to ask you to explain uni debt etc

[sweetsummerlove]

I don't 'get it'

students do A levels. ..go to uni....get loads of debt for it. ..but I read so much about no jobs etc. I don't get it. I also don't understand how it amounts to 40k debts..how do you ever pay it back?

Every now and then I think I'd like to be better educated. . Further myself. Earn more. .......but im getting the impression that it's not actually like that.

I honestly don't have a clue..my friend was taking about thinking of going to uni too..and that her dad reckoned it was just a matter of time before they wiped all student debt anyways (don't understand this either! ?)

can someone explain to me? >

Tuition fees of 9k a year plus a loan for living costs will add up to 40k easy over a 3-4 year course even with part time working.

here

When I went it was less, so about £4 per year (fees + living costs) and I ended up with a £16,000 debt to the Student Loans Company which is an off shoot of the government.

However, I stayed on and did a Master's and a PhD (both paid for by scholarships so did not accrue new debt) and thus did not start paying off my SL until this year when I finished my PhD and got a job. So the interest has been mounting and I now owe £19,000.

The interest is a lot more than you're led to believe, so if you don't earn much then it's hard to break into paying off the capital. If they privatise the loans as they are threatening I will take out a bank loan and pay it all off at once, at least then I can have a fixed-term interest loan where the t and cs won't change in hindsight!

***£4,000 per year

how do you ever pay it back?

I don't think people will. When I went to uni tuition fees & loans had only just been introduced, it cost £1000 a year to go and then whatever your loans were on top of that. On some courses it's really hard to work at the same time as studying, so your loans end up covering your tuition fees & your living expenses. 12 years after leaving uni I'm still in debt (not huge, thankfully) and I'm hoping to god they don't privatise the SLC as they're threatening to - otherwise I may never get out of debt.

For me it was worth going as my debt isn't huge, and I wouldn't have been able to get the job I'm in now without a degree & postgrad qualification. But I wouldn't bother to go if I were an 18/19 year old now. For a 3-year uni course, you're likely to leave in 40k of debt, minimum. If I were to try an better myself I'd try and get a job where you can study for a Masters / undergrad through work. You used to be able to do that through certain healthcare professions like Nursing, not sure if that's still the case these days.

I can see how they end up with that much debt. I've got about £26,000 of student debt. 3 years x£3000 fees + 3 years x£7000 loans for living costs (London uni). If you do a longer course or go to uni now with £9000 fees I can see how you end up with even more debt.

Every month when I earn enough about £16 comes out of my pay along with my NI and PAYE tax.

Atm, I'm barely keeping up with the interest and can well imagine it getting written off in 25 years when I still haven't paid it off.
DP earns lots more than me and he may actually pay his all off in about 10 years.

The thought of the debt didn't even once put me off going to university, I don't really see it as a debt anyway - more like an extra tax. It's not like there are any penalties for not paying (as long as you are honest with the student loans people), and I don't think outstanding student loans will affect my chances of getting a mortgage in the future as I don't have any other depts/good credit score etc. etc.

in my case took minimum loan, 3k a year, worked for a year before uni and part time during uni plus full time in holidays so left with under 10k of loans. overpaid every time I could by going without things and worked hard to rise in my profession buy studying and working at the same time. paid it all off by age of 28.

now only owe on my mortgage and nothing else

its possible to do but you have to be prepared to make big sacrifices

Personally I think people are getting far too hung up over the 'debt' you will end up owing. I think it totally misses the point and the government have done an utterly abysmal job of explaining it and labelling it.

Under the new system, technically yes you will owe a lot of money and yes you will have to pay interest on said debt.

But the crucial part is this. Unless you are going to be a very high earner, chances are you will never pay this debt off and it will be written off in 30 years time. Now some are probably thinking "This guy's nuts! Never being able to pay a debt off in 30 years, that sounds SHIT" But in reality it's not.

If you actually look at the figures the new system is more akin to a graduate tax than a traditional loan. ie. you pay a percentage of what you earn once you earn over a certain amount.

So until you earn £22k, you pay nothing. Nada, zilch. If go on maternity leave, payments are suspended. If you lose your job, nothing. etc.

Let's say you earn £22k. Oh crikey! You now have to pay!!! How much??? £90 PER YEAR or around £7.50 a month. How much is your mobile contract? Considerably more I dare say!

And what about if you are lucky enough to earn say £50k? Well yes...by then your monthly repayments would be around £215ish. But don't forget you are taking home £3k a month net! It's not exactly unaffordable.

Of course paying nothing back is always better than £215. But those days have gone and there's no point in crying over that.

Put this another way. If someone said to you. "If you give me £215 a month, I'll give you a job paying £3k a month", what would you say? I'd bite their fucking hands off.

