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Share your dilemmas and get honest opinions from other Mumsnetters.

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

556 replies

SucksToBeMee · 09/10/2019 20:51

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.

OP posts:
Pixxie7 · 12/10/2019 21:41

No your wrong if the pension was a benefit not everyone would get it. While I agree that some elements are a benefit ie pension credit which is means tested. Also the reason the government could change it was the same reason they can more or less do anything they want and why it can be challenged in court unlike austerity measures brought in. Additionally the change in age isn’t really the issue it was the limited time women were given to prepare and the fact they were never informed.

LemonPrism · 12/10/2019 21:42

I have £65k (2013 start and did a masters) I'm just resigned to paying 12% for the rest of my life. Not that it helped as I had to do an apprenticeship to break in to my industry

jasjas1973 · 12/10/2019 21:54

Mrex

You re talking bollox

When i went to uni, i got 1800 per year and had the time to work during the holidays, earning 3,50 per hour, that was 35 years ago

My DD is at Uni, she has to prep most weekends and evenings, will do 29 weeks unpaid placement over 3 years.
She worked over the summer as a community care worker, earning min wage, earn'e around 1k, it will pay for some books and her go toward travel costs.

She pays interest on her loan the moment it is approved, its a fucking con and all for a NHS band 6 starting salary of 24k.

TBH, she'd be better off getting on a supermarket graduate scheme but fortunately for her, a Aus hospital has offered her a job at 2.5x what she can get in the UK and guaranteed hours.

But hey, who gives shit, if you have to wait 18months to see a Physio? so long as we pay a little less tax.

scaryteacher · 12/10/2019 22:37

OP I'd have suggested he thought long and hard if he wanted to go to uni. We would have remortgaged, or taken a loan to get him through though, as the loan would have been a conventional one, and our credit rating means a good rate of interest.

I made ds research the loans with me, and explained how the loans worked. It was also very clearly explained online, with examples, in information from his sixth form college. This was in 2013, when he was doing his UCAS applications, and one needed to indicate on the forms if you might be applying for finance or not.

If I need to find out about things, then I go digging. The information was there. I wasn't about to let ds sign up to something that I wouldn't touch with a bargepole.

SucksToBeMee · 12/10/2019 22:46

@scaryteacher

Sounds like your DS had a lot of guidance from you (which is great). Would he have done any of the digging without your guidance? Would he have understood everything if you weren't there to guide him through it?

You're also suggesting other ways of helping him (remortgaging/getting a loan etc) which was completely out of the realms of what my parents could do for me and that other parents can do for their kids.

What do you think you would have done if you couldn't do any of these things and your DS wanted to go to uni? Stop him?

OP posts:
scaryteacher · 12/10/2019 23:03

He's a bright kid and had read the stuff from sixth form about the loans as he rang me to discuss it.

Other parents could remortgage if they chose...they don't always choose to though. My nephew has huge loans as my brother said it was his decision to go to uni.

We would have had long discussions,about not going. My God daughter decided not to go and has had a great decade or so stewarding on expensive yachts. Yes, she had to fund a course at the RYA for a year, but paid that back easily once she started working. Last time I saw her, she showed me her Louboutins, bought on the Champs Elysees. I have a BA and a PGCE, but not shoes like that! Go figure!!

DoctorAllcome · 12/10/2019 23:05

@Pixxie7
No your wrong if the pension was a benefit not everyone would get it.

But not everyone gets the U.K. State Pension.....don’t you have to have ten years work history or NIC credits to even be eligible for pro-rated pension?

Pixxie7 · 12/10/2019 23:18

Yes your right how much you get depends on your NI contributions but only applies to the new UK pension, that is where pension credits come in.

Pixxie7 · 12/10/2019 23:20

Also this proves it’s not a benefit.

DoctorAllcome · 12/10/2019 23:23

@SucksToBeMee
I deem fair as paying back what is owed, not twice as much. If I was paying back my loan plus inflation/a reasonable interest rate then that's what I deem fair. That's not what I'm doing now.

Lol. Actually you are paying a very reasonable interest rate at 6.6%. The current interest rate for an unsecured personal loan of £50k to be paid back in 30yrs is 9.9%. Your 6.6% interest rate is a sweet discount because it’s subsidized by the government.

