To believe £27k University debt will put children off?

[Mitmoo]

I am a graduate so value education but now we've seen that so many universities will be charging £9k a year that it will make todays pupils think that a degree just isn't worth the cost?

I know it doesn't have to be paid back until they are earning £21k or thereabouts but they are looking at 20 odd years of debt, more for some and no option to pay it off early if they get a windfall.

Add that to so many graduates not in graduate jobs and others out of work.

AIBU to think we are going to go back to the bad old days when university access won't be based on how smart you are but how much money your parents have?

They will either have to rent or buy catgirl it's not like he won't be able to live anywhere.

sunshine the first years after I graduated I had to pay back a percentage of anything I earned over 10k!!

I do agree the government isn't clear on this either. And I do agree with sunshine that fewer people should be going to university and those that do should be fully funded and going hsould be based on merit. I thought 50% target was crazy.

I don't like the current system and I don't want to sound like I am defending it. What worries me is the prospect of talented young people being put off orm going and I think we have to try to help them overcome the worries about the debt until the funding situation changes.

mitmoo - sorry I didn't understand your post? Who won't be albe to live anywhere?

Will this lead to a whole load of jobs at set salaries which will keep the worker just under the threshold and others working in lesser jobs to avoid paying?

Or people working part time so their salary remains under the threshold? I'm assuming they don't pro-rata it?

I don't think anyone would really chose to financially disadvantage themselves like that would they?

I don't think it would financially disadvantage some people though.

How would it not?

To say - I could earn £30k but I chose to eanr £20k because at £20k I do not have to pay my student loan back but at £30k I have to pay £15.5 a week and I would rather not earn the extra £192 per week to avoid paying back that £15?

If anyone could give me the example where you would pay back more than you would earn I would be very interested as it doesnt exist so yes, you would always be financially disadvatanging yourself.

Husband and wife could both work part time earning 21k each rather than one going to work full time for 42k

Yes - but if they could both work for £42k - why would they chose to both work part time or chose for just one of them to work full time? That would make no sense.

Again - out family income could be £84k but just to avoid paying our loans back we have both decided to limit our careers and family incomes and both earn £21k.

They are a lot worse off if they both work part time for £21k instead of both work full time for £42k. Makes no sense?

They may both choose to work part time for childcare reasons.

I can't imagine childcare costing £42k per year. Which is how much they are chosing not to earn by both working part time.

If they are both capable of earning £21k part time and £42k full time (for the purposes of this example) I really don't believe anyone would chose to not earn the extra £42k just to avoid paying back loans.

A person might chose to work part time for childcare reasons or work life balance but those reasons would exist under either system. I do not believe for a second they would make the decision not to earn £42k just to avoid paying back a loan.

I don't think we have seen people deliberatly chosing to only earn £15k when they could earn more just to avoid paying back loans under the current system. Given the new system is "cheaper" in repayment terms I really think it is crazy to think it might happen.

However - I do believe the majority of graudates on the new system will never pay back what they owein full, but due to inability to get jobs paying sufficient for them to do so rather than choice. For that reason the system seems flawed if it is designed to increase the revenue to the government. I actually think it will cost more and decrease it.

Can I pop in here please?

I am an '80s graduate. 1st degree maintenance grant (no fees) plus a small covenanted contribution from not-well-off parents, which meant I could claim back the tax. In those days we could also get housing benefit and dole in the long vac. I graduated having never been in the red.

2nd degree was Medical research council (MRC) grant funded

3rd degree was part MRC and part Cancer Research Campaign (now Cancer Research UK).

I am incredibly lucky, and one reason I now work happily for the Charity/NHS sector, using my degrees every day, is because I feel I am paying it back that way. I would categorically not have gone to uni if I had been faced with inevitable debts.

Enough of history.

DS is 3. If we assume that this £9K a year fee will increase by retail price index and that stays at 4-5%, by the time he gets to going to university then the annual fee is going to be £20K+ so the total for just fees is going to be well in excess of £60K.

How many years is that going to take to pay off?

And we are all assuming that this whole experiment with our children's (and the country's futures doesn't implode when some future Govt of whatever party realises that it can't ever work long-term?

I don't think it will work long term. It will cost so much to pay out in the first place with little return I don't really see how it can be sustainable.

Agree with MrsKravitz further down who said that university education isn't being advanced by higher fees. Students paying £27k for their degree will want, nay, demand value for money as will parents who whilst not paying directly end up financing the students to some degree (it's a fact that maintenance loan/grants barely cover accommodation aside from all the other expenses and in the current climate student jobs are thin on the ground) The end result may be that universities find that 'customer satisfaction' will mean more contact time and more spoonfeeding which isn't what studying for a degree is all about.

