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.

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

That is the core of the issue. And not only that, but if education were to be funded and treated as a public good, would we advance as quickly as we do now that it is essentially a private good with fierce competition.

Doctor
AP coursework is often accepted as 100-150 level university coursework in the US, and proficiency testing in MFL can mean students don't have to spend years getting to an acceptable level before they can drop it. All of my DCs who have gone to university so far have done BC calc AP in HS so have skipped to Calc III in university. One got out of her university MFL requirement after testing despite only doing honors French to 7-8 level in HS, and was able to get in coursework for a minor instead, as well as two years of Persian. My DCs did between them AP European history, US History, various AP English courses, and AP sciences (bio and chem). They were able to progress faster and undertake more advanced level coursework in university as a result.

Mediocre and/or middle income students have the hardest time getting into a prestigious university and being able to afford whatever university they get into. The most selective universities offer the best finaid, and degrees from these universities will open doors even when graduates are not from privileged backgrounds. It's the underprivileged graduate from a so-so university who is left out.

Universities both public and private are finally starting to address the problems of affordability - very, very late in the day and with a huge hit to the economy caused by student loans on individual and wider levels already being felt. I suspect many middling quality private universities will go under or amalgamate with others in the next twenty years because financial realities are causing a rethink of what is an acceptable price for a consumer to pay for the product they offer.

@Pixxie7 - the fact that you have to pay contributions to receive a benefit doesn’t of course “prove” it’s not a benefit. There are other benefits that are contributions based. And other benefits have been challenged in court for being discriminatory (eg bereavement benefits). And in case you didn’t notice, the judicial review by the waspi women was unsuccessful on every ground and the judgement referred to the state pension as a benefit, which it is.

Yes. I had 8 AP classes where I passed the exams with the B or higher you need to get credit going in. But degree specific requirements meant that this only bought me 3/4 of a year in terms of the # credits I still had to get. They are a great way to get ahead, but poorer schools do not offer them or teach them so badly that the students can not pass the exams (if they can afford them, each exam was $60 in my day and I worked a job to pay for them).
My husband’s inner city school did not even offer Algebra....much less any AP courses.
Yes a degree from Ivy League will open some doors, but not like what I saw. One day a party animal barely passing, next day VP in daddy’s Wall Street firm in NYC with a daddy paid for luxury Manhattan apartment. Whereas regular people who graduating cum laude are still banging out resumes and seriously considering being a federal employee because of the student loan forgiveness program.
Yes, the number of universities shifts, but it’s usually based on generational sizes driving demand. The millennials have just finished and they are the biggest generation. After them is the baby bust echo..students born in 2001 and later...generationn z, which are millions smaller in size. So with millions fewer potential students, the universities now have to compete for students or go bust. Supply and demand is driving that imho more than affordability is now. I agree it’s in the near future as the tuition costs have outpaced inflation criminally. It’s what I’d call predatory lending.
The political climate is all about affordability. I think every democratic candidate has had student loans as a platform item...

Which is being challenged it was lost on the grounds of equality to men and that the department didn’t have to inform women separately. However on the flip side there are 233 Mp who support the notion. As far as the benefit issue we will have to agree to disagree. It’s similar to saying that if you pay into a private pension it suddenly becomes a benefit when you retire.

Oh it wasn’t waspi who took them to court it was back260 campaign whose point of reference were different.

@mathanxiety
Here you can see visual of the demographics....
The 25-29 age group (last of millennials) is the largest and after that the following age groups (gen z and zz) are smaller by 2 to 4 million.

www.statista.com/statistics/241488/population-of-the-us-by-sex-and-age/

8Doctor*
The federal student loan forgiveness programme (after ten years of monthly payments) would be only for those most desperate and would be a terrible idea if those students also had private loans as income in the public service wouldn't be enough to fund repayments plus costs of a decent standard of living. A government pension might make it worthwhile for some, and benefits like maternity leave and decent health insurance. So there is that.

There is a large happy medium between ne'er do well scions of the privileged being appointed VPs on Wall Street and cum laude grads working for the Post Office.

I agree with you about the impact of demographics - this will be huge.

@Pixxie7 no it isn’t anything like that. A state pension is a government Social security benefit (as was set out by the court). Eligibility may be based on contributions (as for some other benefits such as contributions based ESA or JSA) but it is nothing like a private pension where you are paying into a fund. a private pension is not a benefit at any point. A state pension is a state benefit at all times and the amount and terms of it are up to the state. The terms can be changed at any time.

