Student Loans....do they make any sense?

[PhilTheFragger]

I have 3 daughters who have either finished Uni, about to finish Uni, or got another 3 years to go

So they all have student loans of varying sizes. I get that University costs money, but to my mind the current system is unsustainable.

Take my eldest daughter, finished her degree, last year, now into her 2nd job and earning a good graduate salary
she has a student loan with a current balance of £44711, Interest is being added at 4.6% which is about £170 per month . she wont start repayments till she has passed £21000 pa, which she should do in December/January when she will start to repay about £27 a month.

Interest rates are rising to 6.1% in August so her interest will rise to approx £228 per month

Even if her income increases to £30000 she will only be paying £67 per month

Simply she will never be in a position to pay it off and the only good thing about the whole farce is that the balance gets written off after 30 years
That could be a huge sum


I cannot understand how such a ridiculous system could have been implemented, which dunderhead thought it up

 

[jp5]

It's not sustainable.

Worryingly I can see future Governments changing the terms, as they have already started to, as they begin to realise how short they are on payment.

No way to start out working life with £50k+ of debt hanging over you.

Think it's pretty evident that only Corbyn's plan can get our future children / grandchildren out of this mess.

 

[Deleted member 18121]

Agree 100%.

If you look back over the history of loans both of the major parties have had hands in their development and their spiral out of control.

My wife graduated uni around 7 years ago and has only just started paying back the loan. She has little hope of ever making a dent in the balance and as you rightly say, it'll be written off after 30 years.

It was a shambles from the very start.

 

[FairwayDodger]

I was a student when they first came in and I seemed to be about the only one of my peers who genuinely wanted one.... except I couldn't get one!

Things have shifted massively, though, tuition was still free back then so I just wanted some beer money! It's hard to fathom the difference it would have made to me if I'd graduated with the level of debt they do now.

Don't understand why the interest is so high, I thought the deal was that these were cheap loans?

 

[Deleted member 18121]

Don't understand why the interest is so high, I thought the deal was that these were cheap loans?

The interest used to be very low.... less than 1% if my memory serves me right (I graduated in 2000).

I can only assume some bright spark saw the £££ signs of charging "normal" interest rates, without realising how many would be unable to pay back.

 

[the smiling assassin]

In Scotland so I didn't have to pay tuition fees. Despite that, a means loan to cover 5 yrs study rent/living costs etc left my with in excess of 12k debt. Having been though fairly turbulent income (part time, redundancy etc) since leaving uni, I rarely actually made the required cut for automatic repayments until recently. Despite this, because it was 'only' 12k, a figure one can just about get your head around, I made voluntary monthly payments and topped up with the occasional lump sum payment (oversaved tax when self-employed etc.) and finally paid it off last year. I dread to think how my brother, who has just completed his down south, will pay back his 50k +...he doesn't expect he ever will...

 

[Raesy92]

The current system in Scotland is completely different it seems. Of course we do not pay for our tuition fee's but anyone can take out a student loan, up to a max of £4,750 per year.

Only once earning in excess of circa 19k will you start making any repayments towards this. Say you earn 25k you would pay 9% of the difference, so you'd pay £540 per year (0.09 multiplied by 6k). Sure the interest you pay on your loan is equivalent to the inflation rate.

 

[Hacker Khan]

We are just piling the maximum amount into one of those child investment funds that my daughter will get when she's 18. And then this will hopefully go some way to paying her way through uni and not leaving her with a big debt at the end of it. Or she could just blow it all herself when she legally gets it at 18....

I wasn't aware the interest rate had gone up, think I was leaving uni when they first came in so I had one for my last year but it was very small with a very low interest rate so I paid it off pretty quickly. I suppose if it continues as it is with increasing amounts of the population starting working life with a large debt before they even think about buying houses, cars, food then that is not sustainable. As building up a lot of debt is not the smartest move for any economy as I think was demonstrated in the late 2000s.

 

[ger147]

I got one in the 1 of the years I was at uni way back in the 90's when they first came out.

I borrowed the princely sum of £640 and paid it back in a oner when I started earning decent money. Different world back then...

If my daughter goes to uni I will pay for whatever she needs over and above tuition fees which she does not have to pay in Scotland.

I dread to think what it would be like carting around a £50k plus debt right through your working life especially with no prospect of ever paying it off.

 

[Papas1982]

Am I correct in thinking that whilst it is a debt it doesn't actually affect your credit score?

if so the. I don't see the issue really. If your degree helps you attain a level of income sufficient to pay it off then it's worked perfectly for both.

