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.

It’s quite frightening to think intelligent, ambitious young people (particularly from poorer backgrounds) would be put off going to a good university because of the scaremongering around ‘debt’ ‘oh you’ll end up in £100k debt!’ - it isn’t a debt. I do think too many people to go university for the wrong reasons but that’s another thread!

The amount you pay back, even with all the interest, to me is just a made up magical figure really. All it does it mean the amount going out of your payslip each month continues. As PP said it doesn’t matter if it’s £50k or £500k.

And the argument about rich families paying it up front - I don’t think I knew of any students in that situation, everyone used to talk about their student loans coming in. It must have been very rare. Those who subsequently now I’m working have mentioned they don’t have a student loan are not actually from really rich backgrounds, they just had parents who thought they would rather spend £25k on paying the fees up front than investing in property or similar. Their choice. I know what I would rather!

That being said it does gall me that I’ve been paying it off for years and haven’t really paid of that much (due to interest) but there’s nothing I can do as I am not planning to waste money overpaying that when I’ve got a mortgage to pay and other life expenses I’m saving for. That’s my choice and yes it’s annoying to think about the interest but there a lot of ‘unfair’ things that if you think about too much will wind you up!

The interest rate is appalling!
I dont understand how they work, who writes it off? Is there basically a private company making a lot of money rather than am actual graduate tax where it goes into improving the country.

I don't understand, do they not want to ENCOURAGE their citizens to go to uni?

Of course not. Far too many people go to uni at the moment.

The academic people who got good grades in school or need a university degree for their chosen career will still go to university - no encouragement is needed.

But fees go some way to stop people who would never have gone to university in the past from doing so.

pumkinseason Are you saying you’ve got £50K to pay your DC’s fees and maintenance loan up front?

If that were the case, do you realise if you do that you’re effectively only giving them £70-100 a month? (Unless they become high earners, and then it’s still only a percentage of their salary that they won’t miss as much)? Surely if you have that large amount of money like that it’s far, far better to give it to them for a house deposit? That would help them a hell of a lot more!

Unless you can afford to do both? In which case, I’d still give them £100K as a house deposit and they still get student loans!

Oblomov19 Why would the thought of your DS’s paying a small part of their salary back (which is designed to be affordable) put you off sending them to uni? Yes, I would definitely encourage them to do a course which leads to clear employment rather than Deckchair Management or something; and I would also encourage them to do well and get a 2:1 so they get a better variety of Graduate jobs. But there really aren’t that many jobs any more where you’ll earn the same as a graduate if you don’t have a degree...

You're 25 years old and earning £45k after your degree.

Try and realise how privileged you are.

I am livid about the interest. I paid 3k but had a year abroad so 4 years worth to pay back. I only recently realised I have been paying interest the minute I took it out.

DH has got a letter saying he will pay his off in a few months. I am so jealous, I have another decade st this salary due to mg higher year abroad. We are mid 30, depressing to think I've got another 10 years...

But this is the point of interest. You can't compare 55k now with 50k 4 years ago very easily. Just because the number has increased doesn't actually mean you own more, because the value of each £1 is now worth a bit less.

It's a graduate tax. The amount you repay depends on how much you earn and if you never earn above the threshold you will never pay it back.

That's not entirely true thoughRosamond... academic people who happen to be first generation students or from lower socioeconomic backgrounds still need encouragement to go to university. Some groups are still underrepresented in HE....white, working class boys for example.

And that's before we look at how much these students are underrepresented at elite universities.

Inequalities in the system still exists despite the rise in student numbers.

@Vipersnest88 - if your mortgage is on over 6.6% interest then you really need to switch it. If it's under then you may need to review your financial priorities; if you're going to pay both then it's utterly bonkers financially to be paying off the debt that's on the lowest rate rather than the debt that's on the highest rate.

FYI, I did a STEM degree

Ummm, well done you? Or, is it a medal you are looking for?

You chose to go to uni. The terms of the loan were clear. These numbers could always change. That aside, I think you are way over playing the interest thing as it will barely affect you.

You have a well paid job and therefore are having to pay more for your uni education than someone who will never earn that much. That's how the system works and if you don't want to do it, go earn minimum wage.

We funded ds through his BA and MA. It is a way of reducing IHT, as payments for supporting your child through education are not considered for IHT purposes if they are from income. We preferred to pay upfront rather than him have a loan. If you gift money for a deposit, then IHT rules kick in.

It doesn't seem any different from funding private education for primary and secondary to me. If it's your money, then surely, it's down to you how you choose to spend it.

@which1

*You're 25 years old and earning £45k after your degree.

Try and realise how privileged you are.*

Again with these saltly comments surrounding my salary and completely missing the point.

I 100% understand how privileged I am. I'm not angry about paying a student loan. The system is unfair and people want to brush that under my carpet because of my salary.