NI is effectively a tax and isn’t even expressed to be a direct contribution to your pension (it’s relevant for many other benefits but really is just a tax).

And the case was lost on every ground it was pled. It was pretty embarrassing. Even one of the two claimants who claimed not to know anything about her pension changes until 2011 admitted to receiving 2 letters prior to that telling her about her leafed.

In any event as the court said, the government had no obligation to tell people individually about a change in the law. None whatsoever.

If you might be be entitled to a government benefit and the government change the criteria, The government don’t have any obligation to try to anticipate that and inform you personally. That life I’m afraid.

It’s similar to saying that if you pay into a private pension it suddenly becomes a benefit when you retire.

Off topic

That's the reality for me, Ill health private pension so my ESA is cut,and I'm sure they will be doing the same with the old age pension by the time I get it.

ESA btw is contribution based.

NI payments are paid towards your state pension similarly bereavement payments are dependant on a certain criteria and not means tested, I would therefore argue that that is not a benefit either. I know things are different now but when I started work you paid your NI so that you could get a pension in your own right and not rely on your husbands. We will have to wait for the appeal process to see what they say.

OP Ds went to a very switched on sixth form where the students and parents got lots of information on how the loans worked, with examples set out showing loan, interest, salaries, and the repayments depending on the level of salaries. As we didn't like what it was saying, we funded ds.

If I ever win the lottery big style, I'll pay off my nephew's loans as well.

pixxie7 off topic - pensions appeal? I wouldn’t hold your breath. The claim failed on every single ground - not just the headline point that it’s not age discrimination to remove a benefit that women used to have (60 retirement age) relative to men.

They also lost their challenges under the equal pay directive, the social security directive, the European Convention on Human Rights and indirect discrimination (yes, 50s-born women’s position is harder due to the different conditions prevailing at that time, but that difference is not due, even indirectly, to the difference in pension age, so the claim had to fail). Reading the judgment, it is fair to wonder why the legal claim was brought at all. This is a political, not a legal issue.

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

That is an interesting way of looking at it. Although tbf the majority of bbs did not benefit (directly, at least) from higher education -in the 1960s about 8% of school leavers went to university, and that was up to about 20% by the 1970s I think. So this isn't an obvious case of 'pull up the ladder behind you' -except of course for those relatively few people who did go.

I'm still interested that much of the rest of Europe takes a different approach - is that possible just because of higher tax rates or are the numbers of school leavers going to univ smaller as well?

The US system - does it ever become an electoral issue? Does either party ever propose reforms to the current system of finance?

I wish that Pixxie7 would start a new thread instead of hijacking the OP’s thread to whine about having to wait to get her pension, just like everybody else has to.

What next: hijacking style and beauty threads to moan about pensions? Start your own thread. We’ll call in.

@AvillageinProvence
Good morning!
Yes, I think because the pre student loan era of U.K. education with little to no tuition fees was where education was treated as if it were a public good. When you have a public good funded almost entirely by the government, it usually follows that it is rationed. For education, this meant only the top scorers on the exams could go and places were limited on degree subjects based on government projected need for that profession. Sounds like a meritocracy until you look at who gets the top scores and why. Private schools, tutors...all the advantages of the upper classes get them top scores. Bright poor kids get underfunded crap public/state schools that tend to shunt them off on vocational tracks.

So, yes, not all bbs benefited. But those that did are the ones in power and they’ve pulled up the ladder and sent a massive bill to the generation that comes of age in 2042.

Yes, the US student loan situation has finally become a campaign issue. Last election, Bernie Sanders and Jill Stein both said they’d replace the system and do a universal write off up to $x per student. Hilary Clinton promised something, can’t remember exactly what but it was along the lines of capping tuition prices, lowering interest rates and allowing discharge if you become disabled and cannot work. Minor tweaks. For 2020, every democratic candidate has made it a part of their platform in one way or another.

@mathanxiety
Good morning to you too :)
The federal loan forgiveness program for high demand professions...think research scientist, MBA program manager includes the government making your student loan payments while you are employed by them AND then full write off after ten years civil service.
Btw- there is zero maternity leave for federal employees. They did get a bill to almost pass this year...so maybe in time for your kids but currently there is only the 12wks unpaid leave under FMLA.