I hope you aren’t looking at mortgage interest rates and thinking they are comparable? They’re not because they are a secured loan which has a major asset as collateral in the event of a loan default. With a student loan, it’s unsecured because there is no collateral and if you never make enough money, you might never pay it off and your creditor has no collaterol or asset of yours that it can take possession of to offset the debt you owe.

That comment about only paying what you owe and not twice.....erg I’m a bit worried about your financial literacy, you do know that any time you take out a loan you will pay back what you owe plus interest and therefore on a long term loan of 15yrs plus, you are likely pay more interest than principal. If you want to pay less interest, making higher payments and pay the loan off faster.

SucksToBeMee · 12/10/2019 23:26

@scaryteacher

Other parents could remortgage if they chose...they don't always choose to though.

Not if they don't own a house.

There probably was information I missed when I was looking into this at the age of 17, but I also had zero guidance and was doing everything myself. In fact when I spoke to some college advisors about this they came out with the whole "oh no it's fine you just pay it off bit by bit after uni out of your salary untill it's gone". I seem to getting comments from people that I'm stupid and lack intelligence for not comprehending it all at the age of 17 (not necessarily from you but many others here) when all I had was warped guidance from others and lack of examples on the internet as it was all new. I'm pretty sure the college advisers didn't comprehend it all properly either and was passing on incorrect information on to the students.

I do not agree with the whole "information was there you chose to accept it and now you're moaning" type comments.

I am not the only one who misunderstood the extent of it before going to uni, everyone I've spoke to from my year agrees with me. Also I couldn't even comprehend a life with a decent amount of money then as I'd never experienced it. I did not realise at the time that I'd be in this position.

@LemonPrism

I have £65k (2013 start and did a masters) I'm just resigned to paying 12% for the rest of my life

I've accepted I'm just going to have to pay the government a lot more than I ever borrowed through the next few decades. I still wanted to start this thread as I feel like the government's done a good job at keeping it hush hush. I would love to see the loan terms changed for future students even if it means I remain well and truly shafted.

OP posts:
DoctorAllcome · 12/10/2019 23:30

@Pixxie7
Also this proves it’s not a benefit.

Does it though?
State pension- not every pension age adult gets
Child benefit- not every child gets
Housing benefit- not every adult gets
PIP- not every adult gets
UC- means tested so not everyone gets
Etc etc....

A benefit is defined by the source of its money/funding, not who or who does not get it.

SucksToBeMee · 12/10/2019 23:34

@DoctorAllcome

You're talking about student loans like the government gave me 50k to go on a round the world piss up holiday.

We're talking about investing in the future of the country.

OP posts:
Pixxie7 · 12/10/2019 23:35

That’s the point to receive your pension you have to have paid for it. All of the others are means tested.

mathanxiety · 12/10/2019 23:35

DoctorAllcome - I am in the US and my DCs are currently navigating or have recently navigated the world of student loans and finaid. Four of five have managed to get excellent financial aid, whether at private or public universities.

Thanks to the US university approach, they all spent time toiling in core coursework before focusing on their majors. The UK arts/STEM divide isn't a thing in rigorous American universities.

Despite my advice to my DCs to get a degree that would pave the path for a paying career immediately upon graduation, one recently committed to a loan that will come to approx $375k over four years of medical school, which is a sobering - actually staggering - thought. Med students can opt to commit to military service (if the military will take them) and have tuition and board paid in return for active service years equal to the number of years in med school, but then their choice of residency is at the military's discretion. After much soul searching, DS decided that loans were preferable.
www.nerdwallet.com/best/loans/student-loans/medical-school-loans This is the situation he was looking at for loans. He will have to take out insurance to guarantee the money will be repaid regardless of untimely retirement or death.

It's interesting to note that some public land-grant universities have begun to look at the possibilities of offering free tuition to students in certain income brackets. NY is one well publicised case of a public university attempting to become affordable and attractive to well qualified students, but my own sate of Illinois is also jumping aboard the bandwagon. The land grant universities obv benefited from the view of higher education as a public good and public universities obv receive funding paid for by the taxes of all state residents, so it is refreshing to see the germ of a realisation that there should be a quid pro quo, a chance offered to in-state students.

