Student loans to hit 12%

[GreenLunchBox]

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.

[quote chopc]@NoSquirrels if you are so keen on education perhaps you should have been putting money away from the time they were born so you can facilitate their further education?

I agree with @GreenLunchBox - what's the point if going to Uni and using the tax payers money if you are going to be earning less than £28k? University education is not a right but a privilege and it's main aim is to get a degree rather than being a rite of passage that many go to university for [/quote]
But if you’re 18, want to spread your wings and not sure what you want to with your life, you’re not going to be thinking of tax payers money or fret about paying back the loan, are you? Since the tuition fees went up ten years ago the numbers of people entering H.E are still high.

@TheAbbotOfUnreason

What is discriminatory is English, Welsh and Northern Irish students cannot study in Scotland for 'free', but a French, German and Spanish student can.

Not any more - your 2018 BBC link is very out of date.

EU / EEA students starting new courses last year (after end of July 2021) will now pay the international fee rates.

The discrimination is actually still there for now:

"EU students who have already started their studies, or who start this autumn, will not be affected and will still be tuition-free for the entirety of their course..."

For years, students from the rest of the UK had to pay in Scotland whereas non-UK EU nationals did not.

It cost £19 million a year to fund them and isn't fully over yet. Eventually, yes.

So EU students that have started their studies prior to Autumn 2021 (those that started Autumn 2021 will pay international fees) get to complete their courses on the T&Cs that they started with?

Maybe your ire would be better directed to the English, Welsh and NI governments who decided not to fund their own students in the way that Scotland does?

[quote chopc]@NoSquirrels if you are so keen on education perhaps you should have been putting money away from the time they were born so you can facilitate their further education?

I agree with @GreenLunchBox - what's the point if going to Uni and using the tax payers money if you are going to be earning less than £28k? University education is not a right but a privilege and it's main aim is to get a degree rather than being a rite of passage that many go to university for [/quote]
You’re right. Silly me. Wish I’d thought of “putting money away from the time they were born”.

Alas, as my (very enjoyable) Arts degree enabled me to (enjoyably) pursue a very poorly financially rewarding career, much of which was, by necessity due to lack of other opportunities in that field, spent in London, and then I went part-time after having the children I can’t afford to educate with a man I met who’s also made career decisions based on interest not financial reward, I’ve found my career average earnings possibly aren’t more than £28Kpa. Sometimes more, often about that or less. So I suppose I’ve brought it on myself, and condemned my children to an impoverished fate. Thanks for pointing it out

@TheAbbotOfUnreason

So EU students that have started their studies prior to Autumn 2021 (those that started Autumn 2021 will pay international fees) get to complete their courses on the T&Cs that they started with?

Maybe your ire would be better directed to the English, Welsh and NI governments who decided not to fund their own students in the way that Scotland does?

No.

The crucial thing about the SNP in Scotland regarding this issue is that they've denied 15,150 places for Scottish based students as a result of this "free" fees. They go elsewhere in the UK then.

As a result, Scotland sends FEWER students from disadvantaged backgrounds to university compared to England, Northern Ireland and Wales.

It was a manipulative policy from the very beginning as its pretty clear thousands in Scotland are denied places despite their grades.

No, the ire is rightly directed at the SNP for this. The system in the rest of the UK is better in the long run and does not deny places to students due to a cap. Vast majority will never have to repay it - only a small proportion earning £55,000 or more will and they're certainly not a poor, downtrodden group either.

And why does Scotland have a cap?

Because they can't afford it.

Besides, the person I was responding to originally on this wrongly thought that England is the only part of the UK with uni fees. It is not.

@sashagabadon

It’s not a tax either as rich people can avoid it completely by paying upfront. For many it is just an extension of school fees ( in fact cheaper)

I would like to see some competition in the market , so banks offering student loans at competitive interest rates for those ( or their parents) that will likely pay it all back. So people can choose.
Although I guess that doesn’t exist as a thing because it would make the government loan book for just loans that are never paid back basically junk on the loan resale market.

