Student loan repayments are completely unfair

@VoiceFromThePit That is totally unsustainable! It’s not been possible since the 1992 expansion of universities. It’s utterly pie in the sky. It’s also asking less well paid people to fund those who will probably earn more than them. We realised a long time ago that this wasn’t on. That’s why those who earn more via a degree education, pay more. It’s the ultimate pay be results scheme. It has faults but we cannot keep borrowing and there’s NO money to pay for universities beyond the £billions paid by students and owed to the government. Currently around £230 billion and growing. We simply cannot do this unless there’s a massive cull of universities. Would you like that?

The government sets the Bank of England inflation target at 2%.

If that’s what they think inflation should be then the student loans should be this same amount with no write-off/wiping.

Even more sensible would be for there to be no student loans for course fees; students get degrees to get better jobs with better pay and subsequently pay higher amounts of income tax. So universities should be funded out of Income Tax receipts.

Haven't read the whole thread. But both my two are on Plan 2. Its annoying that richer families can avoid it completely by paying up front.
The change to the terms where the threshold has not gone up is wrong.
DS works standard PAYE. He gets stung for a chunk when he gets a bonus.
DD is arguably worse off. She works is 3 month blocks. Very well paid whilst working but then she might not work for 2 months.
So she might earn the same gross as a PAYE person over 5 months- but pay more student loan back
Theres no mechanism to even it out in the same way as as the tax allowance does.

It's better for higher earners and lower earners, but not for higher than average earners which are the typical graduate demographic. Average earners could easily end up paying a lot more than very high earners, which is actually the wrong way around morally and makes it less like a tax. If we wanted a graduate tax, then there should be no link to initial borrowings - it should be a specific length of time, 30/40 years, payable only on earnings levels, not on whether the loan had been "repaid" or not. It's the fact that highest earners end up paying less than average earners which adds to the unfairness.

Exactly - so it’s better than a tax as you might stop paying it. That’s not misselling, in fact it’s making something sound worse than it actually is…

@WheretheFishesareFrightening

It's not a graduate tax because it doesn't last the full 30/40 years for everyone. For the highest earners, they pay it off a lot quicker, so pay off a lot less interest too, so they actually end up paying less than someone on a much lower income, but who still earns more than average. A genuine graduate tax would carry on the full length of the term, of 30/40 years, even when the capital/interest had been paid off. It's the fact that some people pay it off that makes it a loan, not a tax.

Ignoring the actual debate for a moment, I struggle with the logic of saying it was sold as a graduate tax and therefore missold.

It’s exactly like a graduate tax - it’s a percentage of a salary above a threshold that may or may not increase over time, and is payable so long as you earn over that amount. In fact, the only thing that makes it not like a tax is that it eventually gets written off (therefore stopped) after a defined period of time.

If it was just paying down capital at a rate in excess of interest charges such that it gets paid off in a reasonable time frame, it’s not like a tax at all.

I was on plan 1 (post 2006) and have paid it off through salary contributions - that’s nothing like a tax as it as repayment out of my salary for c 8 years and now it’s stopped. If it had been a graduate tax, I’d still be paying it now regardless of how much I’d paid off - which the plan 2 debts feel more like, because of their quantum and interest rates.

People need to look at the presentations/slides etc that were shown to prospective students at University Open Days. There were no warnings about the possibility of interest rates rising, no warnings about the possibility of earnings thresholds not rising, no warnings showing the average amount of interest charged, no figures for APR, etc.

You know all the things that are legally required for any other loan or regulated financial product!

The projections were all showing rising wages, static interest rates, thresholds rising in line with wage inflation etc. The slides showing numbers/proportion of people not paying off their loans didn't mention that most would have paid off most/all of the capital but the graphs showed the loans not being FULLY paid off due to the compound interest etc. The presentations were all about minimising the effect and risks of taking out the loans and nothing at all about the downsides. It was classic mis-selling akin to the mis-selling epidemics of loans, mortgages and endowments of the 1980s! Basically, all about how wonderful the loans were - lots about how they'd eventually be written off etc, nothing at all about how much an above average earner would pay (ie target Uni graduate) over the life of the loan.

