Just wow at the student loan changes… eeek

[juliajo]

Students beginning university study this year upon completion of their studies will have to pay back 9% on earnings above £25,000 (aka, almost all full time wages now pay rises have been granted - national living wage is not far off that even if you decide to work in a supermarket after going to uni). It will now need to be paid over 40 years too so most of your working life, right through the expensive mortgage years and childcare years etc

I think this is catastrophic tbh and removes some of the incentive in education. I really hope schools spend time making sure cohorts fully understand the financial implications of university study, and think really carefully about what subject they choose. It’s a huge decision to make at 16/17 (when applying)

They will have more debt, so will pay it back for longer though. But yes, while you're still paying it back, anyone on the new system earning the same as you will be taking home more money.

Yup. I graduated in 2009, now have two young children and a mortgage and am paying off my loan. I actually spent a few years going further into debt as the repayments weren't as much as the interest being accrued on the loan. So after 14 years of repaying I've only actually taken about £7k off my original total. It's a complete shambles.

I couldn't disagree more with this. IMO university is a 'rite of passage' for many young people, immersing yourself in learning for learning's sake, being part of something, belonging to clubs and societies, making connections with people that may become your friends for life! Coming back to this later in life, often cannot mean that holistic experience as life has brought with it the responsibilities of growing up. I am not suggesting you can't return to study and be awarded a relevant and high class degree but that's not the only thing 18/19 year olds are after.

My niece chose not to go to university but did a degree apprenticeship in marketing instead. Now, three years later she has a full time job earning almost £30k a year and no debt! She has lived at home and while doing the apprenticeship did not pay rent to her parents so has been able to buy a car to get to work. She is now paying rent and is looking for a flat to move into with her boyfriend.

I feel she has missed out on student life and independence but she’s happy with her choices.

You're paying interest the second you take out the loan, including all the years you aren't paying. Interest way over the bank rate

As ever if your parents can help you, you'll save tens of thousands over the years but if they can't you'll be paying it forever.

It's not catastrophising to see this as another massive generational unfairness.

Are people really complaining about the equivalent of £37ish a month on a £25k salary? It’s less than many young people spend on an iPhone contract. My dd is in her second year of university, we’re a low income family and the changes wouldn’t have put her off at all.

Please encourage her to go if she is going to study something that pays well.

One of my dc got that idea in their head at the time, and now they're 40 stuck in nmw jobs.

@DressQuery does she feel that way about owning a house too? That will be a far bigger "debt" than any student debt. We see it as an investment in their future. There are salary calculators online that will break down the yearly salary into monthly amounts for tax and NI plus the student loan element. Also helpful for children of her age to know you don't walk home with £20k if the job pays £20k, good to see what is deducted out and how much. It isn't like they are earning money and then all of a sudden they start taking the money. They never see the money, it is just deducted at source.

@Kazzyhoward "Crazy isn't it? Minimum wage is close to £20k for a full time 40 hour week, and those jobs requiring qualifications pay barley more." The figures quoted to you were starting salaries in those jobs and were there to prove a point that you can be well under the student loan starting salary and potentially remain under it.

My child is a 2nd year uni student and doing a summer internship for their degree. They are being paid £24k pro rata, the graduate role for this job starts at £37k. It all depends what field you are going into. They cannot do this job without the degree so they have no choice but to go to university. They absolutely love their subject and the possible progression in terms of salary and job is great. But they knew this from the time they did their GCSEs, looked ahead not just at A levels but uni courses, jobs and salary plus housing costs, mortgage amounts etc. Both Dh and I went to university so this was something they had always known, we still have friends that we made at uni in the early 90s so this was always a conversation in our home.

I'm in agreement with the changes. This thread is full of posters who have not and will not pay their loans back.

As for it being a tax on the poor - let's not also forget that there are many 'poor' people that have not wanted to go to university yet subsidise further education through their taxes.

Where we are at the moment means that the money will be spent better elsewhere as far as I'm concerned. The NHS is on its knees/education in school (particularly SEN) is seriously lacking/MH services are non existent.

Those from lower income families can still go to university - they just have to pay more consideration into the type of degree they will study and what salary this will bring.

Yes, its not a level playing field but when is anything in life fair?

My ex h pressured my ds so much about uni.

And it made absolutely no sense as ds always wanted to be a police officer. It’s a degree apprenticeship.

But ex h wanted him to do anything at uni, sold it to him as a rite of passage. The real reason was, his siblings children around the same age were all going and he felt he had no bragging rights.