If if you don't get a job that lets you do that then you've had to pay tiny outgoings for a period of time and effectively had free money.

Id take £30-£40k from someone all day long if it meant I was lumbered with returns of £60 a month til I retired.

 

[USER1999]

Also, if you are not going to earn even 20k with your degree, i would question why you thought you needed one. This is the problem with too many people having degrees in rubbish.

 

[Lord Tyrion]

Papas, correct. It is not classed as a debt by mortgage companies, banks etc. Martin Lewis explains it very well. He says it should not be treated as debt. See it as a graduate tax. You only pay it if you earn over a certain amount, if you don't get to that point it never kicks in. Once you get your head around that it stops being quite so intimidating.

 

[Lord Tyrion]

Also, if you are not going to earn even 20k with your degree, i would question why you thought you needed one. This is the problem with too many people having degrees in rubbish.

Well, you hope you are going to earn over that amount. Sometimes life doesn't work out how you hoped though.

I do agree that too many people have degrees however. They have been devalued in recent times by the shear number of them.

 

[Papas1982]

Papas, correct. It is not classed as a debt by mortgage companies, banks etc. Martin Lewis explains it very well. He says it should not be treated as debt. See it as a graduate tax. You only pay it if you earn over a certain amount, if you don't get to that point it never kicks in. Once you get your head around that it stops being quite so intimidating.

Well with that being said. I can't see the fuss if I'm honest. If a student isn't willing to take what appears to be a risk free punt on their future then that's on them.

I certainky don't pity them being "saddled" with debt. Especially as quite a few of them spend a fair amount of the money on none essentials (as we all do when young).

 

[Rooter]

Also, if you are not going to earn even 20k with your degree, i would question why you thought you needed one. This is the problem with too many people having degrees in rubbish.

Oh, i was going to move to america and get a degree in 'Beyonce'. https://theboar.org/2014/02/beyonce-degree-introduced-in-the-us/

 

[craigstardis1976]

Having been sick for most of the last year and a half and graduating with college debt in the USA has been a nightmare. But the bottom line is they were Government backed loans - I cannot afford to pay them back and still owe $80k in hospital bills that I am now filing for bankruptcy for. Sadly, college debt can not be handled that way. Either way, aside from taking my annual tax refund, they are not getting any money from me until I can afford to pay it.

 

[Dellboy]

I have always said that if you want to go on to Uni, you should fund it yourself, why on earth should the tax payer have to chip in.

You have just had 16-17 yrs free education along with the rest, you want more then pay for it.

The system at the moment is wrong and needs to stop.

My own daughter went on to Uni and we paid for it, not easy and had to forgo lots of thing in life, but we did it for her, she did have a small debt when she finished but that was to us, not the tax payer.

 

[FairwayDodger]

I have always said that if you want to go on to Uni, you should fund it yourself, why on earth should the tax payer have to chip in.

You have just had 16-17 yrs free education along with the rest, you want more then pay for it.

The system at the moment is wrong and needs to stop.

My own daughter went on to Uni and we paid for it, not easy and had to forgo lots of thing in life, but we did it for her, she did have a small debt when she finished but that was to us, not the tax payer.

And for those without parents able to support them?

 

[Deleted member 21258]

I think I did uni the year or two years before loans started, may well have changed my mind over if I went or not. My parents could not afford to fund it and it would have been to much of a gamble, I did computing but never intended to end up in computing tbh but really needed a degree for the job I wanted to do.

I do not understand the requirement for quite of alot of jobs to have a degree, most jobs really don't need a degree. No different to the job I do, you don't need that level of education. So I think it is the government problems with loans and pushing for people to get a 'good education' and employers problem asking for degree level education.

I do agree the current system is mad, such a young age to be heavily in debt, just mad. I disagree with it completely.

 

[Tashyboy]

When I was at comprehensive skool, you knew who the kids were that were goin to uni. They were the brightest kids you could imagine. There may of been four or five tops that were goin to uni. I was not one of them. Now it seems that everyone and his dog is goin to uni. Some of the courses just seem a complete and utter waste of time and not all.
When I worked at Harworth pit, my boss at the time told me that she had funded her son through uni, he is a solicitor now. He owed nothing, good on her. A month before he finished he took out a big loan. To buy a car as the interest was next to nothing.
unfortunately education is now business, big business. And like the NHS, and other industries it could and should be better thought out.
could be wrong with this, but bright kids are not going to uni because they cannot afford it. Cannot see how that is right.