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.

@LoyaltyBonus in what way do poorer tax payers support students? That’s like the age old ‘I don’t have kids but I pay my taxes for people who do’ - everyone pays taxes regardless of what government services they actually use and those students who end up graduating and earning large salaries surely contribute an awful lot back in tax!

No one needs to pay it off though. It doesn’t affect your credit rating like normal loans. A % is taken from your wage but only once you earn over a certain amount.
Debit is written off after 30 years.

What’s the problem?

Why should people that don’t go to Uni have to pay for those that do?

"Do people realise the interest rate on student loans is 3% + RPI? It's currently at 6.6%"
The interest rate depends on how much you earn. Per MSE:

"While studying, until the April following graduation, you're charged RPI + 3%. After that it depends on your annual earnings...

• Earn under £25,725: Interest rate = RPI
• Earn over £46,305: Interest rate = RPI + 3%
• Earn from £25,725 to £46,305: It rises gradually from RPI to RPI + 3%. For example, earn midway, so £35,000, and your rate'll be RPI + 1.5%"

@Dowser do they really go after people for their student loans after they die?? Seriously interested as I didn’t think that was the case...!

For someone like you, OP, it's worth paying the loan off quickly as you're a high earner. For lower earners it's not worth it. See Martin Lewis for more analysis.

I agree that the interest rate is unfair - however, I do believe students should fund their own studies. Why should someone on a low wage see their tax go to fund education for those who will benefit from higher wages their whole lives? Yes, we need doctors, engineers, teachers, but those people get paid more than non-graduates. That's their compensation.

People say no lenders take it in to account, but they DO ask for income and expenditure proof and your income is reduced due to loan repayments.
My DS also had the £9k pa fees and he started to overpay as soon as he realised his repayments were less than interest and that in the long run this debt was going to cost him big time. He sought advice from senior financial people at work who ran the numbers. He paid the whole lot off within 2 years of graduating, (earns very good money) and still gets people telling him he has thrown money away!

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

Why are you so keen to pay it off? Change your mindset. You pay an extra income tax. You'll be paying that extra tax for another 26 years.

Do you complain about paying 40% income tax?

About 55% is estimated to be repaid - within what the Gov expected when they costed the thing which is largely cost neutral to the Gov.

*Wealthier students who have their parents give them money still get a degree with a good salary and don't have tens of thousands taken off them, and those who were the poorest and manage to "go up" in life end up paying the most back (and OVER paying much more than they owed in the first place thanks to outrageous interest rates)

You think that's a fair system?*

It’s not a system issue with student loans because you could say the same about adults whose wealthy parents give them a house deposit so they get on the property ladder sooner and with a smaller mortgage, so higher monthly disposable income, etc etc. It’s just the basic inequality of wealth.

What I find ridiculously unfair is that they don’t have to honour the terms to which I signed up. They can change interest rates and repayments at any time. The interest has increased massively since I took out my loan and there’s nothing I can do about it.

I don't think anyone should pay tuition fees actually, but uni degrees should be only for the few (rather than every fucker and his husband being able to do it.)

My DC went to uni - and they were academically smart, top class in everything... sorry to sound braggy - but they were both 'uni-worthy.'

I was not and neither was DH, and neither are a lot more people. DC went to uni with people who did crap in their GCSEs and even crapper in their A levels, and got into uni via 'clearing.' This should not be allowed, and only the top 10% grades of people should go. Tony Blair's idea for everyone to have a chance was stupid, because not everyone should be there!

I do disagree though about the offspring of poorer students having more debt. The poorer ones are better off actually, as they got grants, and bursaries. The 'middle income' suffered the most. Like with anything in the UK, you are better off being very POOR (so you get everything free/subsidized,) or RICH, so you can afford everything.

I also agree with a few others that you are unlikely to pay it all back anyway, And all the student debt is written off after 30 years... If you have say, 7 years off to be a homemaker/parent, the loan is frozen for that duration. Also, if you earn under £25K a year you don't pay anything at all then anyway. So as I said, most people will pay hardly anything back.

All this said, as I said earlier, I don't think anyone should have to pay for higher education/ university; but it should only be people who excel academically, and not every fucker who fancies it!

