Student loans- feel sick

My parents didn't go to university but they did move to the nearest big town and stayed in quasi-student digs - like "boarding houses for young men/women" type things while they did apprenticeships and got their first jobs.

That's probably 90% of "the experience" right there!

This summarises the previous student loan book sales.

https://commonslibrary.parliament.uk/research-briefings/cbp-8348/#:~:text=End%20of%20the%20student%20loan,total%20of%20£15%20billion.

Mortgage style loans introduced in 1990 lasting until 1998. All of that loan book was sold off to private investors a a result of three separate sales which took place between 1998 and 2013.

for those with failing memories 1997 to 2010 Labour governments, 2010 to 2015 Tory led coalition government.

Labour introduced the Sale of Student Loans Act in 2008.

two subsequent sales of income contingent loans, covering loans that entered repayment between 2002 and 2006, and the second covering a further tranche that entered repayment between 2007 and 2009. Face value approx £7.5bn, sold for £3.6 bn.

Less than glowing NAO report, budget 2020 confirmed no further sales. Current Labour government have not changed the no more sales policy.

current book value,England, around £250 bn, so previous sales a tiny fraction of that.

I think the previous government changed the company administering the loans to another company and they put the interest up. It is a disgrace.

@ellyeth that is a completely inaccurate statement.

The Student Loans Company is government owned and non profit making. It administers the loans on behalf of the government and devolved administrations. It does not set policy, it does not set interest rates, it does not set repayment terms, it can’t sell off the loan book.

what possible reason would you have for suggesting otherwise?

I think there are still a lot of people like that given how popular the choice of going to university is for young people (I posted the link the other day to UCAS figures for 2025 entry). They won’t all be going because they’re expecting a high flying job at the end, despite what many people on MN decide to believe. From my own perspective I’m doing my third degree as a hobby.

Also a lot of 1990s uni was 'the experience ', £1 a shot student nights out etc. Now many students are either working around their studies, too skint or both
More likely to be behind the bar than in front of it.

Many will say, what do they expect, to party for 3 years at no or very little cost? But that's literally what it was like in my day. Not saying we should go back to that, the country plainly can't afford it. But going to uni now is nothing like what it was then and I feel sad my kids won't get to experience what I did both socially and financially.

I don't think it would... I essentially paid what the loan would have been worth in 1995 adjusted for inflation, by the time it was repaid. I worked it out.

But your loan capital would have been increasing because of the compounded interest.

For many of those jobs that you say now require a degree the monthly repayments are going to be low and the loans will never be paid off.

Also, not everything funded or part-funded by the tax payer is 'free' when using.

Idon'thaterainbows I absolutely agree with you. Young people were given the impression that it was necessary to get a degree if they wanted to get a job and progress in it (and there was a lot of hype about the university "experience" too, so lots of youngsters felt they would be missing out on a lot of fun). As it has turned out, because so many young people now have degrees (and some have felt it necessary to get a Masters), those that do not have them don't get a look in, and those that do still face stiff competition.

Important trades and skills have been overlooked. A recent report said that the drive for more housing is being held up because there are too few skilled building workers. Meanwhile, lots of young people have degrees which have not proved to be of much use to them, and a huge debt around their necks.

Dont panic ! Student loans are not like normal bank loans. They do not show up on credit checks or affect mortgages. Martin Lewis explains them well. Treat your repayments as an education tax. Do not attempt to pay it off - just pay the minimum required - as if it were an additional tax. Change your thinking on it. It does not matter what it accumulates to as the loan is not intended to be paid off unless you are a high earner - the loan and interest will be wiped off after i think 30 years. Martin Lewis explains it well. The other thing to check is whether your interest and repayment structure are correct - again Martin Lewis explains this. A call to the student loans company can help you check this out - many folk have had a reimbursement due to this SLC error. Anyway main message is dont stress.

If it were a tax, people would be able to evade it much more easily. It isn't a tax but it works like a tax for the vast majority of ordinary people. No system is perfect but changing it to make sure the wealthiest are properly rinsed would cause more problems than it solves. A lot of wealthy families who choose to pay up front actually end up paying a lot more than they would have with the loan, which is fine as they can afford it.

