    Whizzy as it is, both in simplicity and flexibility, I think there is a significant flaw. That is that salary growth for graduates is far from linear in percentage terms, rising much faster over the first 5-10 years of employment than. This podcast from the Office for National Statistics (okay, the forum won't let me post the link so go to youtube and search for 'Graduate earnings over the last decade') provides a pretty good description and shows that the average graduate salary roughly doubles between the ages of 22 and 32, before rising more slowly. The single percentage slider doesn't model this very well and will probably over-restimate repayment time (as people won't realise just how fast salary may rise).

    Given the situation isn't simple, it makes a simple solution hard to come by. I'd suggest perhaps separate sliders, one for the first 10 years after graduating and one for the next 20 years. I'd also suggest changing the increments on the salary growth slider to 0.5%. The changes in repayment time from changing this by a single percent can be several years; I seem 5-7 in most circumstances.

    Finally, on a more philosophical point, with long term debts such as this, the important thing is not the final cost, but the effect on quality of life. I wouldn't take out a mortgage to save money (total repayment about 2.5 times the original loan), but I have done because it enabled me to improve my quality of life at a reasonable monthly cost. Similarly, the 'cost' of a student loan is more about the reduction in monthly earnings (above a threshold) than the total amount paid back. In that way, it's much more like a tax than a loan.
    • sly_dog_jonah
    • By sly_dog_jonah 26th Aug 11, 10:23 AM
    • 1,005 Posts
    • 1,211 Thanks
    sly_dog_jonah
    Suggestions for improvement
    A number of courses run for longer than 4 years, so it would be good to add more year options to the tool. Perhaps options for part-timers too?

    It would also be useful to clarify if the sandwich year option is an 'extra' year or included in the years selected from the drop-down. For example I studied an MEng which included a sandwich year starting in 1998 (first year of tuition fees), so total length 5 years. Back then, sandwich years cost half fees and IIRC half the normal loan was available, not sure if that is still the case.

    Regarding wage rises for graduates, it varies significantly by industry and degree. In my case I started on a below average engineering wage 8 years ago (around 2-3k below the average then) and I've worked in the Telecoms Consultancy industry since graduation. I've averaged a 13.4% wage rise per year whereas RPIX (the index used for loan interest rate) has averaged 3.2% per annum over that period. However the rises have been quite 'lumpy' with the biggest annual rises corresponding to promotions and changing employer once (the biggie):

    2.70%
    21.05%
    14.35%
    10.74%
    54.51%
    0.00%
    10.00%
    2.11%

    Current graduates with significant wage rises usually pay off their loans within the first 10 years of graduation, but Rapier raises the valid point that with longer pay-off periods the deceleration of wage growth over time will affect the assumptions used in the calculator. However to avoid over-complexity in the tool UI I'd recommend keeping things simple.
  • Ignite141
    Course duration
    The Student Finance Calculator looks like a very useful tool. Running through a few scenarios I found that changing the course duration from 3 to 4 years did not make any difference to the amount borrowed. Also, any chance of adding a 5 year course (useful for medics, etc)
  • Marylou1663
    This is excellent in principle, but please could you increase the course length options as a significant number of courses are longer than four years, e.g. veterinary, dentistry or medicine. My daughter wants to apply for a 5-year veterinary degree and is considering taking an extra gap year so that she can work and save enough to cover about one year of her fees, or at least to have some savings to help with the inevitable maintenance loan shortfall over the first few years of the course, but your calculator does not enable us to work out whether she would be any better off by doing this.

    Edited to add - sorry, I didn't realize that several other people have noticed this! It's an interesting point though because she should be able to earn quite a high salary in due course, so would the advice not to pay any of the fees upfront (there is not way we could afford all of them, but with her contribution might manage 1 - 2 years) still stand?
    Last edited by Marylou1663; 22-09-2011 at 12:38 PM. Reason: Spotted new entry!
    • nheather
    • By nheather 6th Dec 11, 2:39 PM
    • 19 Posts
    • 11 Thanks
    nheather
    Great tool, thanks.

    But a little confused by one aspect.

    When I increase the RPI to 6% (from the default of 3%) and leave salary growth at RPI+2% then final salary (after 30 years) is much bigger (as apected) but total repayment falls.

    Why is this?

    Example.

    My son will be doing MEng in Chemical Engineering - 4 years plus 1 year industrial placement.

    Entered the following

    Fees = 9000
    Maint Loan = 3,900
    Years = 4
    Sandwich = Y
    Start Salary = 25k

    With the defaults (RPI=3% and salary growth = RPI+2% (5%)) I get the following

    Salary at 30 years = 108k
    Total to repay = 43,760

    But if I change to the following

    RPI = 6% and Salary Growth = RPI-1% (5%) I get the following

    Salary at 30 years = 108k
    Total to repay = 2,160

    The toatl to repay should be identical because the start salary and growth are unchanged, but it isn't so something isn't working correctly.

    Cheers,

    Nigel

    WARNING!

    There appears to be a significant error in the way the calculator works out total to repay. I have worked out the value manually and for a 25k start salary and a 5% growth, the total to repay is 100.6k not 43.7k as reported by the calculator.

    Okay, Dan has replied to my query. Apparently, it is because the calculator assumes that the 21k threshold will be increased by RPI+1% each year. So if RPI remains the at 5.6% over the next year then the 2013 threshold will be 22,400.

    Personally I think this is a very dangerous assumption. I don't beleive I have ever seen any evidence that the government has raised any threshold (which is in the public's interest) by that sort of amount before - and certainly not on a year on year basis.

    If I was a betting man I would say, assuming this fee\loan scheme survives, this threshold will remain at 21k for many years to come.

