To not class student loan as ‘real debt’

If you earn £50k, which isn't a huge salary, you'd pay about £175 a month for most of your working life. That's not a paltry amount at all.

Using RPI instead of CPI to apply interest to the balance is also wrong.

@anotheranonanon There’s many employed in the arts who are not earning much. Many go to university to follow a passion and pay little attention to work afterwards. I think it’s a complete luxury in too many cases. We have 37% of school leavers going and we almost certainly don’t need this. Were actors somehow useless without a degree? Or many others who studied to diploma level? Clearly they were not, but we now have degrees in everything without evaluation of who needs them and why. It’s a massive expense for everyone.

We know 50% don’t pay them back. The 40 year loans are meant to reduce this to 25%. We don’t know if this will be the case but we never look at reducing the degrees and boosting 2 year diplomas which are cheaper. Many dc would benefit from this and employers are not interested in many of the degrees now offered so young people struggle yo get degree level work. It’s all a mess really.

If you are going to be a higher earner you should do anything you can not to take out student loans as they need you to basically fund everyone that doesn’t pay theirs back. It’s £100’s a month and barely dents the interest which keeps racking up such that by the end you will have paid back multiples of what you borrowed. . Agree if you don’t plan on earning much with lots of career breaks then it’s a good deal probably but you have to wonder what the point was in those circumstances…. It’s particularly bad for those that start off relatively low paid but increase significantly as they become more experienced. Clever kids are doing apprenticeships now.

in any event if you are a higher earner we have a progressive tax system so you pay more tax. Better to be honest about what it is.

my child is doing a 5 year med degree. They will owe ££££.

It is obviously a tax. Students have to consider very carefully if they will get a better job at the end of it. If they could get an equivalent job with no repayments, go for it. Thats hard to do at 18 though and for some jobs, impossible. It’s very much about career and prospects. What do you need to get where you want to be? If there’s no degree requirement, don’t do one but some careers will be off limits.

If you consider it as a tax then its one of the most unfair taxes there is.
For some students on the later plans they will be paying it back their whole working life (repayment threshold is practically minimum wage now), pay back several times more than they borrowed and the worst part is that their take home pay could be hundreds of pounds less per month than a colleague doing the exact same job as them, purely because they come from a poorer background than their colleague. I don't see how you can justify that.

I think you are bring very naive.

Yes it should be considered as a tax rather than debt but for many it will be a lifelong tax which is very unfair. The threshold was never designed to kick in at not much more than minimum wage.

It may not affect credit score but most certainly affect affordability when applying for mortgages etc.

It’s debt with different rules. 🤷‍♀️

I agree OP. It’s the only loan you’ll ever get where the repayments will stop if you don’t earn enough to repay it. Any other time, even if you lost your job, your creditors would be after you every month even if you were only on JSA.

That's a regressive tax because the less wealth a person has the worse they are taxed. The worst kind of taxation, surely?

I can see both sides.

On one hand, successive governments have chosen to structure student funding as a loan/debt system. To that extent, strictly speaking graduates do have a debt.

From the individual's point of view though, it's probably unhelpful to think of it as a debt. It operates more like a graduate tax, with repayments depending on income and stopping, with the "debt" being written off, at a particular age. It doesn't affect credit worthiness, except to the extent that it reduces your available income for affordability calculations.

IMHO it would be much better to call it a graduate tax, and to avoid the seemingly unjust situation where higher earners may end up paying less in total than those earning less.

Neither of my children went to university. After three years in the workforce each was on same/similar salaries to graduates where they work, but their take home pay is more because they aren’t paying loans off.

I only have plan 1, but I feel like I’ll be paying it off for the rest of eternity. I don’t even think about it. Daughter is at uni now doing a five year course, and the amounts horrify me, but she talks like it’s a tax to pay off her education. If education was an upfront fee without loans, she would never have fulfilled her dreams so 🤷🏼‍♀️. Son is going to a local uni so I’ve told him to get a job and not take the living loans!

I pay £300 a month student loan
I pay £400 mortgage
My half of the childcare is £1200

Could really do with that £300 to be honest.

I have some sympathy with that approach, but not all careers that need degrees are well paid. I’m thinking of teaching and nursing in particular.

I’d like to see student loans gradually written off over 5-10 years for teachers in state schools and healthcare professionals who work in the NHS. I’m sure it would help recruitment and retention.

Yes it's been said for years that too many people are going to university. I think the tide is beginning to turn now

If NMW keeps rising as is, with the threshold frozen until 2030, people on NMW will most likely be paying off SLs in 2029....

But even without the loan it’s 40%. Maybe plus NI? Point is a big chunk is always going to be taken.

Open to all other options to fund HE!

Do you think now is the time to go back to the days when you went to University for specific careers, doctor, lawyer, teacher etc? I was in a low paid CS role (barely above minimum wage) and I was one of the few that didn’t have a degree.

I can see less people will be going, basically universities got greedy and will, over time reap the results.

The government taking more than 50% of earnings is high - even on the additional tax rate you don’t pay that, it would be deemed unacceptably high.

its crazy, particularly when 50k today is the equivalent to 27k in the early 00s!!!

The student loan repayment tips the effective tax rate to 51% over £50k now.

The government taking more than 50% of earnings is high - even on the additional tax rate you don’t pay that, it would be deemed unacceptably high.

It's debt. Debt is money, owed by one party to another and if you go into that debt to just use the get out clause that you haven't earned enough to repay it I think that shows a piss poor attitude myself.

I am going to pay my children's fees and living costs up front because I would never expect that they would go onto a degree course with the entire intention of not earning above the threshold for repayment. It's just not what you do.

When I had a student loan (now paid off), I fou d the 51% rate over £50k disincentive enough

To think some people will be on that rate for almost their entire careers… awful.

It is also a 'tax' that disproportionately affects women for longer.

The difficulty is getting a job without a degree is hard as so many have them and they are often a CV sifting tool.

Plus so many jobs/employers now require degrees when those roles didn’t in the past.

Your monthly repayments are recognised when your mortgage (or any other sort of credit) affordability is considered.
Some can’t get a mortgage, and won’t for years to come because of the perpetual repayments.
I guess that’s a problem.

We are certainly talking to our DC about the wisdom of running up debt at Uni as opposed to doing an apprenticeship/internship instead.
I guess it depends what people’s qualification requirements are for what they want to do for a career/job.