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.

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

No. You are paying it back, because you landed a well paid job due to the degree you are complaining about paying for. Not because you come from a poorer background.
You will end up paying a lot of money back because you landed yourself an extremely high paying job which put you into the higher rate of tax bracket JUST A YEAR AFTER GRADUATING. From where I'm sitting, that makes it pretty difficult to work up any sympathy for this terrible poverty you are suffering.

Yes, I agree with that MRex. Thank you for putting figures on my waffling! I think the problem is knowing what to do for the best - obviously with the bare figures then overpaying makes sense but as we all know a ten year personal finance goal is vulnerable to life changes and a ten year finance goal based on comparison with the thirty year projection even more so.

If interest wasn't an issue it would be a much clearer decision ie pay it off fast or pay it off slow but ultimately pay off the same amount.

But when you add in a high interest rate onto an already substantial sum, coupled with the unpredictable nature of, well, life, it's really hard to know what to do for the best.

Well my bank asked about my student loan to get a mortgage in 2016, it was a whopping £200 and something a month out of what would be a good income. I'm mainly a SAHM now, I do have some earnings, but not enough to trigger student loan repayments at the moment and the interest is crazy.

I thought different years had different time scales and that they did away with the write off. I think my loan writes off at 65 ? My brothers repaid his via earnings, as he went when I think tuition was £1k and my parents paid that, so he only borrowed living costs. I am older, but went to uni late, so I got the whooping fees plus my parents didn't pay for anything.

@goodwinter

OP if my reading is correct, you're saying that over the 30 year repayment period, you'd be able to pay back the £50k were they not slapping extra interest on it. With the high rate of interest, instead of having paid it off, you'll be making repayments over the full 30 years.

This is exactly what I'm saying. Although I could even understand if they added interest to the loan, but 3% + RPI is absolutely outrageous.

@MintyMabel, @Dyrne - the debt increases when it isn't paid, you are then charged interest on the increase as well as on the original debt and the same the next year, and the next... that's called compound interest. Over time it grows larger than you clearly understand. Please use an online calculator so that you can understand what you actually owe and what you will owe; if you're happy with it then that's fine, but you should at least understand it.

@goodwinter Lots of people are saying "but your monthly payments are the same regardless of the interest", which is technically correct

Actually that is NOT correct. If the debt were repaid early, then overall OP could pay a great deal less. Don't forget OP might get salary increases to enable her to pay it off even faster if that's her goal, with even less total to repauly. Then no more "graduate tax" at all, she's on to saving for a mortgage.

Ds1 pays his tuition, we pay his maintenance

@MRex

Don't forget OP might get salary increases to enable her to pay it off even faster if that's her goal

Don't forget the interest rate might (probably will) increase making it far harder for me to ever pay it off.

I agree that the interest rate is unacceptable. What can poorer families do though if a child wants Uni?

MRex I am not in the OP’s massively privileged position of being such a high earner, and i’ve been graduated for much longer than she has.

I will never pay off my loan. It makes zero difference to me what the overall balance is. If my salary doesn’t go up I will plod along paying £81/month forever more. I won’t pay of the loan even if the interest was 0%. Why do I care what the overall balance is to me?

Despite OP’s whining about how she’s hard done by, it’s only people who are in the fortunate position of being a fairly high earner who would have had a chance of paying off their loan in the first place if it weren’t for those pesky interest rates.

To which i’d say: in that case the university degree is the only reason they are able to earn so high. If they’d like to go back and not do the degree I can pretty much bet that they’d be far, far worse off over the course of their lifetime than the value of the loan that they have to pay back.

@SucksToBeMee

I am saying you're not making sense, because you are basically moving goalposts, and creating straw men arguments left right and centre to try and prove your point and 'validate your argument.'

Of COURSE rich people who have family who can fork out the £50K they need for the 3 years in advance will be better off, as they won't have anything to pay back! But that kind of person is few and far between.

Also, people who earn a low wage will pay back very little, as you are not liable to pay anything until you earn £25K per year, so what you said there makes no sense.

As a number of posters have said, many people will not even pay back HALF of what they borrowed.

You seem to be tailoring the 'facts' to suit your own argument.

All this said, as I said earlier, I don't think ANYone should be paying for higher education/a university degree. But they must have very good grades, and getting in on 'clearing' (with Ds and Es in GCSEs and Es in A levels) should not be a thing.

I'm in my 30s & my loan doesn't get "wiped" until i'm 65

Over time it grows larger than you clearly understand. Please use an online calculator so that you can understand what you actually owe and what you will owe; if you're happy with it then that's fine, but you should at least understand it.

