To think people are unaware on how much the government has SHAFTED students with loans

[SucksToBeMee]

This brings me so much anger to this day, and I took out my student loans from back in 2012 when 9k tuition fees were introduced.

I did a 3 year undergrad and I left with a 50k debt. I can live with my 50k student loan. Fine, the government wants to pass the cost on to students (not that I agree you they should be doing that) but fine.

But the interest rates are so unbelievably outrageous I have no NO CLUE how they've gotten away with completely shafting the whole (especially poorer) student population.

Do people realise the interest rate on student loans is 3% + RPI? It's currently at 6.6%

6.6% interest this year on a 50k loan. That's at least £3300.

I earn a £45k salary and I still won't cover the interest this year. I have been earning a fairly decent salary since graduating and I have never covered the yearly interest.

My outstanding debt goes up and up each year even though I'm paying them thousands in the year. I now owe them £55k after giving them around £6k since I graduated.

They will carry on taking 9% of my salary over 25k and 9% of all my bonuses for the next 30 years.

Anyone who took out max loan (aka from a poorer background) and ended up breaking the barrier through to a better life is fucked over the most.
The wealthier families get away mostly scott free.

I think it's absolutely outrageous, and I'm not sure people realise how fucked over we're actually getting with interest rates. I have a debt that I can never even start to pay off. I will pay them probably double what I initially owed them over the next 30 years.

Honourable mention: they also charge max interest rates on your outstanding loan for the duration of your study.

@BackforGood

I am most definitely not slow, but congratulations on turning to insults to get your point across.

It isn't a tax of anyone's "class" it is a tax which is entriely based on what you are earning,

It is a tax based on someone class, because the lower class you are, the higher the loan you take out and the higher total amount of interest will be added to it.

for the overwhelming majority of graduates, it would not matter one iota if they charged you £100 000 per year interest, because you still pay the same fixed amount, based on your income

I understand this. You're assuming poor people stay poor (which you are correct in thinking as in this lovely country that unfortunately mostly true).

This is a system that penalises people for overachieving their society expectations.

You can carry on thinking that's fair if you want to.

@BackforGood at my uni there really were a lot of people having at least maintenance paid for. DHs relative has just graduated from the same place and says it's still the same. I am aware it attracts a lot of public school students and therefore money though. A girl I lived with in first year, her parents used her loan to put a mortgage deposit on a cheap house in another student city in the North where property was cheap at the time but growing quickly, which they let for a few years, paid the mortgage down using the rent of probably much poorer students. Property price grew quickly. Sold the house, cleared her loan, gave her the rest of the equity to put a deposit on a place of her own. She accrued little interest. I also know a number of students whose parents bought a house in a cheaper but studenty part of the city we were in, rented the other rooms to friends of their DC, who paid no rent for their own room, used this to pay the mortgage, again property price grew, it's a very popular area with landlords and the market was booming. So their DC accrued no maintenance loan, and parents paid tuition. One who did this was given an allowance for 'managing the property'.

@Dyrne it's not the below the threshold that's the issue it's when you earn just above it, your debt gets bigger and you don't chip away at the capital so you pay more of the then longer term of the loan.

Thing is, I know it sucks but I don't even get angry about it, it just is what it is.

LionelRitchieStoleMyNotebook ah gotcha, I can definitely see how that would happen.

I’m the same as you though - the overall amount I owe isn’t really relevant; I don’t waste time getting angry or frustrated as to be honest in this climate i’d be so angry all the time it wouldn’t be healthy. I just focus on what it means for me on a monthly basis, accept it just like I accept I have to pay tax and NI, and crack on.

SucksToBeMee I kind of get what you’re saying, but ultimately - in order for ‘poor’ students to be truly fucked over by the system, they would have to be high earners. Therefore no longer ‘poor’. And so they’re then the evil privileged lot

I just would be so sad if low income teens have been put off going to university because they’ve been told they’ll be “saddled with debt” or that they’ll be “screwed” and it’s “unaffordable”.

