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.

Here it is: www.lrb.co.uk/v41/n17/andrew-mcgettigan/fiscal-illusions

Ok so I’ve re read the article and they are being sold on to pension funds and insurance providers - not commercial loan recovery businesses - so I overstated the position a bit - no need to scare people. The situation is crap enough as it is.

It is one good reason to vote Labour. Not enough, I suspect, to persuade people to get behind JC though.

And sadly his credibility is so low that it hasn’t scared the current government into eg cutting interest rates on these loans. There is no need to ‘take the wind out of his sails’, sadly, since there is no wind in those sails to worry about.

Perhaps one of the pension companies could come up with a scheme to offset your pension against your student loan interest. Then it gets repaid or not, but it doesn't grate because you aren't paying as much interest. And it incentivises putting more in the pension from a very early age. Well, offset +/- depending on how well the pension fund does. Win-win I'd have thought.

Thanks for posting that link, @Figmentofmyimagination.

I hadn’t realised the scale of the loan book sales. Quite an education.

There you go, OP. Your interest rate is set at a level that will make your loan attractive to buyers. Are you comforted by knowing that your loan will be a highly rated asset? Thought not!

It’s total nonsense to suggest that previously the poors taxes were paying for the rich to go to university. Graduates as a whole (obv not necessarily individually) earn substantially more than non-graduates. They are more likely to be higher rate taxpayers and pay more tax generally. Graduates were always paying for themselves through the tax system. They still are but are now paying again via a loan. It’s pretty unfair and an awful burden on young people who have many other often insurmountable financial issues.

Actually what’s interesting is a pp claimed waspi women paid to get pensions early whereas graduates haven’t paid for their degrees. Actually overall graduates pay for their degrees and as they are less likely to use other benefits and more likely to be net contributors they pay for others welfare benefits and public services too (not least pensioners). Pretty unfair imo.

Also as I said having an educated population is of benefit to society. The state should pay a much higher portion of the cost of higher education as if does in other countries imo.

Figmentofmyimagination

The new dividing line for privilege is paying your children’s university fees up front

Nope, as it can be done out of income; or from saving for them from a young age, or by extending the mortgage. If you've paid for secondary education, then university is cheaper than school fees in some cases. You pay the fees by term or year, so you don't pay the whole three years up front.

@Dyrne - you can certainly borrow less if you work through uni, choose cheaper shared flats that aren't done up, cook for yourself etc. That may or may not be a good idea subject to your particular circumstances (that you haven't shared for advice), bit people can only advise the OP based on her own situation. Please remember that the older generation had lower fees, not proportionally lower living costs. Some of us worked many hours because we had no grant nor money from parents, and know very well that on all but the most arduous courses (medicine etc) you can earn a full wage while studying if you're young, fit and most importantly motivated. I can't think of anybody at uni who wasn't working apart from one spendthrift of full grant + full loans and one super wealthy (and even he worked on the summer). Let's be really honest here, £50k debt to start was not all necessary debt.

Didn’t say pensioners paid to get their pensions early. Their pension was due to be paid when they reached 60.

Also the pension is not a benefit it is a right. Also rather sweeping statement to say that people with a degree are less likely to claim benefits. None of us know what’s around the corner and what about the hundreds of graduates that can’t get jobs.

But it's not wiped out. The national student debt is levied against the deficit so like the last recession creates an instability where money borrowed is generating income and further lines of credit despite less than 50% of the debt being fully repaid in the 30 years before it is written off

@SucksToBeMeeI started lower than you, poor. Social housing, benefits, food banks, secondhand clothing. I paid it off at a higher interest rate than what you’re paying, and it was the equivalent of 38k. As I’ve said before, I worked throughout my studies (40hr weeks!) then worked two jobs afterwards to pay it down quick (my second job was commission based, and I was good at selling). I lived cheap and moved so I wasn’t in an expensive city. It was my choice to go to uni, just like it was your choice. I hear a lot of ‘woe is me, I’m so hard done by’, but it was your choice to accept the loan. There were alternatives

1. don’t go to uni
2. go out and work full time, save the tuition and living costs, then go {cash up front}
3. do a vocational course or apprenticeship
4. work full time, study part time {I’m doing it now, my second Masters}
5. study abroad, lots of EU countries teach in English offering lower fees and/or living costs. As an example nearly 100 students study to be vets in Hungary each year.
6. locate a good employer who pays your fees conditional on good work performance {how I did my first Masters}

You apparently chose 7) agree to the T&Cs then complain when they’re enforced

This is why they need to teach financial literacy in schools, but equally this is called being a grown up and taking responsibility.

@QueenoftheNowhereverse

1) don’t go to uni
2) go out and work full time, save the tuition and living costs, then go {cash up front}
3) do a vocational course or apprenticeship
4) work full time, study part time {I’m doing it now, my second Masters}
5) study abroad, lots of EU countries teach in English offering lower fees and/or living costs. As an example nearly 100 students study to be vets in Hungary each year.
6) locate a good employer who pays your fees conditional on good work performance {how I did my first Masters}

OR not be under a government that forces the working class to consider 6 alternatives to be able to attend uni and not be screwed over with a loan.

It should not be more difficult for me to go to university because of my background. I should not have to consider those alternatives. Neither should you.

You apparently chose 7) agree to the T&Cs then complain when they’re enforced

I'll say it again, there was nationwide misunderstanding of how the new loan worked that the government did not put any effort into clarifying. That's a fact. Easy for you to say this now the loan terms are clearer 5+ years after being introduced.

I paid it off at a higher interest rate than what you’re paying, and it was the equivalent of 38k.