We went to several Uni Open days with our son and sat through a few of the financial presentations - they were all the same, so they were using slides/figures centrally produced, presumably by the Student Loan companies or other governmental quango. They weren't individually produced slides/presentations made by each Uni separately.

Add in the mis-representations made in mainstream media by Martin Lewis - the guy who should have been unbiased and giving the pros and cons, but all he ever did was advocate how wonderful the loans were, again, no warnings about risks nor downsides.

Exactly OP. 3 fun years is a ridiculous characterisation of degree studies, I'm a univerity lecturer. Hard graft, often longer than 3 years, e.g. engineering, veterinary and human medicine, uncertainty re jobs, poverty. Concentrate on tbe iniquitous misssllelling aspect and huge interest rates.
A reminder here of the petion on the mn petition site. I don't like the wording but it's the signatures that matter.

@Sammy900 Why would it be your best interests? It’s the country’s best interests! You know - tax payers! Future borrowing which is already sky high. Maybe people should just get on with working and getting promotion. The rest of the uk who are non grads have to! The loans enabled you to access the education and for most, earn more. Yes there’s a price but you have the benefit of 3 fun years and a degree. I don’t agree with constant changes but our dc will be paying a massive price and government borrowing is already 25% of all tax. So I’m sorry, but students paying next to nothing isn’t on.

It could well fall into the category of mis-selling, the question is who is the “agent” on the hook for claims.

The other issue is the the govt has shifted the goalposts since the original T&Cs. That could also be the basis for a claim.

Nail on the head. It's mis-selling at the very least. A financial advisor/insurance broker would be hauled over the coals for shoddiness, lack of due diligence, lack of warnings, etc., if they sold a regulated financial product in the same way that the universities are "selling" student loans to naive 17 year olds!

Look at all those who claimed to have been mis-sold endowment mortgages in the 80s and 90s! Most of them got compensation despite them knowing full well that investments had risks, but because the salesmen didn't sit them down and tell them like 5 year olds that investments could go down as well as up (and evidence that warning), it was open season for compensation!

Luckily for the government, student loans aren't covered by the Financial services regulatory/compensation schemes - no doubt they deliberately excluded student loans from the regulations to avoid future claims of mis-selling etc.

It's set to be the next BIG governmental U turn. The question is when, not if, the rules will be changed as the whole thing is grossly unfair to the younger generations. It IS starting to impact on future Uni numbers and more and more potential students realise that it's a giant con job.

Absolutely, the only explanation as to why this has never been deemed mis selling is the government itself would be on the hook and any redress would cripple the country.

When you consider the amount of regulation placed on banks by the government to assess affordability and fully disclose terms of loans in a clear fair and not misleading way under Consumer Duty. Financial promotion regulation as well in marketing

It is bloody barmy that the same government gets away with dodgy misleading practices when marketing these loans to a vulnerable group of people- 17 year old minors.

Well yes (I am a sixth form tutor; I advise on about 50 applications each year). But however much research you do, forecasted grades are basically guesswork and decisions have to be made extremely quickly come August.

My poor colleague was on the hook for thousands of pounds in student rent for his son last autumn after a last minute course change. Fortunately he managed to re-let.

@NeedlenardlenooWell maybe but there’s a cost to delaying these days and subject fluency can diminish. Also, to be honest, the vast majority are perfectly ok. Yes, it can feel like a rush but loads are ready to go and make a success of it. Maths is not one where gaps are recommended either. It’s better to do the research before the UCAS application.

I don't think the decision to go to university should be rushed into, by anybody.

I think anecdotes are not the uk picture though. We all know hospitality is struggling and employers are cutting back. Around here it’s who you know for summer jobs and there’s very very few available. There’s a big problem with this and many on mn have noticed it.