I wholeheartedly support a raise in high earner income tax. I should be paying more out my taxes to support those less lucky in life. I've seen it with my own eyes, I've experienced it. We should be supporting others through our taxation system and higher earners should be paying more than they are now (NOT trying to start an argument/debate about this, just stating my opinion)

This current system penalises the working class and it actively affects working class high achievers. The whole reason I'm angry is because I want more than anything for people with my sort of background to be able to break out of poverty and not have the government penalise them for it. This makes it even harder for them to do that than it is now.

The reason I'm so angry is because I'm completely aware of all this. Please don't look at my salary and assume I'm not.

You are right op, the interest charged is scandalous. It was acceptable with the original loan system but now it's a disgrace.

@MintyMabel

FYI, I did a STEM degree

Ummm, well done you? Or, is it a medal you are looking for?

People here are implying I might have done a degree that's not "useful" (including you). Merely pointing out I did a STEM degree.

You chose to go to uni. The terms of the loan were clear.

Erm, no. I went in 2012 when they were introduced. The terms were absolutely not clear back then. We were fed a mass of false information. There was nationwide misunderstandings going on surrounding the loan terms and the government didn't do much to rectify that (probably because they hadn't fully figured out how it would work ether)

You have a well paid job and therefore are having to pay more for your uni education than someone who will never earn that much.

And also probably have to pay much more than someone who went to the same uni, did the same degree, ended up with the same salary, but had parents to pay for their maintenance.

I agree I should pay more than someone who doesn't manage to get as high as a paid job. Just LOWER THE INTEREST on the loans. That's my completely reasonable request.

I mentioned the loan I got with nationwide. Honestly, open an account with them and pay your salary in for a year and they'll most likely offer you a loan of upto £25k at as little as 3% interest. You could pay half your student loan back on that then once you repay the first loan, take another and clear the rest of your student loan. You'll be student loan debt free in 10-12 years and pay much less £££'s in interest

If you treat it like a tax, then it's still a tax the working class (before uni) who end up earning over the threshold have to pay the most of, and the richest who take out no loans pay the least of.

Wow, well balanced with a chip on each shoulder?

The students with the stupid rich parents who pay fees upfront are probably paying more into the system than they will ever owe. That's good for the system.

The students with poor parents will pay way less than they owe, as 85% never pay it off, or get close to paying interest.

The only students who pay more are the ones who themselves go on to earn lots of money. You are not being disadvantaged because you were poor, you are being disadvantaged because you are well paid.

Better get used to that.

Under the old system, we all paid the fees for those rich kids, you think that was fairer?

If you treat it like a tax, then it's still a tax the working class (before uni) who end up earning over the threshold have to pay the most of, and the richest who take out no loans pay the least of.

Well, unless you look at ot as a tax for those cannot afford to pay up front... so the richest will have stumped up £50K at the beginning. A whole 10% of all students.

As others have also said, it really isn't the loan itself that is the issue. It is the interest rates, the failed promises, the selling off of the loans....

Sorry, meant to end with "Yes, that!" to @MintyMabel

@MintyMabel

Under the old system, we all paid the fees for those rich kids, you think that was fairer?

No, did I say I thought that? Does that mean the current system can't be unfair and improved?

So you're telling me you don't think the interest rates on the loans should be lower than the current 6.6%?

Can I raise the interest on all your loans/mortgage to 6.6%? Or is that currently an unreasonable interest rate...

SucksToBeMee if you’re happy to pay a higher rate tax can’t you reframe your loan in terms of the fact that your increased repayments are helping to balance out the payments of those who are not fortunate enough to get as high paying job as you. High rate interest payers like you are likely what’s keeping the entire loan system afloat.

You’ve said it yourself that you can afford to absorb the monthly repayments so you aren’t actually being screwed over; your monthly income is plenty; you aren’t being financially ‘punished’ in any way. Give a thought to those not as fortunate as you to get a job paying over £45K but are still able to increase their earning capacity and standard of living because of their ability to take out the loans and do a degree.

If the whole loan system collapses then university would go back to being affordable for only the privileged few; and I don’t think anyone wants that!

Does that mean the current system can't be unfair and improved?

Come on then, put your money where your mouth is. Suggest a better system. Don't forget to factor in that lower interest rates will mean lower repayment thresholds or a higher repayment rate.

Got anything?

@Dyme

if you’re happy to pay a higher rate tax can’t you reframe your loan in terms of the fact that your increased repayments are helping to balance out the payments of those who are not fortunate enough to get as high paying job as you

Yes, this the only point that's keeping me sane regarding this issue. But doesn't get rid of the fact that higher rate income tax would affect everyone on a high salary regardless of background, and this absolutely does not.

The interest is too high and you can’t call it a graduate tax when not all graduates have to pay it. If mummy and daddy are loaded and bankrolled university for you, you become a graduate who doesn’t pay ‘the graduate tax’ - lucky you ...! Fees are too high - need to be cut to £3k, student accommodation needs stricter controls to stop it being a massive rip off, and interest on loans needs to be reduced - otherwise there will be swathes of hardworking people who will NEVER own their own home, and like it or not, the UK is still a homebuying culture.