Part of the motivation for both the IL and NY initiatives is knowing that well qualified students were getting better deals elsewhere. www.chicagotribune.com/news/ct-met-illinois-students-public-universities-20180824-story.html
Two of my DCs went to private universities that offered excellent finaid. There are approximately 66 private universities in the US that admit on a need blind basis and offer to meet 100% of demonstrated financial need of admitted students on a sliding scale up to $150k annual family income. By contrast, the U of IL had a reputation for being expensive and its degrees in many subjects less prestigious. If the two DCs who went private had opted to do engineering I would have cheered them off to the U of IL without a moment's hesitation.

One of the ways for a public university to guarantee a steady income from tuition and fees is to try to attract foreign students who pay the full whack and out of state students who also pay higher tuition and r&b, when initiatives such as those contemplated by Illinois are undertaken. American universities are attractive primarily to STEM students from abroad. Very few American arts/humanities students will be lured out of state to a state university that is more expensive than their own state U, esp to a place with brutal winters and no skiing, so R&D money from the National Science Foundation is extremely important. Schools pull out all the stops to attract talent in science and engineering.

Developing the endowment has to be taken seriously too. I get mail from three universities regularly, and phone calls every three months during funding drives. They are wasting their time and stamps in my case. Wooing big donors is the name of the game, but every little bit helps, and fundraising/institutional advancement is done very professionally in the US, even in private elementary schools. Only Oxbridge has anything like the endowment levels of US universities. UK university provision was expanded but funding it was a little detail that was neglected.

You can't shop around for institutional financing as much in the UK as some can in the US, which is a pity, because some degrees from some institutions are not going to result in increased income prospects.

Even so, US students who have good but not spectacular grades and whose family income places them in the squeezed middle - students who won't get merit based scholarships and who won't qualify for much financial aid - find themselves faced with very difficult choices. The problems of astronomical student loans that will never be paid off on middling salaries, that prevent people from committing to buying a home or even keeping a dog, let alone planning to have a child, are well documented.

I don't think you can really say that the US system creates success if you mean success across the board. Some people succeed. Others have bitter regrets about taking out big loans to go to Mediocre U, unless they managed to choose a major that turned out to be a really good choice, but many emerge with degrees that will never be a foundation for a career. The big winners in the US system are the de Vos family of course.

DoctorAllcome · 12/10/2019 23:38

I've accepted I'm just going to have to pay the government a lot more than I ever borrowed through the next few decades. I still wanted to start this thread as I feel like the government's done a good job at keeping it hush hush. I would love to see the loan terms changed for future students even if it means I remain well and truly shafted.

But you don’t have to. You can pay extra payments and pay off the loan early, thus saving you money in the long run. Most high earners like you can do that. If you want to be done in ten years, pay £550 or so a month. Then you’ve only paid some £67k.

DoctorAllcome · 12/10/2019 23:43

@SucksToBeMee
*You're talking about student loans like the government gave me 50k to go on a round the world piss up holiday.

We're talking about investing in the future of the country.*

Lol. No I am not. The facts are you took out student loans to purchase an education that would benefit you and your lifetime earnings potential. To raise your standard of living and get you a few steps away from grinding poverty. You did not get an education to ensure “the future of the country.” Really.

mathanxiety · 12/10/2019 23:44

We're talking about investing in the future of the country.

Money for education is only investing in the future of the country if education policy is well thought out, comprehensive, planned with general economic policy as a context, and if the vision of education encompasses all levels.

Making money available for individual students is not necessarily an investment in the future of the country.

In the UK it has been the most publicised element of the education debate because it goes down well with voters who don't know what they don't know when it comes to questions of funding, of economic benefit, or how funding models work elsewhere.

SucksToBeMee · 12/10/2019 23:48

@DoctorAllcome

Sorry, you're saying student loans isn't an example of the government investing in the future of the country? What?

you took out student loans to purchase an education

Purchase an education. How sad is that statement, that we have to purchase our education.

OP posts:
mathanxiety · 12/10/2019 23:54

you're saying student loans isn't an example of the government investing in the future of the country? What?