This is actually a good point. 12% isn't competitive in the market at the moment. I wonder if more banks would take this up.

Obviously if they do then they will make the government look very bad.

The crucial thing about the SNP in Scotland regarding this issue is that they've denied 15,150 places for Scottish based students as a result of this "free" fees. They go elsewhere in the UK then.

The very disadvantaged Scottish students that I know were able to go to university because they could live at home and work several jobs and not have to take on huge amounts of debt.

You’re right. Silly me. Wish I’d thought of “putting money away from the time they were born”

Yes, it's one of those invisible barriers. When everyone in your family goes to university, you'll just 'know' that with both loans and grants before them, one component is the parental contribution.

If your family is different, then you may not and it can come as a late shock. Too late to do anything about it.

It's an aspect of the loan system that needs talking about more (and I think it's one of the things Martin Lewis has identified as an important step for improvement)

This is actually a good point. 12% isn't competitive in the market at the moment. I wonder if more banks would take this up

Banks don't generally make large insecure loans over a lifetime no term, especially to those without an income and uncertain prospects of when they will and what it'll be. I think that type of loan will be either unavailable or expensive, and repayments will need to be met irrespective of graduate income.

@TheAbbotOfUnreason

The crucial thing about the SNP in Scotland regarding this issue is that they've denied 15,150 places for Scottish based students as a result of this "free" fees. They go elsewhere in the UK then.

The very disadvantaged Scottish students that I know were able to go to university because they could live at home and work several jobs and not have to take on huge amounts of debt.

A few points here:

1. you're relying on an anecdote and, therefore, the Anecdotal Fallacy.

2. the vast majority of fee paying students will NOT have to repay in full. Only those earning £55,000 or more.

3. "The name 'student loans' frightens people....the truth is what we call a student loan isn't really a debt like any other, in fact it acts far more like a tax than a loan....in reality it isn't a tax, it's more of a contributory contract. In effect though, it's somewhere between the two."

4. "Many people earning over the £27,295/year threshold (2022/23) will never pay back their student debt within the 30 years. And lower earners won't repay very much at all.

So for many people what they borrow is irrelevant – they'll just keep paying monthly until the debt is scrubbed after 30 years. This is one reason why talk of £50,000 debts is nonsense for most."

5. The above applies to the 15,150 students in Scotland who have to out to the rest of the UK due to the SNPs cap. They're NOT disadvantaged under this system in the rest of the UK.

6. As of 2021, just 14.4 per cent of Scottish students will come from the poorest areas of Scotland. This means proportionately fewer of Scotland’s poorest teenagers receive a university place. This is the LOWEST level in five years.

In comparison, 28.8% will come from the richest areas.

According to UCAS, a rise of students from poor backgrounds equates to 6.2%, but the rate of students from affluent backgrounds was TWICE that at 13.13%!

Of the 3500 new university places in Scotland, a whopping 30% went straight to students from affluent backgrounds.

A paltry 8.4% of these places went to students from poorer backgrounds.

What's the upshot of this in the long term?

Simple - the poorest students in Scotland WILL continue to be hit hardest. And they will be worse off than their counterparts in England, Wales and Northern Ireland.

The SNP in another failure. Their policy with its cap is NOT as good as it sounds.

@Sacada

12% interest, 7% (forecast rising later this year to 10%) inflation....so not really 12%. IS IT ?. Do you understand the difference between 'interest rates' and 'real interest rates' (the only interest rates that really matter). I don't think you do.

Do you know you can communicate with people without being hideously patronising? I don't think you do.

It's a crazy situation.

I graduated in 1985 when there were no fees but there were also no loans. The govt gave me a pittance of a grant that covered my halls room and about half my books. Then I either had wealthy parents (I didn't) or I worked all year alongside studying, and I nearly starved.