Exactly this. It is a money making scheme!

You haven't done anything wrong @Lazy56789 . It's ok. The balance of your "debt" is irrelevant and does not relate in any way to the amount you have to repay unless you win the lottery/inherit a large amount/get a super-high-paying job and choose to pay it off.

For most ordinary people, student loan repayments are effectively just an extra tax that you pay until you reach the write-off deadline (25 or 30 years or whatever was in the rules when you had your agreement). For people whose incomes are decidedly average or low, the interest will exceed their repayments and their balance goes up not down. This is normal, expected and not a problem. They make their modest repayments and then the rest is written off. For people with a bit more income their repayments may exceed the interest by a bit, so the balance goes down but very very slowly with no hope or expectation of it reaching zero. This is also normal, expected and not a problem. Once they have paid for as many years as required to reach the write-off time, they no longer owe anything.

This means that the amount you pay for your degree is proportionate to how much you benefitted from it. If you never become a high earner, the cost is low. Only those who earn high have any expectation of paying it off.

I had a small loan in the 1990s, around 6k and inflation linked so the value wasn't increasing over time relatively.

The government paid for the tuition this was just for living expenses.

Felt about right in terms of making a contribution to my education but also getting some support from the state.

But the real con isn't the cost of a degree, its the requirement to have a degree for jobs which 40 years ago only required a levels.

And if you 'get nothing in life for free' why are we all paying taxes??

How is it a con? It's a product - like any loan - that we signed up for. You get nothing in life for free, and as explained many times on this thread, the amount you may pay every month varies.

Yeah its like hey if I tell myself its 'just a tax' I can deny that I'm being forced to pay £200 a month or whatever for 25 years cos I got scammed by my own government.
It's a total con.

What an absolute con it has all been. I feel so sorry for younger people these days. I think the previous government changed the company administering the loans to another company and they put the interest rates up. It is a disgrace.

When everyone is broke and struggling they have no bargaining power, so it leaves it wide open for large corporations to underpay and overwork staff, especially with the threat of AI to the job market now being openly discussed.

I realise that under or non payment of the student loan does not carry the same dangerous penalties as with other loans. However, for many people it will have a psychological impact. The OP has been paying off her student loan but can see the significant amount that is being taken in interest. It must be very disheartening.

I agree with Donatella that it almost enshrines the inequality passed down through the generations. Disgusting.

It’s annoying that people actually think of it as a tax. It really isn’t!

People keep saying this is like an ‘education tax’ but it’s not. If it were an education tax then rich people would have to pay it too but they don’t as they don’t need to take out loans in the first place. Let’s make it an education tax instead of a loan and make it equitable so everyone pays it.

Yeh. It is definitely considered even if it is reduce the amount you can borrow.

You really don’t need to be a high earner to be earning over the threshold. Plan 1 threshold is £26,065, and for current students who are on plan 5, it’s only £25k.

I was very confused when I moved to UK 12 years and heard a co worker talking about student loan. I was like ?? Ehh? What's that.
I feel so lucky I didn't pay one dime for my university education as it was free. 5 year degree in one of the best uni of my country. Free. My country works different. If you have a great private primary & secondary education & get amazing grades you get a spot at uni.
I will have to live this nightmare with my kid , dreading it.

Yes if the mortgage company see dedications from PAYE on payslips it will be taken into account but if you earn under the repayment threshold the mortgage company doesn’t take student loans into their affordability checks. Mumsnet appears to have a lot of high earners but large amounts of graduates are not at at the threshold of repayment.

I got a mortgage with hsbc in 2022, it was very much taken into account on affordability, because i remember challenging it when the MA asked me what the monthly amount was

https://www.gov.uk/government/organisations/student-loans-company

the what we do bit is about a clear as it can get

• government owned
• non profit making

what would shutting down the Student Loans Company achieve @Adrienne23 ?

all they do is administer loans in line with the higher education policies set by government in England, and the devolved administrations elsewhere. Do you genuinely not understand that?