How many people then potentially are stuck in minimum wage jobs to “avoid the debt” when they could have gone to uni, and potentially be earning twice that while only having to pay £50-100/month extra? They’d still be miles better off.

(Note: I agree Uni is not for everyone and a degree nowadays is not a guarantee of earning a lot of money).

@Dyrne

How many people then potentially are stuck in minimum wage jobs to “avoid the debt” when they could have gone to uni, and potentially be earning twice that while only having to pay £50-100/month extra? They’d still be miles better off.

You completely have a point here. I hope I haven't turned anyone off of going university from my post. The good news is that most people aren't put off by the loans and go to uni anyway.

The bad news is the government are a bunch of swines which is all I'm trying to point out.

in order for ‘poor’ students to be truly fucked over by the system, they would have to be high earners. Therefore no longer ‘poor’. And so they’re then the evil privileged lot

This is it, you get shafted for breaking out a shitty cycle. People should not go to uni worried about not being able to afford the the loan, but if they're working class and going to uni in the hope of becoming a high earner, then they definitely need to be aware of everything I explained because it may affect them.

@Dyrne

Going to reword my last paragraph.

Affording the student loan should not be a worry as it's not a problem. It's done in a way that you can afford it whatever your income after graduating (great!!)

Having a massive amount of money taken from your salary over 30 years because you're from a working class background should be something to think about if you're hoping to become a high earner.

@suckstobemee - I totally agree. The uni fees are also set at a level above cost for arts degrees. So some students are subsidising others. Also it’s of benefit to society as a whole to have graduates - it’s hardly fair that the whole cost is covered by the graduates themselves. As for why should non graduates pay for universities- why should healthy people pay for the NHS? Why should people who have never been on benefits pay for those who are, and so on. As a society we tax and then provide public services, including education. We don’t tax on the basis of use of public services.

Clearly there are people here who don't understand the difference between compound interest and simple interest.
Lots of people are saying "but your monthly payments are the same regardless of the interest", which is technically correct
Nope. Incorrect.

SucksToBeMee - taking out the maximum in loans and finding yourself squeezed will only be the case if you earn just above the threshold for the increased interest rate. If you earn close to the next threshold but just below, then you are maximising your income and minimising your repayments.

It's not a given that everyone will be squeezed. You get shafted for not breaking enough out of the poverty cycle.

If you get a few pay raises over the next ten years, please do a loan amortisation online with various different payment amounts entered, and then see how much you can afford to pay as lump sums or as greatly increased monthly payments in order to greatly cut back the total-over-the-lifetime-payment figure that is giving you the heebie jeebies.

To the poster who wondered if the government really wanted poorer students to go to university - no, that was only a by-product of the desire to create a financial product that would keep on returning income for the government as loan portfolios were sold off.

I thought, and still think, it was disgraceful that a Labour government, comprising many cabinet members who benefited from free university education with non-repayable grants to enable them to attend, introduced the tuition fees which created the need for student loans.

I find it even more disgraceful that Scottish students are not burdened with any debt for their further education.

When Blair made his clarion call 'Education, education, education' the unsuspecting voters failed to realise that he was referring to his then 3 children who were sent to the cream of state primary and secondary schools thus depriving 3 others from what may have been their only chance of achieving academic excellence.

< blood pressure rising ... must lie down >

I have every sympathy OP. It is a rubbish tax because the wealthiest people just get to opt out of paying it.
I have heard a lot of stuff on Mumsnet about it just being a graduate tax but it seems a really rubbish one and one I am determined my dc won't have to have.
Coming from a poor background I hate the thought of debt you can't pay off. I had a tiny 90's loan, the first that appeared but it didn't take that long to pay off even with public sector wages.

Emigrate permanently and never leave any assets in the UK for the govt to get hold of?

That’s what we did, I don’t care if I get a CCJ, they don’t carry over to other countries.

