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To think people are unaware on how much the government has SHAFTED students with loans

(554 Posts)
SucksToBeMee Wed 09-Oct-19 20:51:42

This brings me so much anger to this day, and I took out my student loans from back in 2012 when 9k tuition fees were introduced.

I did a 3 year undergrad and I left with a 50k debt. I can live with my 50k student loan. Fine, the government wants to pass the cost on to students (not that I agree you they should be doing that) but fine.

But the interest rates are so unbelievably outrageous I have no NO CLUE how they've gotten away with completely shafting the whole (especially poorer) student population.

Do people realise the interest rate on student loans is 3% + RPI? It's currently at 6.6%

6.6% interest this year on a 50k loan. That's at least £3300.

I earn a £45k salary and I still won't cover the interest this year. I have been earning a fairly decent salary since graduating and I have never covered the yearly interest.

My outstanding debt goes up and up each year even though I'm paying them thousands in the year. I now owe them £55k after giving them around £6k since I graduated.

They will carry on taking 9% of my salary over 25k and 9% of all my bonuses for the next 30 years.

Anyone who took out max loan (aka from a poorer background) and ended up breaking the barrier through to a better life is fucked over the most.
The wealthier families get away mostly scott free.

I think it's absolutely outrageous, and I'm not sure people realise how fucked over we're actually getting with interest rates. I have a debt that I can never even start to pay off. I will pay them probably double what I initially owed them over the next 30 years.

Honourable mention: they also charge max interest rates on your outstanding loan for the duration of your study.

ImGoingToBangYourHeadsTogether Wed 09-Oct-19 20:54:48

You're right, a lot of people are unaware. A lot of people are blissfully ignorant of an awful lot of modern economic realities, or even what have been daily economic realities for those born into poorer and geographically isolated groups for a very long time. It's really quite an achievement in modern times, I don't know how they manage it.

Waterandlemonjuice Wed 09-Oct-19 20:55:46

Yep, it’s outrageous

chomalungma Wed 09-Oct-19 20:56:04

It would be interesting to see how much is actually paid back by the time it gets written off.

If you pay back less per year than the interest you get charged, then obviously you aren't going to pay back the loan by the time it gets written off.

It all seems complicated - and something that you will end up paying 'back' for the rest of your life - obviously amounts finally paid back depend on your earnings.

Vipersnest88 Wed 09-Oct-19 20:56:37

But it’s not a debt like any other, no mortgage provider etc. even asks about student loans - it’s basically a graduate tax. Yes it’s annoying to know you do in theory have a lot of ‘debt’ but it’s not the same as having £50k of credit card debt. If you lost your job you wouldn’t be expected to keep paying. In fact, if you never worked again you’d never pay back a penny. Yes the principle is frustrating when you look at it from an interest perspective but it’s actually not as horrific as people make out. Also, those people in the ‘9k a year’ student loan plan pay back FAR less percentage wise every month than others. I know this for a fact as my younger brother pays back about 1/3 a month of what I had to pay back when I earned the same salary.

And I speak as someone who also has a student loan, has been paying it back for years and will be for the foreseeable future. I see it as an irritating graduate tax that I would rather be without and look forward to getting rid of, but not something I lose sleep over.

picklemepopcorn Wed 09-Oct-19 20:56:57

It's working more like a tax than a loan.

TabbyMumz Wed 09-Oct-19 20:59:01

Aren't they wiped after 30 years? So if you took out yours in 2012, how do you still have another 30 years to go?

Vipersnest88 Wed 09-Oct-19 20:59:14

Oh and you’ll only be paying it for a maximum of 25 years (i think that’s right?) before it gets written off - so really the oldest anyone would be and paying off a student loan is 46 and that’s if the persons pay didn’t go up at all and they ended up paying it off sooner!

chomalungma Wed 09-Oct-19 21:00:03

But it’s not a debt like any other, no mortgage provider etc. even asks about student loans - it’s basically a graduate tax

I don't get that - if you have to pay back a certain amount of money every month, then surely that's relevant to affordability...

SucksToBeMee Wed 09-Oct-19 21:00:16

@Vipersnest88

I don't think student loans are outrageous, I think the interest theyve placed on plan 2 loans I completely outrageous. The people who manage to break out of poorer communities into a good salary are the ones who are going to overpay by 10s of thousands.

I'd just like to have my debt go down when I'm paying them £2k a year.

DoctorAllcome Wed 09-Oct-19 21:00:31

Come to America then! Where a degree is 3x the price, and you pay more than 9% of wages when paying it back. In fact you owe even if unemployed and bankrupt. That’s right, it’s the one debt you cannot wipe away by filing bankruptcy. And the debt is never ever wiped off, you pay for the rest of your life if need be.
The real payer in the U.K. is the tax payer. You’re just paying a graduate tax which doesn’t even cover the interest accruing on the debt.

TabbyMumz Wed 09-Oct-19 21:00:37

Was it 9k a year as opposed to 9k a term as it is now for tuition fees?

MyDcAreMarvel Wed 09-Oct-19 21:00:42

But you won’t pay it off anyway so really it’s irrelevant if you owe £50k or 30k so is the interest. It’s just numbers the amount you owe on a £45k salary won’t change. As pp says it’s a graduate tax.

chomalungma Wed 09-Oct-19 21:01:26

I'd just like to have my debt go down when I'm paying them £2k a year

How much do you think you will end up paying back when you have to stop paying it...