It’s one way to get those student loans gone.

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

Sorry, don't know why that posted like that! I was going to say, I kind of agree, but it seems to skip generations, or at any rate my generation X are being burned at both ends. We were expected to not take anything off our parents, in fact we were still of the time that expected children to support their family: but as times have changed, it's become necessary for adults to support their children until well into adulthood.

@ImGoingToBangYourHeadsTogether
That’s how I see it too. Gen X got nothing (lost the most in the recession) and are understandably the generation with the highest suicide rate since 1991...so almost past 30yrs.

Millennials are also shafted to use OPs word, but the generation that is being born NOW and will be setting off for university in 2042 will be the worst off imho because that’s when the student loan balloon payments will start in earnest.

Unless Gen X and Millenials figure out how to clean up the mess....

Wrt Fed loan forgiveness - it seems to me you would still come out ahead in the private sector. I would always advise my DCs only to do a further degree if there was a clear path from that to much higher paid employment.

the generation that is being born NOW and will be setting off for university in 2042 will be the worst off imho because that’s when the student loan balloon payments will start in earnest.

It's very counter-intuitive that the next generations are ending up worse off than the earlier ones when productivity and per capita gdp have continued to increase (and ai means they should continue to do so). Even more so when you think how many more people are now in the paid workforce as a percentage of the working age population - due to the decline of long-term SAHMs.

Is this purely an issue of distribution of wealth/income (and I accept that the increase in house prices means a substantial redistribution to the generations that have already bought), or are we actually poorer overall?

Having to pay tuition fees doesn't necessarily mean that generation is worse off than the previous - it depends on overall real incomes, asset distribution etc - but that does seem to be the way it may turn out. Why/how?

@mathanxiety
Wrt Fed loan forgiveness - it seems to me you would still come out ahead in the private sector.

Agree it’s usually that way but not always. Generally it’s a 30% pay cut to go fed employee if you are highly educated. Depends if that 30%(after taxes) exceeds your monthly student loan bill plus it being 100% paid off in ten years because it’s a tax free benefit. ;). Can also get tuition assistance for graduate degrees and get free masters/doctorate as well while working for feds. Another tax free benefit.

Too, you can keep whatever pension years you earn. It’s 1% times years of service. So if you did the ten years then went private sector all debt free and adding extra free degrees to your resume, that’s also 10% of your salary inflation protected/increased annually that you are guaranteed to get from age 65 for the rest of your life. That costs less than what youd have to save from your private sector salary because feds pay I think 1.2% of salary for FERS pension plan.

Thus, worth seriously considering depending upon your location limitations, career field, and prospects.

@AvillageinProvence
Most economic realities are counter intuitive.
I say that generation...circa 2042 will be the worst off purely in terms of the cost of higher education. Here is why/how:

1. 1960s-1970s: Baby boomers- little/no tuition fees because prior generation funding via higher income taxes of 75-90% as highest bracket.
2. 1980s-1990s: Gen X- self funded education with moderate tuition fees, small student loans that are mostly paid off as Thatcher slashed income taxes to 40-60% as highest bracket so no baby boomer funding. But universities ran through savings..so Gen X was getting a bit of a freebie.
3. 2000-2010s: universities in crisis, not enough money, tuition fees triple. Millenials partially self fund. But Reality is Millenials can’t pay off full cost of their education, so most will not pay of student loan, so government write off starting in 2042 quickly grows to tens of billions.
4. 2020s-2030s..Gen Z will go much like Millenials unless things change.

5.2040s. Not only with this Generation have to self fund partially, but taxes will have to be raised to pay off the Millenial student loans. So, income taxes are likely to be raised again to 1970 levels. That’s why I think they will have it worse...9% graduate tax to pay their student loans on top of a basic rate of ~35% and highest tax bracket of ~65%.

That’s where it’s heading if nothing is done.

@Pixxie7 I would not hold your breath for any appeal. They lost on every claim and there seems to be no arguable basis in law for any of it.

As for student debt I already said I think it’s disgraceful what we are doing to the younger generation. University in many European countries is fully funded and their participation rates are just as high. Scotland has a higher participation rate but no fees. It’s a disgrace that it so much harder for young people to establish themselves.