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 become more of a con these days I think, that encourages people via false claims, to wind up actually paying and getting into debt to fund 3 years of otherwise probable unemployment.

You're not wrong. I've just paid back an old style loan from 98 after many years of deferment. 5 years of £140 /month and it was paid off. The amount leftwent down every month til it was paid. It was index linked to inflation too , no extras.

They should have kept this style of loan. Yes it was only 6k due to no fees back then but there was no interest hocus pocus making the loan increase after it was taken out.

"If parents pay the fees and the living costs then those from rich background pay nothing"
The students themselves pay nothing, but their parents have unnecessarily forked out up to 50 grand, when they are advised not to...because after 30 years its wiped.

I can live with a massive loan.

Them putting so much interest on it that it is impossible to pay off, that's the bit that angers me.

The previous loans were at the lower of (bank rate +1%) or RPI, thus making it sensible for almost anyone to take out a student loan and leave the rest of their money free for a better use. Presumably the change of interest rate was to discourage this. But it is iniquitous. As is charging interest on it before repayments are due.

2nd thing that people don't realise is that student accommodation costs, especially the university approved "halls" that most students are in in their first year, have risen to swallow up the entire loan, so you still have to find some other source for your living costs. So poorer students work (often to the detriment of their studies) and students from richer families are subsidised.

3rd thing that people don't realise is that you still have to repay even if you don't graduate (which is reasonable, and if you're stuck on minimum wage you won't repay anyway). OK if you realise in your first term that university isn't for you, but if you are the type that is determined not to give up easily, you may struggle into your second year or beyond, end up with no degree, and when in 10 years time the more mature you decides to have another try, you can no longer get a student loan, because you've already had one.

• and normally the loan is impossible to even START paying off thanks to the interest

It is more like a tax than a loan, YABU on that front. You're not meant to ever actually pay it back.

However you are so not being unreasonable in terms of it being a tax for the poor but not for the rich. It's utterly unfair from that perspective- another way to make it harder for people from low income backgrounds to enjoy the same privileges as those who have parents who can pay their student fees and rent, have contacts to get the highly paid jobs in the city and then help with a deposit for a first house....

And don't get me started on the likelihood that lower income students are more likely to be paying the seems fees to go to newer universities which are not as highly regarded and won't give them the same earning potential either...

Another outrage some feel about student loans is that many students who take them out never pay any element of them, even the interest, back at all.

Friends of mine from uni days who took the maximum loan have never earned enough to pay back even the minimum payments, due to a combination of life events, the areas they live in and personal choices.

@ImGoingToBangYourHeadsTogether I admit I was focused on the majority of students there in my response, those who finish uni at 21/22. But yes I know there are mature students too. However the fact is if you don’t have a job or you earn too little afterwards you DO NOT have to pay anything!

You’re daft if you think it’s anything but a 30 year graduate tax. The interest rate could be 1%, 10% or 100% but it doesn’t change how much you will pay back every month.

"If parents pay the fees and the living costs then those from rich background pay nothing". The students themselves pay nothing, but their parents have unnecessarily forked out up to 50 grand, when they are advised not to...because after 30 years its wiped. Except that students with rich parents are more likely to have "social capital" and therefore be in a higher paying job, so that they will repay the loan. Therefore it's more sensible for parents to pay upfront than to take out a loan at RPI+3%

The threshold for repayment is set quite low. And, incidentally, contrary to a common belief, I was asked about liability for student loan repayments while taking out a mortgage (first one at 40), and that expense was taken into account.

The drop in numbers of mature students tuition fees has caused is well known in the sector, but it's just acceptable collateral damage. As usual.

There is a lot of inequality across cohorts of students. I paid my (large for the time) loan off at 32. Most graduates now have little chance but it is probably worse for the ones that get close to paying off or just pay it off because of the interest that is applied. It is effectively a tax and the messaging around that should be clearer. I was also surprised when one of my young employees said they stacked undergrad and masters loans so instead of the 9% he was paying something like 16% of income across the threshold.

@VirtualHamster. But surely if you have gone to the trouble of studying hard at university for 3/4 years or more, you’d be pretty disappointed to stay in the same job for 30+ years with only a cost of living increase - surely the point of a university degree is to support you to forge a career where you progress and do increase your pay somewhat through job changes!

