How can this be right? It isn’t . Martin Lewis on uni costs.

[Dowser]

Watched Martin Lewis tonight as grandson is off to uni in two years.

So...it’s £9000 a year tuition
Then the highest living allowance is presently £8700 per annum

So...if your parents earn over £25k , your maintenance loan is reduced.
Some parents didn’t realise that they were expected to top up to the full amount
One poor lad was attempting to live on £4K . His parents hadn’t realised they were meant to top up

Then there was a young girl who had to leave uni because her mum got a new partner. The students loan went down from full to low and this guy who wasn’t her father, had only been with the mum was expected to pay for someone else’s child. I think there was a shortfall of £5k

Martin Lewis rang up the student loan company and was told it was correct.

He’s looking into it.
I was shocked at that.

@myusernamewastakenbyme you say your 2 get by ok on their loan and DF's top up.

I think most kids at uni do get by ok, but I think the point of this thread is the contribution that the parents have to make and the fact that they don't necessarily get by ok.

But as it stands the loan can be paid off quicker if you are a high earner and so you pay much less in total than a middle earner who pays continuously for the full 30 years.

The same applies to mortgages, of course, and to any other form of loan.

Why doesn't the government sell the debt for more or hold the debt themselves?

The same reason that we're paying billions under PFI for all those shiny new hospitals and schools for decades to come. It gets the debt off the government's balance sheet. When you had a govt like the Blair/Brown years who were splashing the cash to buy votes, that money has to come from somewhere. They were desperate to pretend they weren't borrowing in their era of so-called prosperity, that they sold their souls to the likes of PFI, student loan companies, etc., so that the eye watering official debt/deficit figures weren't even higher.

(And the reason why a straight graduate tax would be iniquitous is that high earners would pay an absolute fortune for the loan: who would become a consultant doctor - to cite the example usually trotted out as one of the "good" degrees society should be fine with - if the effect would be to pay many, many times over the odds for qualifying).

ReflectentMonatomism

Yes because they are loans.

You are saying student loans are actually a graduate tax and comparing them to the fact that you pay more towards schools and drs because you are a higher earner.

I am saying student loans are the opposite to this. Lower earners pay more because they pay for longer. So low earners are paying a higher "tax" than high earners.

Lower earners pay more because they pay for longer. So low earners are paying a higher "tax" than high earners.

Aggregated over 30 years, yes, that's true. Year by year it isn't, until the last few years.

Now propose a better system which actually reduces the payments for lower earners without also reducing the payments for higher earners, but which also does not require a crystal ball to predict future earnings.

Surely the Chancellor doesn't just come up with the budget all by themselves? Anything at all in the public sector doesn't happen without armies of of civil servants and multiple meetings/calculations etc - I wouldn't have thought that something as important as The Budget is just one person and a spreadsheet.

Probably not even a spreadsheet when you consider some of the ridiculous tax changes that have been made in the last 20 years. Brown sold off our gold at rock bottom prices. He knackered our pension schemes by changing the dividend tax rules. He brought in a zero percent company tax rate and couldn't understand why hoardes of one-man window cleaners suddenly converted themselves to limited companies. He brought in tax credits at completely ridiculously generous levels and didn't bring in any anti-avoidance rules for them, meaning loads of people set up bogus/pretend businesses so they would be quids in claiming tax credits! Don't forget increasing the highest rate of tax to 50% which resulted in lower tax revenue from those earning that much! Then we come to the coalition - if we thought Brown was bad, then Osborne/Cable took stupidity to a whole new level, with the £50k per person cut off for child benefit, the whopping 62% marginal tax rate on those earning just over £100k which has meant huge numbers of GPs and dentists have cut down their working hours to keep under the £100k threshold, same happened with reducing the lifetime pension allowances which again hit GPs and dentists hard so again, they had to work fewer hours to earn less so less was paid into the state superannuation pension schemes. And for hilarity value, the ill-conceived and badly implemented pasty tax!

So, no, maybe not only by the Chancellor themselves, but they seem surrounded by incompetent advisers too!

Now propose a better system which actually reduces the payments for lower earners without also reducing the payments for higher earners, but which also does not require a crystal ball to predict future earnings.

Well, by not charging interest, or charging a more palatable rate of interest would go a long way to dealing with the unfairness, wouldn't it?

Now propose a better system which actually reduces the payments for lower earners without also reducing the payments for higher earners, but which also does not require a crystal ball to predict future earnings.

Or make it simple like an extra x% on income tax, so that it's payable on ALL income over the personal allowance for life. That way the people earning nothing at all, don't pay anything, those earning pay proportionally to their income for life. Much fairer and simpler. So, howabout saying 1% surcharge for each year of university. So if you do a 3 year course, you pay an extra 3% tax, on a 4 year course, you pay 4%, if you stay on to do masters and spend say 6 years at uni, you pay an extra 6%. All less than the current student loan repayment percentage, but more money will be generated for the Treasury, because it's payable by more people and for longer.

Kazzyhoward

Exactly!

Well, by not charging interest, or charging a more palatable rate of interest would go a long way to dealing with the unfairness, wouldn't it?

You'd still have the same 'problem' in that very high earners pay it back quicker so have a lower marginal rate of tax.

Next!

Graduate tax - I agree! (Not related to years spent at uni though - far too many unintended consequences to that one.)

For the vast majority the current system works just like a graduate tax. Conservatives have never liked to be the party that increases taxes though, which is why we have this 'almost graduate tax but not quite' system.

Might change in the future. Watch out for subtle name changes. Student loan -> student contribution. Who knows.

Or make it simple like an extra x% on income tax, so that it's payable on ALL income over the personal allowance for life

Fantastic news for the children of the affluent studying at top universities: they just pay the fees up front, or (if you come up with some "you have to take the loan") scheme just opt to pay international fees or go to America.

Great news for ex-pats: as they don't pay income tax, they get their degree free (there is a reciprocal agreement with many countries to collect the loan repayments; by definition UK citizen ex-pats don't pay UK income tax).

Bad news for school teachers in their early years on £30K: they're paying 4% of 20K, so £800 a year, when they are currently paying 9% of 4K, or £360. Indeed, terrible news for everyone earning less than about 40K.

Utterly appalling news for junior doctors on 40K, who will be paying £1800 per year instead of £1260.

Pretty shitty news for teachers on small pensions, who will be paying for their qualifications until they die.

Still, it's not as if affordability of housing for people in the first ten years of their career is a problem, is it?

Next?

titchy got there first on the effect of lowering the interest rate. But forgot "affluent parents simply take the loan and use it to buy a buy-to-let, while paying their children's fees direct", which is why the interest is now charged while studying.

As Gordon Brown found out, markets respond to signals, but not necessarily in the way you think they should.

(You're also forgetting that loan repayments are made out of net, not gross, income, so people who are rich use a larger proportion of their salary to pay each pound of the loan repayments).

Just work while thee - it isn't that hard. I went to oxford - graduated with a first. Had the loan which didn't cover accommodation. I worked as a breakfast waitress at the hotel next to exam halls in the morning (made it easy for lectures) and at the dewdrop inn in summer town for a mix of day and night shifts. Long holidays - I worked in a factory or as a temp. Only time I did t work was the last two terms in prep for finals and I had money saved up for that.

It is possible - I still belonged to societies and sports teams, charities rep in the JCR etc I was just busy!

It costs a lot more than the loans given to train a doctor, a lot longer too.
This is one area governments have up till now subsidised thank goodness.

The BMA have produced a table of costs.

Sorry wrong link sheesh...