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.

When the loans first came in, I thought there would be a braindrain of STEM and other marketable students

That's one reason why it was structured as a loan rather than a graduate tax. If you ever want to return to the UK you can't just leave and never make any payments - the loan will still be outstanding, with interest, when you return (not sure about how the 30 yr period works in those circs - there may be some mechanism where you've failed to make repayments that are due).

Of course you're supposed to repay while you're abroad but I believe not all do - but in theory they will have to repay eventually if they return.

@MRex. Yes you’re right in terms of the interest but the difference being if I lost my job or whatever I would still have to pay my mortgage every month but if I never worked again I would never pay a penny more on my student loan repayments so I would rather clear the ‘actual’ debt I have, particularly as that’s actually going towards an investment and will help me to move further up the ladder. As I said, my choice, other people may do things differently.

Meh I've been with the nationwide for years earn a 6 figure income. They wanted to charge me 19.9% API for a loan!

@titchy

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?

Yes, a fairer middle ground. Where interest rates aren't extortionate but are there and loan repayments therefore aren't extortionate either.

Interesting to hear that some families are paying all the maintenance, so their dc take the tuition but not the maintenance loans (Obviously I realise a lot of families pay some maintenance, as the loans are means tested).

I thought (= had it explained to me on mn!) that that is the worst of all the worlds on some future salary brackets - since the repayments are the same however much you borrow, and you will never pay it off anyway, you (the family, that is) are probably better off borrowing the whole lot, or none of it. But that may depend - if you're earning so much that you will pay it off, then it's better to have borrowed less.

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

See, all you are doing now is showing you don't actually need to be too smart to go to uni these days.

If my mortgage had loan payments linked to my earnings and would be wiped after 30 yours, I couldn't care what the interest rate was.

You want to make your point by comparing your loan to my mortgage? Again you show you actually don't understand the loan you have taken out.

SucksToBeMee I get it’s frustrating, but I really think it’s honestly counterproductive getting wound up over the privileged 10%. Even the solidly middle class’ parents probably wouldn’t have stumped up the fees etc nowadays, in favour of saving it for a house deposit; so they’re in the same situation as you, it’s not saved for only the Working class as the difference in maintenance loan is only a few hundred pounds, let’s be honest.

The Tarquins and Fellatios of the world are privileged that they Don’t have to pay back the loans, sure. But they’re also privileged that they had fantastic 1:1 nannies; went to a good prep then on to a decent public school with small class sizes, making all the right connections with the other future powerful people. They had tutors bringing up their grades, and all the right kind of extra curricular and music lessons to add spice to their UCAS application to get into a decent RG University. They of course had their ‘gap yeah‘, giving them more fodder and life experience for their future CV. They of course wouldn’t have had to get a job in the Summers and Christmases and Easters; but wouldn’t you know it, Mummy and Daddy we’re speaking to Andrew whilst at the social club; and he’s happy to email his PA asking her to arrange some work experience at his Law/Accounting/Finance firm “to give the lad/lass a helping hand”. So by the time they graduate they’ve got lots of lovely life experience, and some impressive work experience. So they walk into a high paying graduate job.

After all that, the student loan thing really is a drop in the bucket of inequality, isn’t it?

user if you think fees are too high what do you think they should be charging? And who should fund the shortfall?

Yes, a fairer middle ground. Where interest rates aren't extortionate but are there and loan repayments therefore aren't extortionate either.

So lower interest rates. Which will mean higher repayment rates and a lower threshold which you keep ignoring. How is that fair to those on lower incomes who currently don't pay anything?

In the past, student fees have been funded out of general taxation.

Because the government recognised that having a decent further education offer meant that anyone with the skills could get to university. This benefits the whole economy.

We’ve now shifted to a very selfish mindset and think that university is a luxury. All because of anecdotes about silly university courses.

Well maybe the answer was to restructure the sector, not make lower income graduates pay on top of their taxes.

@MintyMabel

See, all you are doing now is showing you don't actually need to be too smart to go to uni these days.

Again with the personal attacks trying to put a point across, I'm seeing this tactic a lot on this thread.

If my mortgage had loan payments linked to my earnings and would be wiped after 30 yours, I couldn't care what the interest rate was.

You want to make your point by comparing your loan to my mortgage? Again you show you actually don't understand the loan you have taken out.

Do you think a loan from a bank, which can much easily be held accountable if they were to break laws, is comparable to a loan from a government who can seemingly do as they please? A loan from the very people who make the laws.

If I was confident the loan would be written off after 30 years as they've stated, I wouldn't be as angry. But the government has already shown can change the terms of the student loan at any given point.

Example: blog.moneysavingexpert.com/2016/07/tell-your-mp-to-fight-disgraceful-retrospective-student-loan-hike/

Still waiting for your alternative that doesn't increase repayment rates....

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

If I was confident the loan would be written off after 30 years as they've stated, I wouldn't be as angry. But the government has already shown can change the terms of the student loan at any given point. AGAIN that is stated in the loan agreement, on the government website, on all the other sites discussing student loans. You don't have to trust them NOT to - they WILL HAVE TO!