Student loans in the UK were conceived as financial products and as vote getting headlines.

The UK does not have a comprehensive education policy to ensure any economic benefit of third level education.

Therefore, student loans are not an example of the government investing in the future of the country.

SucksToBeMee · 12/10/2019 23:57

@mathanxiety

If student loans weren't available at all, there'd be a humongous drop in students going to university. You think the country wouldn't suffer because of that over the next 30 years as the existing professionals pass on?

You might have to further explain that one to me because I see no way how it is nothing but an investment in the country.

OP posts:
mathanxiety · 13/10/2019 00:02

You have stumbled into the debate about whether education is a public good.

DoctorAllcome · 13/10/2019 00:04

@mathanxiety

Hey nice to talk to you again. I agree with 99% of what you say. The US system is jacked up tbh. The thing I disagree with most is the fact that really bright students do not go to Ivy League even though they could get admitted because the tuition alone is running around $50k per year. A kid from a poor background won’t have the connections to get a high paying job after graduation. And it’s 4yrs to a bachelors (not because they are more rigorous like you say but because their high school ends in Yr12, so the Yr13/upper sixth form that is free in the U.K. is the 1st university paid year in the US.) You make very good point about medical school costs....graduate and postgraduate tuition is even more expensive per year than undergraduate in the US where I think it is the opposite...graduate degrees are cheaper tuition/yr in the U.K. I think I saw too that it’s only 1yr to go from bachelors to masters, but in US it is 2yrs....both full time.

The US is awful harsh student loans are never discharged. You have to pay all of it back even after you die. You cannot ever get it wiped, even if you file bankruptcy.

Yes, proponents of the system often say financial aid means most students do not pay the full sticker price, but I think you will find that the “need” calculations for financial aid not only come up short but the aid itself is about 2/3rds loan and 1/3rd grants. For example, I had a friend whose parents income combined was $42k a year. Tuition was $32k/yr but after they looked at “need” financial aid decided she should pay $20k/yr....essentially half her family’s entire pre-tax income.

I don't think you can really say that the US system creates success if you mean success across the board. Some people succeed. Others have bitter regrets about taking out big loans to go to Mediocre U, unless they managed to choose a major that turned out to be a really good choice, but many emerge with degrees that will never be a foundation for a career. The big winners in the US system are the de Vos family of course.

I don’t mean success across the board. Only in terms of the purpose of having universities which is to further knowledge in science and humanities. I’m not measuring success by how many students get to go, fairness of opportunity, satisfaction with debt to income cost benefit.etc. Those are all success measures from a consumer standpoint.

mathanxiety · 13/10/2019 00:07

What professionals are you specifically thinking of?

What areas of expertise need to be encouraged?

Is all higher education worthwhile?
Is all higher education going to come out looking good if subjected to a cost/benefit analysis?
Or should a country try to identify the next big thing and push 17 year olds into it?

Ireland took a calculated gamble on engineering education/training back in the 70s and 80s. It paid off. Ireland also took a gamble on developing an updated information/communication network at precisely the time when the information revolution was occurring and distance was ceasing to be a barrier to income-generating human endeavour.

DoctorAllcome · 13/10/2019 00:17

student loans isn't an example of the government investing in the future of the country? What?

No, student loans are not the government investing in the future of the country. They are the exact opposite tbh. The reason student loans were created in US and U.K. is to shift the cost of government investment off to third parties. But more importantly, so that politicians could also create an industry to boost the economy via interest charges.
The third parties are slightly different in US vs U.K. because the student loan systems are different. In the U.K., the third parties are the private finance company, the student, and the future generation government (taxpayers). The finance company fronts the tuition to the university done. The student services the debt for 30yrs. Then the future generation government at the 30yr mark pay off the balance of the debt. That pay off will actually be more money than if the government of today had just paid the universities the tuition fees up front.
What the U.K. student loan system is quite literally is your generation robbing the generation that will be your age in 30yrs because they will be paying off your education costs.
It’s an inter-generational transfer of wealth. The prior generations all paid for the next generation, but while the baby boomers benefited from that, they did not want to take their turn. So they implemented the student loan system so that your generation pays and the generation after you pays for your education.

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