I had one of the first loans and got royally shafted when it got sold on. The careers woman swore it was just an academic exercise to help the government out with grants and not to worry it wasn't a real loan etc etc.

First they took payments automatically because they purchased our bank information as well as everything else (so direct debit agreements were passed over and acted on). Only those in deferment were purchased. So clearly done deliberately.

Second once you'd begun payment/defaulted (a lot of people who were unable to pay this payment defaulted as didn't have the money to pay) they have found they now cannot have the loans written off - despite it not being their fault.

Third the interest has been higher.

Forth the loans show as a loan in payment holiday if you try to get a loan/open a bank account. They claim this is in line with what happened with the student loan company (untrue) and is legal according to financial law in the uk (I suspect also untrue).

Fifth benefits are counted as income, all benefits. It took at least two years before they would accept PIP wasn't to be counted.

Finally, the annual statements are a joke. I've kept all of mine. The amount I "owe" changes every year, I don't mean it goes up, it goes up AND down and I get letters asking me to pay it off at a lower rate on "special offer" around November time - last year if I gave them £6000 direct they'd write off the other £3000. My statement in September was for just under £8000. Last years was over £9000.

Unlike later loans they must be paid within five years. There's no lower payment and deferrment is no longer automatic on proving income/reciept of benefits you must fill in a form and "manage" your account online. I don't trust them and refuse to do mine online. I know people who have found they cannot access historical information about their loan.

How much did this "company" pay for my loan, which I was told wouldn't effect me in anyway at all as long as I was earning less than average wage? £1 per loan.

Yes I had a grant, yes it was a long time ago but as a disabled person I'm completely screwed by this as if I had direct payments I'd be forced to repay the loan monthly from them as they are not excluded as income. Universal credit isn't excluded either despite replacing some benefits that are.

Students loans/finance whatever they call themselves these days are very soft on what they expect from people. The companies they're sold to follow the contracts to.the.letter. And the fact is that only benefits explicitly excluded are not counted (early/mid 90s there was no direct payments so they're counted as income for example). Student loans would ignore all benefits and just take last three months income and ignore any extras e.g. Money paid back to employees for work expenses or overtime - that counts all as income for these companies. Now you need letters proving a years income.

You're supposed to get two months notice to defer. You're lucky if they contact you at all. I've always had to chase them to get deferment.

I lose sleep over this.

However the fact is if you don’t have a job or you earn too little afterwards you DO NOT have to pay anything!

@Vipersnest88

But me, someone who came from a poorer background and was therefore entitled to take out the max maintenance + tuition fee loan, and has now managed to secure a decent salary and career, is now going to pay them probably double what I owed them over my lifetime.

Sigh

The actual disgrace is that these loans are NOT wiped upon retirement! You can have a 48 year old career changer who ends up still being liable to repay at 78 out of her pension!

Opps. Sorry for essay

I was in a period of loan (graduated 2007) where it doesn’t get written off until I’m 65 or 35 years, all other loan periods are less than this. I have a lower amount of loan (around £20k) but it increases every year as I don’t earn a lot currently.
It is annoying. For me it is a graduate tax and I don’t begrudge it. £45k is a good income. How much would you be earning with no degree in your field?

@TabbyMumz. Yes I totally agree - parents who spent their savings on paying student tuition fees up front would have been far better putting that money into say, a deposit for a property for their child than paying for the fees but clearly if there are parents that can afford both then they’re laughing!

@Becca19962014

Nice to know the government has always liked to fuck over students.

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

The vast majority of people will never pay any interest - if you don't repay the capital you're not going to start paying the interest.

If, as a result of your degree, you achieve the kind of salary where you will repay, it's only right that you contribute by paying this "tax" IMO.

Absolutely agree with the interest point. It's disgraceful. I don't mind paying for the uni, but 6% interest is just ridiculous.

It's just about 15% of students afaik who will actually pay it off in full incl interest.

I find them immensely frustrating too. I have paid back £3500 yet my interest in that same period has been almost £4000 so i also now owe more than when I started. It is a big chunk each month as well.

@tabbymumz it's 9k per academic year not per term.

It does work more like a tax than a loan and there were some technical reasons linked to repayment which meant it couldn't be called a tax.

The interest rate is scandalous and not explained sufficiently.