But it doesn’t matter. Because the debt is wiped after 30 years, and very few will pay off their initial 50k borrowing in that time, let alone any interest. They could add a million pounds of compound interest, you would never pay any of that off because you only pay a fixed amount, based on your earnings, over that 30 year period.

@Dyrne

the university degree is the only reason they are able to earn so high. If they’d like to go back and not do the degree I can pretty much bet that they’d be far, far worse off over the course of their lifetime than the value of the loan that they have to pay back.

Funny you say that.

I'm in tech. There are 2 people I can name in my company off the top of my head that did not go uni, are within 3 years of my age, have the exact same position as me and very similar salaries.

I completely understand I am in a very privileged position with my salary at the moment. Believe me I still can't believe it and appreciate it massively everyday. I'm proud of where I came from as it allows me to realise when I'm in a privileged position like this.

Of COURSE rich people who have family who can fork out the £50K they need for the 3 years in advance will be better off, as they won't have anything to pay back! But that kind of person is few and far between.

And they would be idiots to do that unless their kids are going in to very high paid jobs. They’d be paying money they don’t have to. I suspect anyone so careless with money wouldn’t be very wealthy.

paying debt til you’re 81

Debt is wiped at retirement.

I'm in tech. There are 2 people I can name in my company off the top of my head that did not go uni, are within 3 years of my age, have the exact same position as me and very similar salaries

More fool you for going to uni, then.

@rainingallday there have always been courses you can get in on Es at A level depending on the subjects you took. I remember back in my day not applying to any former polytechnics as I knew I could go through clearing if I got Es. It's a case of supply and demand. If you apply for a popular subject, which don't necessarily lead to the best paid jobs, then expect to need higher grades for entry.

Anyway like with all things governments touch I knew student loans would turn to shite and cause long term problems which is why everyone campaigned for a graduate tax.

@MintyMabel

More fool you for going to uni, then.

Well there you are.
I have no doubt it's helped me to an extent, but was it all worth it with this current loan system, I'm not so sure.

FYI, I did a STEM degree.

SucksToBeMee but that’s a fluke.

The days of someone being able to walk into most well paying jobs without a degree nowadays are over. It’s extremely rare. So many people have degrees nowadays that a lot of employers paying a certain level ask for a degree pretty much as standard.

@Dyrne

The days of someone being able to walk into most well paying jobs without a degree nowadays are over.

But it's not someone walking into a well paid job without anything. It's someone walking into a well paid job with a 3 year degree vs someone walking into a well paid job after 3/4/5 years of work experience. Both are valuable in their own ways.

Someone working in an industry for 5 years can definitely go on to get a good salary.

after 2008 it wont be wiped off at retirement if you are a mature student it is still 30 years - was is seriously irritating is that all those rich mps would have got free education - presumably even Boris for his university education (grinds teeth)

@SucksToBeMee - the interest rate increasing will increase your debt, interest compounds on interest, the point is that you'll end up paying even more. Under the current situation you're already on the hook for £140k assuming you don't get a single pay rise nor is there any interest rate rise in the next 30 years. MSE actually explains it really well, then you need to add on what you think will happen with your own salary and with interest rates.
www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/
www.moneysavingexpert.com/students/student-finance-calculator

I will be 76k in debt when I finish. That’s without interest.

SucksToBeMee that may work in your industry but it certainly doesn’t work in mine. You can’t even get your foot in the door as a lab tech on £16K without a degree. It’s not actively required, of course, but when so many people need the experience, an employer is definitely going to pick the person with a degree over the person without, and thus the person without never even gets into the industry to get the ‘industry experience’.

If you’ve found the rare industry where a £50K degree only seems to give you a couple of years’ head start over someone without one, then yes, I can see why you’d be bitter. And wonder what the point was in doing the degree. But you’re still earning more than most uni graduates so you’re still better off.

I'm on the worst kind of plan one loan OP I graduated in 2007 so will pay mine until I'm 65, I did have to pay tuition fees and had to take maximum maintenance loan because my parents both left education at 14 and couldn't afford to subsidise me although they would've loved to. I have a decent graduate job but am unlikely to ever earn six figures (public sector role which allegedly pays in job satisfaction and the greater good...). I've not had a non promotion related pay increment since 2010. With the way interest has ramped up I'll never pay it, and DH is in the same boat. My friend's MC parents remortgaged a chunk of their large home to pay hers and she had paid that back with very little interest and will inherit that property anyway. So over my lifetime will pay considerably more than I borrowed.