to think that massive debts on Uni fees will have a knock on effect on the housing market?

[donkeyderby]

What happens when a graduate earns enough to be in a position to get a mortgage? Won't they then be slammed with paying off debts from University which will either stop them qualifying for a mortgage in the first place, or make their outgoings unsustainable? Add to this a VAT rise, massive fuel bill rises etc.

I'm glad you can afford all that, MrsGuy. But for many of us, the purpose of higher-education is to get a skill that will lead to a higher paying job.

Sorry if you find that reality drab and dull, but it's real life for an increasing number of people for whom education just for the sake of it is a luxury.

People have to be able to pay bills and eat, and seek to achieve skills employers find valuable and pay decent money for.

It's negative in the sense that if you're paying it to the student loan company you can't spend it on your mortgage.

I think it uni debt is factored into what you have as expendable income (I know mine was), but not considered to affect your credit rating. So wont affect whether you have better interest rates available etc., but will affect what they consider to be your take home (no change there).

DH and I had 40k debt between us when I finally graduated and we got married. In 5 years, we've cleared it by living as lodgers instead of having our own place on a single income of 30k. I bring in about 9k self-employed, but can't see it ever increasing. It is possible!

The days of degree education for the 'love' of education are over.

It was maintainable when 10% of students went to university, but not when the target is 50%.

A lot of non-vocational degree courses will suffer, but so will the mickey mouse degrees being taken by people who shouldnt be at Uni in the first place. If it costs good money to do a degree, people are going to choose degrees that have worth in the job market once they are over, or take an honest look at their reasons for wanting to go to uni and see that the 3 year job-dodge is too expensive.

Fair trade off IMO.

We need a return to apprentiships, employer funded trade colleges etc rather than a dumbing down of the degree standard.

Call 999. I'm having a heart attack. Cause: not heart disease, but because for once, I agree with ccp.

Actually, and I can't believe I'm saying this - the system might mean it's MORE possible to take a degree for educationor interest sake, rather than to "gt a gd jb"

Bearing in mind that the debt doesn't have to start being paid back til you are earning 21K, it's OK to take a degree that might not lead to a high paid job, because then you won't pay anything.

ccp - spot on.

Hmmm interesting seeker

the cuts in funding for arts & humanities courses might make that possibilty moot though - so stop your crying, your priciples are intact!

Agree about mickey mouse courses and 50% taking degrees. Far better to do a good, well-focused, vocational skills course than a crap degree at a crap uni.

I suspect a lot of these graduates won't earn enough to start paying back their loans for years because this country doesn't produce enough graduate level jobs.

I have one of the very first student loans where I have to earn 80% of the national average before my loan repayments kick in. That's currently £27000. I have what I think is a well paid job and I've been working for 14 years. Because that threshold figure keeps rising, I honestly suspect I may never pay back my student loan.

Have a look at the current job market and there's not a lot of jobs with a salary over £21000 and competition for those higher-paid jobs will be immense. Regardless of whether you think the changes are right or wrong, no one seems to have asked if they will actually have the desired effect. Where does the finance for these loans come from? If it's the government then it may not be recouped as quickly as they hope and the public deficit isn't reduced. If it's private finance,will the interest rate mean graduates will take even longer to pay off an increasing debt?

spidookly you'll have to trust me on this one - i do not agree with any of this. However as i understand it (with 3 coming up to Uni age, one 2011 and one 3 years later and 1 three years after that all on at least 4 year programmes if they study what they currently aspire to), the 'debt' students will owe for their fees isn't treated the same way as other debts so it will not reduce your ability to get other loans eg mortgages.

However, in practice even if you 'only' pay £25 pcm extra tax to cover repayment it reduces the size of any loan you can afford to repay. This is all early days and after last night's resounding victory debacle, the ConDems now have to work out the fine detail.

Watch this space.

Btw, housing costs far too much in the UK. Whatever happened to it simply being the place we call home?

