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Original poster

Student loans to hit 12%

125 replies

GreenLunchBox · 13/04/2022 21:45

www.bbc.com/news/education-61088025

It always boggles my mind how nobody really cares about the student loans situation, writing it off as a 'graduate tax'.

At 12% interest a £50k loan becomes £100k after 6 years then £200k after another 6.

"But you don't have to pay it all off.. "
What if you have aspirations to getting a high- paid job?

Honestly, they are trying their hardest to widen the gap between rich and poor. If we still had access to studying in the EU I would encourage my kids to look into it.

OP posts:
TheAbbotOfUnreason · 14/04/2022 00:14

@stickanotherlogonthefire

Apologies, there really needs to be an irony alert emoji on MN.

Studying subjects like history is incredibly important.

cakeorwine · 14/04/2022 00:16

No offence but my kids aren't going to uni to earn £28k

That's just an example.

But don't forget that loans are written off after 30 years.

So most graduates are going to end up with debts being written off - except for those who have done exceptionally well and are on very good salaries, in which case, going to Uni was probably a good thing.

MidnightMeltdown · 14/04/2022 00:39

Very highest earners will pay it back. If a £50k loan is £250k by the time it's paid back by a council house kid and their rich kid colleagues didn't have to take put a loan in the first place, how hard is it to understand that the gap between rich and poor is widening?

@GreenLunchBox someone earning 50k+ isn't 'poor' by any stretch of the imagination.

Whether or not they grew up in a council house and used to be poor is totally irrelevant. They are not 'poor' at the point that they are paying back the loan Hmm

Interested in this thread?

Then you might like threads about this subject:

General money
MidnightMeltdown · 14/04/2022 00:40

The 'poor' are unaffected as they will not pay back the loan anyway

worriedatthistime · 14/04/2022 01:49

@cakeorwine 40 years soon not 30

worriedatthistime · 14/04/2022 01:53

@MidnightMeltdown a teacher or nurse will be paying it back for 30 or 40 years most likely
Even if its only £50 a month or so with cost of living so high that adds up
To think its not easier for rich kids ??
My ds is going to uni , hopefully he gets the job he wants and needs a degree for , maybe he gets a job 30 to 40 k eventually , then he also has to save for a house and pay his loan
A child from a rich family may have a loan gifted , so its clear who is better off
Ridiculous interest for a loan
I bet you wouldn't be happy if your mortgage was this high

Patchbatch · 14/04/2022 01:54

@IDontHaveAnOutingHobby

Yes. Martin Lewis saying it doesnt matter is just wrong.

When my DD and her partner wanted to buy a house it mattered. She had no loan but he did and it reduced their borrowing amount

(not a whinge but a fact that is never mentioned)

It depends, when we went for a mortgage yes my take home pay was less due to paying the loan off, but my wage was substantially higher because I was in a graduate role- so was better off overall.
Patchbatch · 14/04/2022 01:58

A child from a rich family may have a loan gifted , so its clear who is better off

As will invariably always be the case. They will likely receive help towards a first property, an inheritance etc as well. Yes it's unfair that take home wages for doing the same job are different, but its not unusual for rich families to be better off.

Personally a loan was my only way to university, parents couldn't afford to give me a penny towards it so alongside working it meant I could go to uni. Yes having money taken every month is annoying but I'm on much more than I'd be without a degree, so swings and roundabouts.

PinkPlantCase · 14/04/2022 05:32

[quote DownNative]@PinkPlantCase said:

"Because of the ghastly interest rates it has not possible for me to pay off my student loan. I think I’d need to earn atleast 75k every year for the next 25 years or something like that."

No, you don't even need to pay off your student loan.

"You stop owing either when you've cleared the debt, or when 30 years (from the April after graduation) have passed, whichever comes first."

Source: Martin Lewis

If you still haven't repaid your loan 30 years afterwards, it's written off by the Government.[/quote]
My point was that the system is broken if it’s designed in a way that it is not possible for me to repay it before it’s written off.

Since leaving uni I’ve earnt over the threshold to make payments but every year the loan still increases.

They whole system is floored if someone with a good professional job who requires university training will still have a large amount of loan to be written off after 30 years.

Original poster
GreenLunchBox · 14/04/2022 05:56

@MidnightMeltdown

Very highest earners will pay it back. If a £50k loan is £250k by the time it's paid back by a council house kid and their rich kid colleagues didn't have to take put a loan in the first place, how hard is it to understand that the gap between rich and poor is widening?

@GreenLunchBox someone earning 50k+ isn't 'poor' by any stretch of the imagination.

Whether or not they grew up in a council house and used to be poor is totally irrelevant. They are not 'poor' at the point that they are paying back the loan Hmm

I said £50k loan, not earning £50k!
OP posts:
Oblomov22 · 14/04/2022 06:00

I hate it and it makes me cross. I just think it's so wrong.

DoubleChinWoes2 · 14/04/2022 06:06

Surely only very high earners (i.e. the rich) will pay it back

I am a single income household, I earn £60k pa. I live in the south east and have a family of 4, rising everything including mortgage, food and bills. I am absolutely certainly NOT rich and this kind of thing really pisses me off. Earning 50k/60k doesn't automatic make you rich and therefore able to swallow this type of rise. I've cut back as much as I can, no gym, no extras, camping holidays. With petrol, childcare and everything else going up, I'm bloody struggling here

User7493268965 · 14/04/2022 06:30

DS is on Plan 1, he was the last year of this, the rate seems completely different and is only 1.5%, he also has to pay it on lower earnings, anyone over about 29 will be on this one

MarieG10 · 14/04/2022 06:33

@GreenLunchBox "Somebody earning £28,000 is paying back £11 / month = £132 a year for 30 years."