@Idontwanttotalk

Sorry, I do realise the interest is on a scale and I didn't explain that very well on my original post.

I've gotten the max interest since leaving uni
I've rounded my salary down.

Oh and of course also got the max interest rate while studying too like everyone else.

You can have a 48 year old career changer who ends up still being liable to repay at 78 out of her pension!

They'd be in a pretty decent pension to still be making repayments!

@Becca19962014 unfortunately it sounds like your case was a horrible situation that happened a while ago but that certainly doesn’t happen now - the student loans nowadays are not taken out of your bank account and you don’t get chased by a private company? I’m sorry you’re in that situation though. My student loan has never shown up on my credit record.

raining the problem with having university reserved just for the few is that it tends to be wealthy, privileged people who benefit from that.

@Becca19962014

What's happening to you sounds absolutely awful and I'm so sorry you've had to go through that!

@Babdoc is so right.

If we have 50% of the population going to university, it has to be paid for somehow. Also, it’s not really a money spinner for the State. It got out of control very quickly. Most loans will never be paid off.

It's written off by the time most are 45-50. Also repayment thresholds for earnings are increasing year on year. Probably 1 out of 20 students even starting this year will ever earn enough to even make repayments once they graduate, and if they do it will be £10-£20 a month until they jump up in wages which for the majority is unlikely.

That is why the interest rates are so high. Because those that can afford to repay it, are carrying everyone else's debts basically.

I'll never earn enough to repay my degree that I started at the OU this year. Do I care? Nah. I'm getting a degreee for fun. And after this one I'm doing a STEM degree in 5yrs... which will also be fully funded and I wont ever have to repay 🤷

YANBU that it's a ridiculously high rate and should at least be pegged like the cheapest variable mortgages e.g. BOE base rate +1.3%, or at least these days it should be 2.5% at most.

That said, it is how it is right now and you have to live with your own finances. If you calculate the compound interest over time, then (as long as you have a reasonable expectation of staying employed) you'd be much better off making overpayments to clear the debt. There are online calculators if you don't want to do the maths e.g. www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php). I was lucky to graduate in a cheaper time, but I paid off my student loan well before I was ever due to pay a penny (low paid first job!). On a £45k salary your take-home excluding the loan must be about £35k, so put in £5k/year overpayment or whatever you can afford and see what it does to your personal total costs. It's much more expensive than a mortgage, so if you stay employed you're better off having a bigger mortgage and less student loan.

But you won't be paying it all back if you don't earn a good wage. After 30 years it will be gone regardless. Think of it as a tax rather than a loan.

largely cost neutral to the Gov

🤣 are you kidding me? It is FAR from cost neutral! It costs the taxpayer about 45% of each loan. The government aren't profiting in any way here. What people are angry about is that higher earners pay back a lot more than they borrow.

Since there are now so many universities, the cost, or some of it has been shifted to students.

If they don't want to pay it, then they don't have to go.

you'd be much better off making overpayments to clear the debt.

@MRex

No, I won't. I have to overpay by a fair amount just to cover the interest. And I also have to live and pay for all my bills.

I'd have to give them around an extra 1k a year just to cover interest, and the interest rates may be even higher next year so what's the point.

If I had a spare 25k to give them then sure.

I don't, and neither do my family.

Most students have no idea how it works.

My parents paid my uni fees, and my friends at uni said "But why didn't you just claim the loan anyway? It's free money! There's no interest on it, you may as well have done!"

People genuinely thought it was an interest-free loan......

It is FAR from cost neutral! It costs the taxpayer about 45% of each loan.

To clarify - it costs around the same as the old system where the Gov paid universities directly.

vipersnest those in deferment are being sold to private companies, so nothing being taken from employers. Not just those from when I had my loans in early 90s but more recent as well.

I know someone whose been effected this year by their loans in deferment being sold to two different private companies and it shows on their credit record too. They're now expected to pay back from benefits as their benefits are higher than the amount needed to repay. They don't work (disabled child with a lot of needs and money from council to help fund support) so it's taken from their bank account.

Yes it's shit situation but don't want people to make the mistake of thinking I was a one off I'm not.

I was told it couldn't be sold and was totally safe from impacting my credit.