    For example, I believe that when the current ICR loan was introduced in 1989/99 the threshold was 15k. Some twelve years later it is still 15k. Never mind RPI+1% per year it hasn't risen a single % in 12 years.
    Last edited by nheather; 06-12-2011 at 8:30 PM.
    • setmefree2
    • By setmefree2 7th Dec 11, 6:30 AM
    • 8,862 Posts
    • 19,041 Thanks
    setmefree2
    Just noticed this

    There is no tuition fee inflation, so if you pay 9,000 in year one, you pay it for each year of study.
    What a totally ridiculous assumption!!!!! Tuition fees go up annually with inflation. Why would you not factor this into your calculator?

    This statement is also HIGHLY MISLEADING as it suggests that there is NO annual tuition fee inflation!

    If inflation stays at 5% to 6% tuition fees will be 9.5k in year 2, 10k in year3 and 10.5k in year 4.

    Yet another example of MSE erring on the side of optimism???? and being Misleading?????
    Last edited by setmefree2; 07-12-2011 at 7:32 AM.

    • brummierebel
    • By brummierebel 7th Dec 11, 8:44 AM
    • 31 Posts
    • 23 Thanks
    brummierebel
    For example, I believe that when the current ICR loan was introduced in 1989/99 the threshold was 15k. Some twelve years later it is still 15k. Never mind RPI+1% per year it hasn't risen a single % in 12 years.
    Originally posted by nheather
    You are wrong. In 1998/99, the threshold was 10k. It only changed to 15k in 2005 and it will start rising by inflation from April next year.

    The original plans were for the 21k threshold to be reviewed every 5 years but a concession was made to change it by inflation every year.
    • Lokolo
    • By Lokolo 7th Dec 11, 10:09 AM
    • 20,216 Posts
    • 15,399 Thanks
    Lokolo
    Personally I think this is a very dangerous assumption. I don't beleive I have ever seen any evidence that the government has raised any threshold (which is in the public's interest) by that sort of amount before - and certainly not on a year on year basis.

    If I was a betting man I would say, assuming this fee\loan scheme survives, this threshold will remain at 21k for many years to come.

    For example, I believe that when the current ICR loan was introduced in 1989/99 the threshold was 15k. Some twelve years later it is still 15k. Never mind RPI+1% per year it hasn't risen a single % in 12 years.
    Originally posted by nheather
    No they haven't before, but they are now. They are also retrospectively increasing the post 1998 threshold in a few years.

    Not sure it's a dangerous assumption given they have announced it.
    • Lokolo
    • By Lokolo 7th Dec 11, 10:11 AM
    • 20,216 Posts
    • 15,399 Thanks
    Lokolo
    Just noticed this

    What a totally ridiculous assumption!!!!! Tuition fees go up annually with inflation. Why would you not factor this into your calculator?

    This statement is also HIGHLY MISLEADING as it suggests that there is NO annual tuition fee inflation!

    If inflation stays at 5% to 6% tuition fees will be 9.5k in year 2, 10k in year3 and 10.5k in year 4.

    Yet another example of MSE erring on the side of optimism???? and being Misleading?????
    Originally posted by setmefree2
    Better than the BBC calculator where it thinks you get a larger salary the longer you stay in uni!

    But has it actually been said that the tuition will rise with inflation? I know in another thread it was mentioned because the current one rises, but I haven't seen anything to suggest that 2012 will also increase with inflation.

    Not sure how you can call the calculator highly misleading when they are going on the data provided.
    • setmefree2
    • By setmefree2 7th Dec 11, 3:26 PM
    • 8,862 Posts
    • 19,041 Thanks
    setmefree2
    But has it actually been said that the tuition will rise with inflation? I know in another thread it was mentioned because the current one rises, but I haven't seen anything to suggest that 2012 will also increase with inflation.
    Originally posted by Lokolo


    From Bristol University's website

    What will tuition fees be in 2012?

    With effect from 2012 the University of Bristol will charge an annual tuition fee of 9,000 (increasing annually in line with inflation) for all UK and EU students on full-time undergraduate programmes, as approved by the Office for Fair Access (OFFA).
    Not sure how you can call the calculator highly misleading when they are going on the data provided.
    Originally posted by Lokolo
    So either they didn't know that tuition fees rise with inflation in which case you have to wonder what else MSE don't know?

    or they deliberately ignored the fact tuition fees rise annually with inflation which I think is totally misleading.....and you have to ask yourself this where MSE being deliberately misleading? Which is a really sad thing, as a long time user of MSE, to have to ask yourself.
    Last edited by setmefree2; 07-12-2011 at 3:52 PM.

    • setmefree2
    • By setmefree2 7th Dec 11, 3:38 PM
    • 8,862 Posts
    • 19,041 Thanks
    setmefree2
    WARNING!

    Okay, Dan has replied to my query. Apparently, it is because the calculator assumes that the 21k threshold will be increased by RPI+1% each year. So if RPI remains the at 5.6% over the next year then the 2013 threshold will be 22,400.
    Originally posted by nheather
    Then the calculator is wrong because the threshold is 21k in 2016.

    Personally I think this is a very dangerous assumption. I don't beleive I have ever seen any evidence that the government has raised any threshold (which is in the public's interest) by that sort of amount before - and certainly not on a year on year basis.

    If I was a betting man I would say, assuming this fee\loan scheme survives, this threshold will remain at 21k for many years to come.

    For example, I believe that when the current ICR loan was introduced in 1989/99 the threshold was 15k. Some twelve years later it is still 15k. Never mind RPI+1% per year it hasn't risen a single % in 12 years.
    Originally posted by nheather
    Nigel none of the governments Student Loan Terms and Conditions are binding - any of them can be changed in the future - but you won't read that in the MSE guide either.
    Last edited by setmefree2; 14-12-2011 at 4:44 PM.

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