The interest rate is pure exploitation. If that system had been in place when I left school, I wouldn’t have had the courage to go.
Having said that, I worked all of my 3 years because there were no loans. I got a grant that covered my books and almost my bus pass (london). I paid rent, food & necessities from wages/savings.
Accommodation was an unheated bedsit in Stockwell. Bronchitis for three years.
I worked full time in a factory all three summer holidays and in a bar all term and every Christmas. I did my food shopping in the market on a Saturday afternoon when it was cheap. It was grim.
So please don’t think pre-loans was all milk & honey because it really wasn’t. You are right the poorest students get shafted - it has always been so.

That’s ok then, what a selfish attitude. The British tax payer can pay for your education and then you clear off without contributing to the UK economy.

The people who manage to break out of poorer communities into a good salary are the ones who are going to overpay by 10s of thousands.

But going to university has provided the chance to get the high paid jobs. Perhaps when they're children go to uni (if they do) they will be able to pay for them and so break the cycle, would that then be resented? Or it is only rich people who have had money for ages? I am the only person in my family to have ever gone on to higher education, and within 5 years of graduating earn triple what they did upon retirement after an entire working life. When I apply for jobs I just factor in the student loan when calculating take home pay, aside from that it's not a loan which stops you getting other loans such as a mortgage. Most people don't pay the full amount back before it's written off, so the interest fairly or unfairly helps to offset that loss; but the alternative is not providing any loans I imagine, so it really will be just the richest who can go. Growing up with money comes with many advantages, such as getting on the property ladder etc, I am not upset though at the leveller that is university to be honest.

Their*

YABU as the reality of the repayments is clear up front. From WHICH to Martin Lewis and a whole host of other high profile publications all applicants have the information freely available.

If you don't like the tems of the contract don't sign it.

And don't even think of looking at Scotland and asking why it is free there... look at the financial state of those universities...

inews.co.uk/news/scotland/two-thirds-scottish-universities-in-red-accounts-show-90967

Nether system is keeping universities financially viable

www.bbc.co.uk/news/uk-england-48045265

What we all should be shouting about it who owns those debts and why?

I do believe that this is a disgrace. Puts me off either ds's going to uni.
I was the last of having no fees, and paid off my tiny student loan immediately. So I haven't had all this, but I do think it's disgraceful.

I agree, I started uni in 2010 and did a postgrad on top to work in a specific career. Luring 17/18 year olds into huge debt is unethical. When we signed at the time they said the interest rates were low, I was under the impression they were maybe 1‰/2‰ however now they are much higher. How have they got away with raising it? Is that what we agreed too? Where else can a 17 year old agree to borrow £60,000? It is a huge scam and I do wonder if its legal, the fact no one questions it is also worrying. We people are the ones with the power.

minty you questioned whether I understood why application rates were different for different groups of students. That was my way of saying I have a very good understanding of this topic.

Not only was this the topic of my PhD, I've worked in student recruitment and widening participation and I now research and write on the subject.

Was there something in my posts you disagreed with?

I am a student. Imo the loan dosnt count. But what dies get my goat is that they count it as income so i get less universal credit. Tories suck. Its an NHS course too...not a mickey mouse one.

It’s personal responsibility to know your finances and what you’re signing up to. I worked straight from college in a good job/industry but wanted a change and it was impossible without a degree. I wasn’t even considered (despite transferable skills and experience).

So I went to uni, full tuition/maintenance loans and graduated this year. I got a very good job with a large multi nat (because I was doing my degree) and worked PT through uni, I also got married, I’m now pregnant (first of hopefully several) and will continue to work PT in this role for the next 10 ish years.

It wasn’t my intention when I went to uni but life happened and now I highly doubt I’ll repay hardly any of my loan before it’s wiped away in 30 years. So for me it’s worked pretty well tbh.

I'm in the same position OP. Four years since graduation and I owe more than I did not less.

I have accrued roughly double in interest the amount I have paid back this year and I'm in a professional role. It's crazy.