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.

Agree, the high fees are a shame, but I can understand. The high interest rates are an outrage, and break promises made when people first took out the loans (and in normal financial matters that would be unlawful, wouldn't it?) Given how easy it was for govt to break their promises on the interest rate, does anyone REALLY feel sure that debts will be written off in 30 years?

It's a sad situation as I did my degree when it was free and not the norm. So many kids feel pressured to go now and do useless degrees on course with a unconditional offer and about 25 weeks of lectures at 9 hours a week. It's those I feel the most sorry for. In my extended family there are lots of (mostly girls) doing art , fashion, film degrees in old college settings. They aren't getting value for money or much chance at social mobilty

@titchy

Do you complain about paying 40% income tax?

No, because everyone is paying this regardless of financial/family background.

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.

Where did you get this information? It's obvious the government increased student loans to artificially "lower the deficit". The government was forced to reclassify this after a review. They now have an extra 12bn added to the deficit that they were trying to pretend wasn't there.

www.bbc.co.uk/news/amp/education-46591500

We were told by college/school in the 90s it was a free "loan", but not a loan in the real sense so nothing to worry about, just free money really, completely trouble free.

It's worrying how many people still think that's the case now.

Having said that I've relatives who think credit cards are just free cash and worked with people with the same mentality so maybe it's just me!

I really don't think it's a big deal - I have one lot of student debt from 2006-09 from my undergraduate and some from 2011-13 from my masters which wasn't entirely covered by the NHS bursary 🤷‍♀️ it's definitely more a tax than a loan though as if your not working then you don't pay it, and it's cancelled off eventually anyway.

There is a lot of inequality across cohorts of students

This. Loads of people on this thread are saying "loans are wiped after 20/25/30 years" - that is not the case for many, it entirely depends which cohort of students you are in.

My loan wouldn't be written off till I'm 65 I believe, so 45 years after graduation. In that time I will have paid the debt several times over, no doubt. I owe more now than when I graduated 12 years ago due to the interest.

@SucksToBeMee - the point is that over the next 25 years it is more cost effective FOR YOU. Your overall financial position would be improved if you share a cheaper flat and focus on paying off debts, then keep saving for a mortgage etc. Or (better), you're already on £45k very soon after graduating, so you're doing well already, go after promotions like mad and put every extra penny you earn into paying it off, then save for a mortgage etc. It's unfair, yes, and I'm sorry about that. But you can only work with what you've got and realistically right now you are the only one who can ensure that you end up paying less overall - by setting yourself up to overpay. If you leave it longer, the compound interest effect only gets worse.

@MileyWiley

What about if you were paying thousands towards it each year and the amount you owed never went down?

It’s nothing like credit cards!

If you have non means tested benefits and you end up with more than the minimum repayment level why shouldn’t you pay it like a wage ? Presumably the benefit is because the carer is effectively doing a job. Just that the government is paying them.

The loan is a graduate tax ,nothing more.

@SucksToBeMee most graduate wages these days are so poor, particularly in the north of England, that nobody will ever pay off the original amount before the timescale in which it is all cancelled off. Certainly that's the view amongst my peers who I graduated with. Especially women who take time out of careers for maternity and then work part time for a few years.

@Becca19962014 I don’t understand - what do you mean by deferment? I thought the whole point was you only paid back if you earned over x threshold. How are they claiming back loan repayments if people don’t work?

put every extra penny you earn into paying it off, then save for a mortgage etc.

@MRex

This is a clear misunderstanding of how the loans currently work. Paying it off is the worst advice you can give anyone with a plan 2 loan unless you have a big sum of money somewhere to clear it.

If I put all my money together and focused on paying it off then it would probably still take me over a decade and I'd still give them far more money than I ever owed them thanks to stupendous interest rates.

..and then save up for a house? Means I probably wouldn't be able to buy until my 40s

All because I come from a poorer background and that's the cards the government has given me.

If they just stopped charging crazy interest rates everything would be easier to deal with.

rainingallday

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!

@Benes

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

I would have agreed with this 30 plus years back, but my 2 (now in their mid 20s) grew up in a very average, working class family, (on an average income,) and me and DH left school at 16 with poor CSE grades, and never went to uni (or even college.) We were not even offered the chance to go, as we were in average intelligence classes... We also grew up on council estates.