They will be paying back less than they are now, so if anything it will make mortgages more affordable.

coalition - how do you work out they will be paying less back when the tuition fees are 3 times as much as now? Doesn't sound logical. i estimate my children's debt will be around 50k each with living and tuition fees

The highet threshold means that the monthly payments will be lower, as they are proportional to income not debt size. They really AREN'T like other types of loan.

This is the argument for them being more progressive.

This is monthly payments against salary under the old and new systems.

Salary Current New
£10,000 £0 £0
£15,000 £0 £0
£20,000 £38 £0
£25,000 £75 £30
£30,000 £113 £68
£35,000 £150 £105
£40,000 £188 £143
£45,000 £225 £180
£50,000 £263 £218
£55,000 £300 £255
£60,000 £338 £293
£65,000 £375 £330
£70,000 £413 £368
£75,000 £450 £405
£80,000 £488 £443
£85,000 £525 £480
£90,000 £563 £518
£95,000 £600 £555

Source: Me fiddling about in Excel

So a Graduate earning £35,000 would have 45 pounds more to spend a month than they do at the moment.

I think it will affect the housing market as in effect its a 9% extra income tax on income over a certain amount - they take into account things like childcare costs in affortability tests so would take this into account.

However it will probably take 10+ years for it to have an effect.

MumNWLondon - The new system is MORE affordable from that point of view.

Its more affordable than current but they'll keep on paying it for much much longer since the fees/debt will be bigger. Might not have much impact on buying first house but would mean that most people paying it for significantly longer.

Person on £35k pays £105 a month? And borrows £50k? They'll never pay it back.

Someone on £50k borrows £60k (possible) pays £208 will take over 25 years to pay back (24 years with NO interest).

An affect on the housing market assumes that the majority of students will have such large debts to pay back.

The majority of current students come from middle class backgrounds. I see it becoming less likely for working class teenagers going to uni and it become more the norm that those who's parents can pay, get to go.

Young people are never going to be able to afford to buy their own home anyway. Gordon Brown stole their future during his years "no more boom and bust" in power.

The house price crash has a long way to go yet.

Of course it will have an impacton the housing market - mortgages these days are based on affordability criteria not just income multiples - mortgage lenders are required to work out your disposable income and base lending decisions on that.

More money in student fees per month and for longer = less disposable income.

But more than that, I think the main effect will be psychological - taking on a big mortgage debt is scary enough with houses at current prices - but if you knew you had a 45K loan to pay off on top of that, it would surely affect how keen you'd feel to take on another huge debt.

It would certainly have terrified me.

granted - and a loan of 45k is per person? so a couple trying to buy a home will have a join student debt of maybe 90k

"Remember that those with degrees earn 50% more than those without."

As I said on another thread, that's bullshit -- the so-called "graduate premium" is estimated at 100K over a lifetime. Take away 40K plus 3-4 years of lost earnings, and that difference whittles away to almost nothing.

Will it affect your ability to get a mortgage? Student debts already do, according to my estate agents -- currently having student debts is one of the things that mortgage lenders count against you because their lending rules have tightened so much.

But I suppose that's merely anecdotal. After all, my estate agent has only seen hundreds of disappointed first-time buyers over the past couple of years.

Isn't it the case that house prices are currently too high, so any recallibration of house prices against earnings can only be a good thing. My opinion is that earnings potential is dependent on the degree choice, but a good degree in science or engineering should enable a salary approaching £40k at family starting age.

I think there's a danger in creating a generation of young people who are accustomed to scary levels of debt. Given what caused the financial crisis, we'd be better off with a society of people who think debt is A Bad Thing and try to live within their means.

i am a graduate, i also have a masters and contemplating a PhD now. I am 52 - I earned megabucks (ie over £60K) for only 4 years of my career. I currently earn around £20k in a good year.

I do not believe that getting a degree necessarily gets you a high paying job. Ie teachers, nurses, maybe doctors maybe dentists?