Luckily, ds thought it was bonkers. Why pay for a degree to join the police right after anyway when he could do the apprenticeship?

He’s in the last year of the police degree now, doing great, will finish with no debt having been earning and saving, and just carry on his job, do the professional qualifications he wants to do and go into a specialist department - and his dad is still pissed off at him.

I am quite disgusted by the custom in some arts sectors whereby payment for services is seen as optional. A lot of archives services wouldn’t survive without volunteers - well qualified ones, usually highly educated retirees, or students on arts and humanities masters - doing their cataloguing, digitising and admin donkey work. I know that the arts have always traditionally relied on patronage of some sort, commerce being a notoriously bad master for this sort of thing, but there isn’t an inexhaustible supply of volunteers able and willing to work for free.

Would the advice be to parents who can afford to pay fees, maintenance- the whole lot to just pay up front and for the student not to take the loan? I know there is no way of knowing future earning potential but is it still largely better to pay this way if you can afford to and therefore the student have no ‘debt’ / ‘tax’ to pay ever?

You can if you can work your way through the system of finding out exactly how to do it and exactly how much to pay. We were going to help my son to pay when he got married and had two children, but had real trouble doing this. They don't want you to repay it as they are making money.

Yep.

But this is exactly what is wrong with the system. Rich are debt free and get a cheaper education as not paying interest on a loan.

Coincidentally today I had a look at mine, what I pay per month doesn't even cover the interest. I pay £92 a month, the interest alone on the loan is £132. I'm now qualified for 9 years and have gained £3000ish on top of what I borrowed. I will likely not pay this off, and will be written off at the 25 years or whatever it is.
I'm not worried about it and don't care that I haven't paid any of it. I've bought a house, and got good credit.

Yell her it is,a future tax but it should not stop her doing what she wants
If shexwants to study dance she should
There are costs to everything

Anecdotally I know more parents who with the changes this year are now going to pay the fees. Obviously these are people who can afford it but a few years back they would have followed the Martin Lewis advice.

Except pre 2006 tuition fees were capped at £1000 per year not £9250. That's a huge difference
The maintenance aspect has also increased exponentially. In 2006/7 my uni accommodation was £52 per week, just checked and the same accommodation (except more than 15 years older) has nearly tripled

Plus interest rates were no where near as high -there was a period in 2009 where they were 0%

If you still aren't anywhere close to paying off fees 9xcheaper than the ones new students are going to be amassing then a) you can't have a very good or even averagely paying job and b) you are hugely lacking in empathy

Again if you are 39 then your max tuition fee loan was £1000
Can't you see how different that is to a total more than 9x higher, with much higher interest rates?
If you can't pay off your comparatively tiny debt in nearly 20 years then surely you can appreciate that it's going to be exponentially harder for those much younger than you?

You sound like the people saying "don't understand what all the fuss is about, in the 1980s we had 17%? Mortgage interest" ignoring the fact the average house cost about £20k....

Is there a way of working out how much you pay over the 40 years in total? Does it work out to more than the loan itself?

Because the interest is compounding currently at 6/7% (?) it seems that your whole working life you're just paying interest and not the capital?

It's very hard to work out as you don't know what your salary is going to be over the course of your career.

I did see some calculation somewhere that you could end up paying over £100k over 40 years and that's in real terms as it's inflation linked which is extortion.

@Exasperatednow does paying it all off make more sense if you're a high earner or a lower earner? It's just so hard to work out the best way to pay the least as there's no point in paying off the whole lot if over your working life you'd never pay it off and it would be written off at the end.

My DS has a Plan 1 for his degree and Plan 2 for PGCE. Unfortunately you can't pay the Plan 2 off first, both are paid off in tandem so he's paid nothing off the actual loans, just interest and that's after 8 years.

Genuinely surprised at how little people seem to get this. Those on Plan 1 are so privileged, yes you pay back more now but your debt was only £3k a year. I am Plan 2 and graduated with £50k of debt, for the first 4 years (all earning above the threshold) I paid more in interest than the debt so it actually went up. Now I will pay it back within the next few years as I’m a high earner but I am immediately disadvantaged compared to peers as they had family money so they get hundreds more a month than me, which makes the absolute point of it reducing social mobility. The new plan will fuck over current students. Better educated populations earn more as a whole. This is just another case of young people being fucked over.

also remember SL is monthly not annually - so any bonus or PILON gets rinsed in tax

Think of it as education tax. Also by going to uni you have the potential, though it doesn't always work, of earning more money.

yes my 15 year old dd said the exact same. she's also a high achiever such a shame.