SucksToBeMee Wed 09-Oct-19 21:01:59

@TabbyMumz

Sorry, I meant 30 years from graduating. I personally only have 26 years left to go.
Yay

awishes Wed 09-Oct-19 21:02:13

I argue with people about this all the time!
I always lose the argument! Most people have no idea. I think Martin Lewis has made it more difficult as he keeps telling people it's just a graduate tax.
My DD started a 6 year course the year the grant changed to a loan and because it's an additional £2k keeps being told how much better that is. How can borrowing £10k with interest at 6.6% compound interest better than being given £8k grant (we are low income family due to exh running away with all savings).
It drives me mad and most Pepe who argue with me about this were at university when it was free or £3k!!!

RandomMess Wed 09-Oct-19 21:02:17

thanks

Yep it's depressing!

Frenchfancy Wed 09-Oct-19 21:02:34

A tax would mean all graduates paid it, they don't. If parents pay the fees and the living costs then those from rich background pay nothing whereas those from poor backgrounds who needed the maximum loan will be paying it for 30 years with interest.

TabbyMumz Wed 09-Oct-19 21:03:05

Also, I was on the understanding you paid a percentage of what you owe that year? Not that the interest is added to the overall debt so the amount never reduces? Am I wrong?

CrystalShark Wed 09-Oct-19 21:03:10

Everyone I know who went to university knew full well they were never going to pay back their student loans. Eventually it gets written off. And the repayments are in line with salary: you won’t pay a penny back unless you’re salary is over a certain threshold.

I just see it as a graduate tax, that was well worth it as it enabled me to earn a far better salary than I could have done otherwise. Don’t really see it as a debt given that it has no impact on credit record.

I worry that a lot of the scaremongering around loans puts poor kids off studying. When in reality, the loans aren’t anything like any other debt you’ll ever have access to. It’s still absolutely worth going!

Vipersnest88 Wed 09-Oct-19 21:03:18

@chomalungma well it’s a deduction on your payslip through PAYE like tax, NI, pension contributions so it’s not like you ‘have’ that money and you physically have to pay it to the student loans company. The mortgage company asks for your gross salary figure and looks at copies of your pay slips and obviously can see your take home pay. It’s like saying paying lots of tax affects your ability to get a mortgage!

ImGoingToBangYourHeadsTogether Wed 09-Oct-19 21:03:21

I quite agree with your outrage at this ridiculous situation too op btw. I'm mid-40's. I honestly think that I've done living all wrong. Coming from a poorer background I was suckered into the common trope of working for a living, and then as house prices doubled and quadrupled, into working for someone else's living via rent. I honestly think that I would have been better off getting pregnant at 13 like so many others I know did, getting a council house at the time, buying it under right to buy, and then selling out at the max. That's modern economic reality. There's no incentive for poorer people to try, and few real opportunities to do so. And I don't call taking the little safety net left away from the poorer groups starting out in life now an incentive: that's force. Don't expect poorer people to be grateful to the wider society while other groups get richer and can now actually afford to work for nothing and never notice.

Oh and you’ll only be paying it for a maximum of 25 years (i think that’s right?) before it gets written off - so really the oldest anyone would be and paying off a student loan is 46 and that’s if the persons pay didn’t go up at all and they ended up paying it off sooner!
More blissful ignorance of others' situations. What about mature students? Admittedly there aren't many left any more, those who lose their jobs due to technology changes are no longer welcome in the jobmarket and please can they hurry up and die no doubt? And pay is not going up: it is dropping across the board. In figures, ime, not just in 'real terms'.

VirtualHamster Wed 09-Oct-19 21:03:49

Oh and you’ll only be paying it for a maximum of 25 years (i think that’s right?) before it gets written off - so really the oldest anyone would be and paying off a student loan is 46

It depends on what year you took the loan out. Mine wouldn't have been wiped out until retirement (or permanent disability). I once worked out that if I'd have stayed in the same job and got a 2% payrise every year (unikely as for 5 years actually had a pay freeze) I'd have paid my student loan off when i was 63 after paying £55k

SucksToBeMee Wed 09-Oct-19 21:05:43

But you won’t pay it off anyway so really it’s irrelevant if you owe £50k or 30k so is the interest. It’s just numbers the amount you owe on a £45k salary won’t change

@MyDcAreMarvel

This is the classic response I get and the reason why I believe a lot of people don't realise how fucked we're getting

But the amount I pay WILL change as I progress through my career. So I'm forever throwing money at them (and will give them FAR MORE than I ever owed them in the first place) and my debt never goes down thanks to interest.

Vipersnest88 Wed 09-Oct-19 21:06:29

@SucksToBeMee oh I do feel your pain when I see my annual student loan statements (!) but it’s seriously not something to get that worried about, in my opinion.

I am glad I had the opportunity to go university and that I was able to take out a tuition fee and maintenance loan to do so - I wouldn’t have the career I have if I hadn’t gone to university so paying what I see as a graduate tax is annoying but I appreciate the value of my degree.

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