Just to clarify wrt funding - full loans for fees are available for all and are not based on income assessment. There is a basic maintenance loan also available to all and an additional amount that can be accessed but that is means tested. They take back some of the loan and give you a bit of grant. As mentioned above though it doesn't cover all the costs and it's then that low income families start to worry because they (we) can't find the extra to help out. Also it doesn't help that Student Finance are crap and can't do their jobs properly. I had to bank-roll my son for his first two months because despite applying waaaay in advance and sending all the evidence I was asked for (twice in some cases) ds didn't get his loan paid until the beginning of December.

I expect they charged the interest from Day 1 though.

moonbells, if the fees go up by rpi, then in real terms they don't go up & in terms of buying power and probably average salaries etc they will be the same.

Catgirl, in your example the couple are not losing out on £42k by working part time since above £21k their marginal tax rate (inc loan repayment and NI) is a whopping £41%. So they are really only loosing out on £24.7k take home, which would be rather expensive childcare for two children, but quite reasonable for 3? (I'm not really up on childcare costs, but it sounds about right for a full time nanny for example) and if they were choosing say to homeschool instead of private education it could leave them in pocket. I agree it's not a choice that many would make, but when marginal tax rates are that high it will tend to act as a bit of a disincentive to work longer hours imo, so I think women will be more likely to take longer career breaks to have children for example and be more likely to become SAHM. The real issue for me though is that these loans are repayed for so long, so will continue to hit people in the pocket until they are in their 50s.

I agree that students will probably demand more value for money -- but is that a completely bad thing? I'm finishing a postgrad at a Russell Group uni and I find it literally shocking how badly run most of the administrative aspects are. I'm not talking about coddling or hand holding, I'm talking about things like losing a week's worth of lectures because they couldn't get the schedule sorted in time. There is also so much waste, for example our perfectly good department website has been overhauled 3 times in the last 5 years at the same time they are eliminating grants for students to do field research and attend conferences.

I don't think fees should be raised but I don't have a problem with higher student expectations if it helps universities get their act together.

I agree Snorkie but it is going to be rare that someone makes that choice and they will not be making it based on the loan - they will be making it based on the cost of childcare.

Also - how long the loans will take to pay off depends on the earnings. The more you earn the quicker it is paid off. I was paying about £800+ a month of in student loans at one point, and although it was a lot it did get paid off very quickly.

If you earn less, then yes they will hit you for longer but at a much reduced rate. On the average salary (£27k?) it will only be about £10 per week which is not a huge amount in exchange for an education, but yes would take close to 30 years to repay.

Tuition fee loans of up to £9k are available for everyone, regardless of household income. Maintenance loans are also available to all: how much you get depends on income, the minimum (for those from households earning over £62,500) will be £3575 in 2012. Students from poorer households will also get a grant of up to £3250.

This is slightly more than is on offer at the moment but of course fees are capped at just over £3,000 now. Students don't pay up front fees at the moment, so that's not new.

Repayment is at 9% of income over £21000. Lots more information available here

Overall, your repayments are the same however much you borrow so you should go for the best uni you can get into. Fee waivers and bursaries are also available for those from households with incomes under £25000.

I hate what the Govt has done and how they have slashed HE funding. I also have serious concerns about the marketisation of HE signalled in the White Paper. But I actually do think that poor students shouldn't be put off going to uni if they can and it would be a disaster for society if only the children of the rich went from now on.

Students do currently pay up front fees scarlet? I know I did.

Not since 2006 I think. Whenever fees went up to £3k

Ah fair enough - I thought they were still upfront but that would be pre-top up fees.

No - not currently paid up front. I have two at university at the moment [skint]

Dreaming - I agree not a completely bad thing. I'm sure improvements can be made.

Mine will be applying this time to go in 2012 depending on AS level results. I am a single parent on a low income so she will get all the grants and bursaries going. We estimate that she will still be around 27K in debt after a 3 yr course, will be more if she choses a course that is longer.

Now if I had a partner on a similar low income that debt would rise to approx 39k, factoring in living expenses, as there will be less help on offer.

I feel sorry for families on low incomes and also on middle incomes. That level of debt will make it very difficult for the students to save for a deposit on a house, pay into a pension etc.

It won't stop mine going though if she makes the grades she has as much right as students from rich families, who probably won't bat an eyelid at shelling out 16K a year. Most will have been able to afford this in private school fees for the past 13 odd years anyway.

The general consensus amongst her peers who are turning 18 next year and suffering these fees, is that it's highly likely, they won't pay it back so stuff it lets go anyway.

I am so glad to hear that is the general consensus amongst young people adams and I hope it grows and continues.

If someone has got the grades and the talent they absolutley have as much right to go and it would be a tradegy for this country if only the "rich" students went.

Good on her and good luck to her.