I graduated and have paid higher rate tax for the last 35 years, because then a degree gave access to higher salaries, so paying back my grant/tuition costs.

It was pretty cold and uncomfortable but it worked better than the current system. Those with wealthy parents had much more time to study but at least we didn't all end up with millstones around our necks.

And the govt got their money back through income tax. It seemed a much fairer system.

@OakleyStreetisnotinChelsea

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.

You'll never pay it off in full because it's written off in 30ys

@DownNative

1) you're relying on an anecdote and, therefore, the Anecdotal Fallacy

I know - works every time

[quote TheAbbotOfUnreason]@DownNative

1) you're relying on an anecdote and, therefore, the Anecdotal Fallacy

I know - works every time [/quote]
On the contrary, Anecdotal Fallacies NEVER worked when they come up against statistics. See above where your attempted reasoning was simply deconstructed.

It’s more that anecdata never fails to get a rise from the outraged.

@TheAbbotOfUnreason

It’s more that anecdata never fails to get a rise from the outraged.

Here's me thinking we were having a serious adult discussion.

And I'm far from feeling outraged. I never get emotional during debates because I'm focused on the point.

Anyway, I'll take that as you've run out of road in the debate when faced with actual statistics. Not a problem!

No, I wasn’t really debating as I’m not averse to the Scottish Government funding young people to go to university.

But do crack on.

[quote chopc]@NoSquirrels if you are so keen on education perhaps you should have been putting money away from the time they were born so you can facilitate their further education?

I agree with @GreenLunchBox - what's the point if going to Uni and using the tax payers money if you are going to be earning less than £28k? University education is not a right but a privilege and it's main aim is to get a degree rather than being a rite of passage that many go to university for [/quote]
Maybe you should tell people they must sign an agreement that if they go to Uni, they must get a career and earn lots of money, not take a career break, not have maternity leave, part time work, not have a career that doesn't pay well etc.

I wonder what you think of people who go to Uni, meet someone, have children and never have a high flying career again. They never pay off their student loan.

University education is not a right but a privilege

I don't think it's either. We need doctors, nurses, lawyers, accountants, engineers, other professionals for which a degree is needed. It's very short sighted to think that a degree is only a benefit to the people taking it.

@TheAbbotOfUnreason

No, I wasn’t really debating as I’m not averse to the Scottish Government funding young people to go to university.

But do crack on.

Me neither and it's a pity the English/UK government is so blinkered about this.

But in the UK (England) everything has to make a profit. There's no sense that anything should be a public service (except the NHS, to an extent).

I graduated and have paid higher rate tax for the last 35 years, because then a degree gave access to higher salaries, so paying back my grant/tuition costs

Exactly - everyone seems to forget that graduates pay far more in tax than they ever received in tuition. I didn't pay fees and had a full grant except for my final year when I had a small student loan which I paid off as soon as I could. I've worked since 1996 with very little time off and have paid tax throughout.

@NameGoesHere

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

They do???? The only exception is Scottish students who stay in Scotland, who only pay a relatively small contribution at the end of their studies, and NI students who stay in NI, who pay about half the amount (£4.5k p/a rather than £9k) All English and Welsh students, and Scottish and Irish students who study outside of their own countries (but in the UK) all pay full tuition. Get your facts right before you complain about something that isn't true.

I will do everything I can for my children not to have student loans. I guess that may have to mean university abroad.

For the majority, as you say, it’s just a graduate tax and if you’re unlikely to pay it off 50k or 200k really doesn’t matter. It’s not real debt. But it is an extra tax and I did notice the difference when mine was paid off. I was in my early- mid twenties and really wanted mine gone.

@cakeorwine what do you think I think of them?

I believe you should be responsible for yourself. The questions you have raised lends itself to a whole new debate about the nanny state

But I sincerely believe that people shouldn't go to third rate university doing Micky mousse degrees for the hell of it at the tax payer's expense . I think the landscape is changing now with more apprenticeships coming up which is a good thing