If my loan was 38k, then we would not be having this conversation as I'd actually have half a chance of convering the interest and starting to pay the loan off.

@QueenoftheNowhereverse

Also not quite sure why you keep bringing up that you had higher interest rate when your interest rate was only 0.4% higher than the current max rate on student loans and the interest can/will probably at some point rise above 7%?

@Binkybix

If successive governments had been serious about providing meaningful third level access to a wide population, with any kind of overarching strategy or plan in mind, they would have considered a huge investment in vocational education along the lines of Ireland's Institutes of Technology, which began life as Regional Technical Colleges back in the early 70s. Strategic government investment in the RTCs and ITs and before that in STEM in secondary education created a highly skilled workforce. In particular, Ireland focuses on R&D in higher ed and on business, labour and government partnership in developing strategy.

Instead, in the UK, polytechnics were transformed into universities, with the implicit message in the 'upgrade' that a mere technical certificate or qualification did not have the cachet of a degree.

Access was widened, creating headlines for mass consumption, but resources allocated by government to funding of the universities dropped until by the early 90s there was a financial crisis in third level education. It could have been solved by increasing government investment/direct subsidisation of third level education, or universities could have been forced to develop endowment funds or deep relationships with various industries, and accompanying govt investment in STEM/R&D, as US universities do, but instead it was decided that students / consumers themselves would support the universities. Obviously, fees were not an affordable prospect for about one third of students, maybe more.

Loans killed several birds with the one stone therefore - student numbers from groups traditionally under-represented in higher education whose access to third level education the government wanted to brag about remained steady or rose, universities got enough funding to keep on carrying out their function and fund their pension obligations, and the government created financial products that could be sold or securitised, even down to the lemons. A further advantage of the loans was that they weren't registered as a deficit on the government books at time of origination, an important accounting loophole affecting the picture of the national deficit that was presented to the public, and their sale at less than the book value didn't register as a loss either. The idea as it has been practiced is quite similar to tax farming from hundreds of years ago.

The recording of student 'loans' and how their sale is entered in the books may all change in coming years after a 2018 review by the Office for National Statistics that challenged the sleight of hand that has been the MO of governments since the 90s.

Thanks to all aspects of student loans, government failure to invest in public goods is presented as efficient management of the public purse to an electorate that craves simple answers and lacks the education to discern thick layers of wool over its eyes, in thrall to the idea that managing a national economy is the same as managing the family finances.

If my loan was 38k
Your fees would have been under £10k. If you'd paid your own living costs by working then your loan WOULD have been £38k when you finished.

@Pixxie7 pension is a benefit, it’s not a right. Hence why the government can move the age for eligibility.

Also part of the reason that the government moved the pension age is that the increase in life span means that pensioners were very costly to the rest of the population and certainly weren’t paying for themselves.

The thing about working during term time - am i right in thinking that there is some evidence (or at least concern expressed by academic staff) that students who work more than a few hours a week in term time do jeopardise their chances of getting the best results?

I think there is another side to it because those students also develop organisation, time-management, people, skills etc, but it worries me that there is another way in which the less well-off are disadvantaged - by working they may be less likely to get the results that they could achieve if they didn't have to?

(This doesn't apply to holiday working I agree - although whether that's possible depends on where you live, public transport, state of the economy that year etc. Yes you could do live-in at a hotel, but I wonder if they recruit for longer seasons than university holidays?)

Many universities encourage part time working. The employ students themselves and often have 'job shops' advertising part time work.

But they suggest not working more that 15 hours

OR not be under a government that forces the working class to consider 6 alternatives to be able to attend uni and not be screwed over with a loan. It should not be more difficult for me to go to university because of my background. I should not have to consider those alternatives. Neither should you.

OP you seem to be in denial that the reason why you could not pay for university up front was simply because you could not benefit from family wealth/assets.

It has nothing to do with “the government” or any government for that matter.
Isn’t it fair for graduates who needed loans to pay most if not all of the costs? The 9% that you pay for 20-30yrs but then the rest of the loan is paid for by all tax payers. This includes mostly the working classes who never go to university and ARE paying higher taxes so YOU can go get a degree and make gobs of money simply because you were lucky enough to be born with a good brain and go to a good school. Most of the working classes paying off the balance of your loan are getting nothing for doing that...given the timeline many of them are not even born yet.

Unless, are you proposing the government make all university education free? Well, wouldn’t that mean even higher taxes for the multitudes who cannot go to university due to accident of birth without an academic mind, learning disabilities and/or crap education in run down schools? Why would it be fair for you to take even more from those less advantaged than you?
At least the rich kids whose parents do pay for them are taking nothing from the working class tax payers by not taking out student loans.

LOL Doctor Allcome clearly doesn’t need doctors ... or nurses, teachers, engineers, scientists, etc etc.

@mathanxiety

Loved your post. Very informative.
Only one small comment where you mentioned US universities
universities could have been forced to develop endowment funds or deep relationships with various industries, and accompanying govt investment in STEM/R&D, as US universities do, but instead it was decided that students / consumers themselves would support the universities

Just wanted to clarify that while we do have lots of investments into research at the universities, we ALSO do require students to support the education functions. Which is why our tuition costs are much higher than in the U.K. and our student loan situation at crisis levels.

@Figmentofmyimagination

Hah hah here in the US each student pays their own way more than you guys do in the U.K. and we dominate in the top ten universities worldwide, and in Nobel prize winners in all those fields.

Referring to your original message, OP, YANBU and this generation has (and is) being stiffed by the government on loans. And selling them to a third party to profit from is beyond disgusting.