I am totally aware. I was one of the last years to pay fees of some thing like £1,250 per year. It was easily possible for me to pay myself from my summer job.

I cannot believe the fees will even stay this high as the loans don't even get repaid in most cases.

Mine's on the lower rate but doesn't get wiped til I'm 65. Sucks arse

It is a regressive tax which is always undesirable.

If two people leave Uni with 50k debt and within 15 years of graduating, one earns 45k like the OP and one earns 120k, then over the lifetime of the loan, the one earning 45k will pay back more in their 9% payments than the 120k earner ever will.

The interest rate has everything to do with the above ludicrous situation.

OP, I'm totally with you and this thread demonstrates quite a lack of understanding of the maths of the loans, the 9% and who it affects most.

I'd just like to have my debt go down when I'm paying them £2k a year.

So pay more than the minimum.

The people why have shafted are those of us with permanent disabilities. If you become disabled your loan is written off, if you start with a disability you don't.

Eg identical twins, one goes to uni, leaves after 3 years with a degree. The other goes into work and then decides to go to uni at 25.

The week before the second twin starts they are in a car together, have a terrible crash that leaves them both with identical disabilities. Twin one has their debt written off.

I just checked thesalarycalculator.co.uk and even if you were earning £45k right out of uni the max you'd pay back over the 30 year period is about £52k. A £2k overpayment is hardly unreasonable, especially when you consider the fact that the student loan company have to cover their costs so that they can continue to help fund others.

Fwiw I'm in my 30s and have just graduated with no student debt. Uni wasn't a financially viable option for me after school so instead I took an apprenticeship and saved until I could afford to support myself through uni, even I could only afford to study part-time and had to continue working full-time to do it. So there are ways to avoid student debt that doesn't involve rich parents.

@titchy

So lower interest rates. Which will mean higher repayment rates and a lower threshold which you keep ignoring. How is that fair to those on lower incomes who currently don't pay anything?

Still waiting for your alternative that doesn't increase repayment rates....

I'm at work, so I can't reply to every question instantaneously.

I'm not ignoring you. I appreciate there will be higher repayments for some, but we're talking about the introduction of smaller affordable repayments for those earning a decent salary.

Will that work? Good question. Would love to get feedback from those on plan 1, 3k loans. The thing is, it is not my job to do this. There are people paid very high salaries to solve these problems in government and they're not doing a very good job. If I could spend my working day trying to figure out a fairer solution then maybe I could come to you with a 30 page document outlining a good, fair student loan repayment system.

The government has fucked up with this anyway. The higher loan and interest rate and higher repayment threshold compared to plan 1 means they're getting less money back in the short term and probably around the same money back in the long term over 30 years.

So from tripling the fees and increasing interest they've achieved...not much for themselves.

@Buccanarab

I just checked thesalarycalculator.co.uk and even if you were earning £45k right out of uni the max you'd pay back over the 30 year period is about £52k. A £2k overpayment is hardly unreasonable.

Is that based on an assumption that someone would be earning 45k over their whole working careers and their salary not going up? If so then that's an unrealistic prediction.

I think it's another argument against the current system - t's quite hard to understand (for example the counter-intuitive point that it may make sense to borrow a higher rather than a lesser amount; and that the highest earners may repay less than lower earners!). And impossible to predict whether you are better off borrowing or not, as it depends on how much you'll earn, whether you'll go part-time, take time off for dc.

Discuss and debate whether it's desirable for a 18 or even maybe 17 yr old to decide to enter into a complicated contract with such farreaching implications - parts of which can be changed by the government of the day (still not certain whether that applies to the 30 year wipe out, but has already happened with the threshold).

On the other hand - you aren't bankrupted if you can't repay, it does not seem to have discouraged students from going to university (though there may be sub-sets who are deterred), and if 50% of students are going to university it is electorally unrealistic to ask voters to pay for them all. (I don't like the idea of reverting to only the intellectual "elite" attending, and having free tuition - that wasn't fair either.)

@sashh

The people why have shafted are those of us with permanent disabilities. If you become disabled your loan is written off, if you start with a disability you do

This is a good point and also unfair and I'm not saying it isn't unfair.

I've got a fair system for repayment; all STEM, medicine, nursing, dentistry, veterinary = fees paid by a rise of 0.5% general taxation for the highest band and 0.5% rise in corporation tax (because businesses win).

Businesses can choose to overpay student loans for their employees, apprentices, sponsored students or contractors as a tax-free bonus. There should be additional tax credits for 100% sponsorship of apprentices where that includes minimum wage payments as well as course fees.

Language degrees can get reduced interest rates to reflect their mid-range usefulness.

Those with postgraduate degrees or any other type of arts degrees can pay for them, suck up the loans but with lower payment thresholds that suit their expected earnings, find a sponsor or switch to a degree that benefits the overall economy. Arts and masters courses are a hefty financial choice for individuals to make, they should go into that with their eyes open and we should not all pay for those students deciding to take the risk of earning less.

The student loan situation, as far as I'm concerned is fair enough.
What IMO isn't fair is the poor level of tuition, poor level of support etc for that £9K/annum. Students these days simply do not get the same level / quality of tuition that they used to years ago: it's not good value.