All this needs a mindset change and it's criminal the government haven't promoted this more.

Lastly, how many people say "oooh don't get a mortgage. Look at all that debt you take on! It'll take you 25 years to pay off and there's not even a guarantee the house will be worth it!" How many people look at how much they repay in total? I know I don't. I look at what my monthly repayments are.

Education is an investment and what we have now is a pay as you earn higher education system. If you earn the big bucks then you pay more. If you don't, you pay nothing.

niceguy2 has put it very well. It is a lot of debt on paper but in fact it's not such a bad deal at all.
If you had a mortgage where you could never be thrown out for not paying, and you were guaranteed to own the house regardless after 30 years, you would consider it a bargain.

That's a great explanation thank you, really helpful! I worry as I need to earn 1000pm and im not sure I could study and earn that..let alone sorting childcare on top!

niceguy explains very well.

If you think that going to university will increase your earning power then it is "worth it".

Personally I thin that even if you end up earning the same amount of money as if you had not gone, but you have a job that is more enjoyable then it is still "worth it".

This is not the kind of debt that anyone will ever chase you for. There will never be baliffs knocking on the door. You will never have to worry about paying it, it just comes out of your salary automatically, and because the amount you pay back goes up very gradually as you earn more, you never miss the money that you'r not getting.

I reckon I'll pay mine off. I now owe about 10k. I've never worried about it and I currently live on pretty much fresh air, cos I'm self employed with a mortgage.

I wouldn't do it just for 'the fun'. But as all my qualifications have been useful I think they're worth it.

Far more stressful is my career development loan, I have to pay that back every month regardless of what I earn!

The debt does mount up relatively easily and there are many aspects of the system that I don't/didn't like and/or trust.

I did a 4 year course at uni when fees were around £1000/year. £3000/year loan x 4 = £12000 + interest, + interest added on when I went on to do a (fully funded) Masters. So, £16000 once I'd had 5 years at uni and was qualified.

Roll on 5 years and I've cleared about half the debt. But, I'm now on a career break following the birth of DD and PG again. I don't work at the moment and so the interest is mounting up again. Joy.

Things I don't trust:

A) The whole thing was means tested and my parents signed various forms, though the debt is mine. I don't even have a copy of the original paperwork. How is this right?! Any other debt would have been solely mine from the age of 18, so why was this one linked to my parents' income somehow? How can I be responsible for something they effectively signed for?! (Obviously I am, but it doesn't make sense!)

B) Why, now I'm not working, does my husband have to write to the SLC year after year and explain that he is supporting me financially right now? I've told them I don't have an income, they see that I don't earn anything through HMRC, yet they still refuse to believe I don't work. Surely this is quite a likely situation for someone with young children?

C) Why are the people who run the SLC seemingly so incapable?! I've had repeated letters sent to number 11 and not 1, despite NEVER having incorrectly supplied my current address, I've been chased for payment recently whilst living in the US but as I'm a dependent on my husband's visa and can't work here, and they have a copy of my visa which says I can't work, where does the confusion lie?!

D) How is it possible that the agreement my parents/I signed up to back in 2000 could now be subject to a change in Ts and Cs and interest levels? Is this legal? Agree with Artemisat - should the changes be brought in, I'll also be getting a bank loan to pay off the remainder where there's actually an element of transparency around fees and interest rates.

E) DH and I are now in our mid 30s and we're already saving for our children to go to uni - but I'll still be paying off my student debt for a good few years once I go back to work after DC2. I don't know if I'd bother with university if I had my time again...

The thing that I haven't seen explained adequately anywhere, is, if it is the case that most people will not have to pay the money back, where is the funding for university education actually coming from then?

I realise that doesn't actually answer your question OP, apologies for the thread hijack!

Student loans are not really loans, they are a 9% tax on graduate salaries

And yes, a fair percentage will never get paid back in full
but as the interest is set at significantly more than the Government's borrowing costs, the Government will get most of its money back
(look at my spreadsheets for loans on the site stuff board and see how much profit lenders make on you ...)

but the vast majority will earn enough to pay some back
and a very few earn mahoosive amounts and pay it back quickly
AND
Bliar's stupid idea of 50% at Uni has been ditched - it will drop to around 20% doing degrees and those people should get decent jobs in their lives

Thank you Talkinpeace for your swift reply! Will look at your spreadsheets when I get the chance...

I've got student debts. The government take it straight out of my salary before it gets paid to me so I don't notice really.

Oh yes,
and when a graduate with student loans takes out a mortgage,
their salary for multiples is reduced by that 9%, rather than looking at the total amount "owed"
which just proves its a tax not a debt