Not for long...what is happening is what was predicted....the goalposts being moved.

A friend who has admitted done well and just exceeded £50k salary with bonus etc. Her deductions are now:
Tax 40%
Pension 13%
Child benefit high income (what a joke!) tax 20%
Total 73%.

I understand why those at the opposite end of the threshold that are getting some universal credit but working, when getting a pay increase attempt to reduce their working hours to negate it

NameGoesHere · 14/04/2022 06:33

It’s appalling and discriminatory, make the rest of uk pay tuition fees then maybe this wouldn’t happen.

Toponeniceone · 14/04/2022 06:43

That said I don’t see why the taxpayer should fund someone to study english/art/history either, as used to happen. I think there should be far fewer university places and that degrees useful to society (engineering, medicine etc) should be free and those that are basically a hobby should be paid for by the student

Yes all those fucking English teachers that society doesn't need, just doing it for shits and giggles.

MarieG10 · 14/04/2022 06:50

All that had been done is create yet another back door tax. How can it be justified that a hard working single parent ends up with 73% of her salary deducted. She herself has said, if she could reduce her hours she would. She is now looking at paying all the excess into a separate pension as what she receives from that amount is minimal. Her colleague is now paying £10k per annum into a second pension as it is so pointless receiving the little they do over £50k but as she said, she could really do with the money now, not when she is old and knackered and kids grown us as all it will do is benefit them when she dies!

chantico · 14/04/2022 07:11

Well, they're already changing the 30 years to 40 years.

They've already frozen/lowered the earnings threshold for repayments (and inflation is likely to erode that further overbtime)

And the newly announced RPI for March 2022 is 9%

So yes, it's going to mean larger payments by more graduates and over a longer time.

Is it the March or the April RPI thats used to fix the following year's rates?

OakleyStreetisnotinChelsea · 14/04/2022 07:20

I have a ridiculous amount of student loans, currently have a plan 1 from original degree, plan 2 from retraining and a graduate one. I will never, ever pay it off and overall it increases as overall interest is more than I pay.

Now let's take into consideration that I'm in a specialist area of the NHS and my graduate loan is to further my skills in that specialist area which is one that mashes a huge public health difference and what I do can help save the NHS millions plus the wider economic implications of a healthier society who therefore use fewer resources, contribute more to work therefore tax etc.

And I will never earn enough myself to pay off my loans in full.

scaevola · 14/04/2022 07:25

A friend who has admitted done well and just exceeded £50k salary with bonus etc. Her deductions are now:
Tax 40%
Pension 13%
Child benefit high income (what a joke!) tax 20%

Those figures don't uite work

Tax: it's nil rate to personal allowance of £12,570, then standard rate to £50,270, and 40% only the on income over that. So as you say she's only just over £50k then not much will be at that rate.

CB repayments are on sliding scale scale - charge is 1% of the total received CB per every £100 over £50k earned. So even at £2k over that (which is what I guess you mean by 20%) it's 20% of £1133.60 (first child) and £741.40 (subsequent), which of course is not part of the earned income, which is not reduced by these payments - they will,still be receiving 80% of CB on top of their salary

And you have missed NI and local tax (Council Tax) from your calculations

FixTheBone · 14/04/2022 07:28

Simply not fair moving the goalposts.

My wife is a 'part time' GP meaning she only works 30 hours per week.

When she took the loan out it was suppose to be 1.5% for the lifetime of the loan. She's already in a position where it will never be paid off, and indeed the outstanding amount is set to steadily increase. She finished uni almost 15 years ago, when the loans were much, much smaller, I can't see any graduate ever paying off the entire loan these days, never mind people from poorer families doing lengthier degrees such as medicine or postgraduate degrees...

Waxonwaxoff0 · 14/04/2022 07:29

Maybe it's because I didn't go to university but I don't really see the big deal. Honestly I think a lot of people go for the sake of it now, some jobs you definitely need a degree for but there are other paths you can take to end up on a high salary as well. Admittedly I'm a low earner but I'm not very ambitious, I'm happy where I am. My ex husband earns £60k and didn't go to university.

My DS wants to either be a vet (obviously would need uni for that) or work in IT (which might not necessarily require a degree and if he decides to do that I'd encourage him to look at all routes into it, not just uni).

watcherintherye · 14/04/2022 07:32

No offence but my kids aren't going to uni to earn £28k

No offence, but if you think graduates, even those with Masters degrees, are going to walk into jobs paying £40K +, I’m afraid you’re deluded.

over2021 · 14/04/2022 07:57

@watcherintherye

No offence but my kids aren't going to uni to earn £28k

No offence, but if you think graduates, even those with Masters degrees, are going to walk into jobs paying £40K +, I’m afraid you’re deluded.

This. I work in HR and if you think the salaries mooted on MN are the norm you'd be bitterly disappointed.
cakeorwine · 14/04/2022 08:06

It's weird though.
It's not a loan. As you don't pay it back.
The interest rate is not fixed - it varies
The way you pay back depends on your earnings
It's not a tax - as you can stop paying it back if you earn a lot of money.