Like me and DH, our 2 DC are working class, but unlike me and DH, they are very academic. They tried really hard, and worked really hard at school, (and college,) and both graduated with a 2:1 from Warwick University, and Birmingham University. Them coming from a fairly average, working class family did them no harm.

As I say, me and DH are solid working class, grew up on council estates, and have a modest semi in the midlands that we bought for £40K in the late 1990s. And we are on average salaries (£43K a year between the two of us.) Yet our DC both did well at Uni, and are on £35K and £39K a year already (only in their mid 20s...) So IMO, it's not necessarily just the elite who will do well IMO - not these days...

I don’t spend any time worrying about my student loan. It has no impact on my life. If I don’t pay it off it still has no impact on my life. Forget about it.

I think it's shit for young people. Don't forget on top of paying back the loan, they need to save for a pension & a deposit whilst likely paying high rents. All these expenses mean people are having children later & less of them & we have an ageing population which has associated cost increases in health & social care that need to be paid for somehow.

It's all well & good saying too many people go to uni (I agree) but employers in turn have to stop making degrees prerequisite of jobs where it's not needed.

@MileyWiley - it's still a risk. They may well get caught by inflation, like some friends in my generation who started paying later. By that stage at 6.6% the compound interest may have dramatically increased the loan amount so they'll be stuck with it. Whatever happens with future governments, I can't envisage one that is going to cancel these loans and certainly not one that will reduce the interest.rates for graduates even if they reduce it for new students. People are now sadly stuck with the debt.

The biggest issue I'm seeing in this thread is that not enough graduates have studied maths. (Joke, joke, joke!)

For those who are saying treat it like a tax.

Fine.

It's a tax that the poorest who earn a good salary have to pay the most of.

Those who earn an average salary don't have to pay much of.

And those who are rich and earn 6 figures have to pay none of.

Was a great tax.

It's obvious the government increased student loans to artificially "lower the deficit".

The RAB classification was a fudge on the national debt figure yes. But not on net gdp - that remained the same. The same money that used to go to universities went to SLC instead.

But is it a graduate tax if it only applies to certain people in society?

If wealthy parents (who have been used to spending £25k per year on private school fees) pay higher education fees for their children then the only people to pay the graduate ‘tax’ are the middle/lower income families. As usual it’s not really a level playing field.

Just my observation.

@SucksToBeMee - they won't stop'charging the crazy interest rates. So now what are you going to do? You have a choice; 1) accept it as a tax because you did a calculation and risk assessment that you won't earn enough over the 30 years to keep repaying, or 2) start overpaying to get rid of this unpleasant debt, or 3) accept you're going to pay hundreds of thousands when a large proportion of that expense is avoidable for you (not for everyone, for you). It's your finances and your choice.

Deciding to complain but pay the minimum is picking option 3 by the way.

YABU! I doubt that the total amount YOU will repay will be any different if it was interest free or 1000% interest.

It is effectively a tax... but it cannot be called a tax for several reasons, one of which is that if you leave the UK you are not liable for the tax but the loan will still be yours...

I totally disagree with the high interest rates and applying ANY interest prior to graduation (or leaving the course). The numbers can look terrifying. But the end result is largely the same... the actual amount paid back is the same regardless of the level of debt. They are written off eventually.
No-one should be rushing to pay it back... unless you are a VERY high earner and have the disposable income to hand.

What concerns ME as a squeezed-middle parent is the expectation from the government that I will fund my child at university. Lower income families have access to much higher loans. Higher earner families do not. Of course I WILL support my child but not every family does!

OP, your final point is absolutely bloody spot on. I WISH it was a tax!!! Only tax I’ve ever wished for!

People, stop saying it’s a graduate tax.

It’s not because it’s not paid by all graduates???

@onlyjustme

I doubt that the total amount YOU will repay will be any different if it was interest free or 1000% interest.

It will be different!!! If the interest rate wasn't there or wasn't crazy as it is now then I'll be paying back FAR LESS in my lifetime. This is the exact point I'm making! That statement may not apply to every graduate but as someone who had to max out the loan cus of my family background and now can be earning a high salary I'm fucked!

I think that originally it was a low interest loan but then the government changed the goal posts by selling the loans off to private companies and the interest rates are now punishing. Also for working class students the thought of carrying a huge load of debt for years and years is frightening.