Aibu to think the student loan is a graduate tax that you can avoid if your parents are wealthy enough?

[Tryingtryingandtrying]

Was it designed deliberately this way by people with wealthy parents? Can you pay the fees up front each year if you have enough money?

Yes, there's no obligation to take out a student loan.

Yep! Exactly!

Of course you can pay up front.

I'm not sure it's something you can avoid though unless you're eligible for full grants - whether you're wealthy and pay it upfront or not wealthy and pay it off in installments, you still pay it.

The interest on the payments is another matter.

Yes it is designed this way and much better than being an ‘actual loan’. I think your post is designed to bash wealthy parents which is disingenuous as it’s no different wealthy parents giving their children a deposit for a house or buying them a car.
The alternative would be for it to be an actual loan which everyone had to pay back as you graduated, but it’s linked to earnings which makes it affordable. Ultimately, free university education became unviable when Labour encouraged everyone to go to university for Mickey Mouse degrees, who then flooded the market into low paid jobs. So this system acts like a tax which is fairer.

There’s no obligation to go to uni nor take out a loan.

What I do disagree with is the option to not pay the loan back by either not working or keeping below the salary threashold , repayments should start from six months after the course finishes regardless of what the person is doing career wise.

Yes. Not really a surprise that children from wealthy families have advantages and opportunities that other children don't.

We are comfortably off and can't complain. DS' best friend's dad earns 10 million a year. Their experiences, especially during school holidays, are vastly different.

I think it should be a graduate tax that everyone pays regardless of wealth. That would be fairer than the current system.

@sst1234 A tax that the wealthy don't pay? How's that fair?

@Tryingtryingandtrying

I think it should be a graduate tax that everyone pays regardless of wealth. That would be fairer than the current system.

So everyone pays it regardless of if they went to university / how much loan they got etc? I don't quite understand?

I could pay the fees and my kids not take a loan but I don’t know anyone who is finding their children in their entirety through uni. We have all decided it’s something they should fund themselves and understand the value attached to their education.

[quote Tryingtryingandtrying]@sst1234 A tax that the wealthy don't pay? How's that fair?[/quote]
But they do pay, they don’t get tuition free

Lots of parents save from birth for uni costs etc for their children, it’s not just the wealthy that help out.

Paying it all up front would be a very silly thing to do since most people won’t pay off the full amount before it gets written off. Martin Lewis has some good explanations about it on the MSE website.

So yes, wealthy people could pay all the fees up front and thereby avoid having to pay anything else in future but it would make very little financial sense to do that.

Surely your point is that the wealthy pay up-front? They are still paying, just not the interest.

@Tryingtryingandtrying

I think it should be a graduate tax that everyone pays regardless of wealth. That would be fairer than the current system.

Why? So we can find useless degrees like underwater crochet…or media studies.

Your argument makes no sense. Fees get paid either by (a) parents up front covering the full amount or (b) students themselves covering some or all of the amount by paying a monthly sum.

[quote Tryingtryingandtrying]@sst1234 A tax that the wealthy don't pay? How's that fair?[/quote]
They do pay. That’s the whole point of the system.

@CloudPop

Your argument makes no sense. Fees get paid either by (a) parents up front covering the full amount or (b) students themselves covering some or all of the amount by paying a monthly sum.

You have interest on the loan though. So can end up paying back more which I guess is OP’s point. Obviously you can end up paying back far less, if you don’t earn enough to pay much back.

@IceCreamAndCandyfloss

There’s no obligation to go to uni nor take out a loan.

What I do disagree with is the option to not pay the loan back by either not working or keeping below the salary threashold , repayments should start from six months after the course finishes regardless of what the person is doing career wise.

That would likely see a reduction in people taking degrees in areas that traditionally lead to jobs in lower paid sectors though. Nursing, public sector jobs etc. Those areas hard to recruit in anyway.

Even the wealthy people should consider taking out the loan. Its one of the best rates you'll ever get.

Young people are paying the equivalent if nearly 50% tax because of the student loan. The interest accumulating means few ever pay it all off. (but would have covered the actual money)
Ultimately it should either be a graduate tax or interest free loan. If I had been paying £25000 a year in school fees £9000 is a lot cheaper and my child won't be on effectively a higher tax code for 30 years.

What? They are still paying, they are just doing upfront rather than in installments.

I agree that it's unfair in the sense that people with rich parents could have no student loan, and everybody else has to pay one, but surely that applies to absolutely everything? Every time parents pay for something for their children they are providing them with something that another parent somewhere else can not or will not pay for. It sucks but it is just life.

I am more cross about how they are unfair on women. Or more specifically, women who have children.

Interest still accrues during maternity leave. Therefore a woman who takes a year maternity leave when they have a baby will end up having to pay back more than a man who doesn’t suffer this gap. Shared parental leave does exist, granted, but it’s is 99% taken by a woman.

Not to mention that women are more likely to take more time off work or go part time after having children...

I think student loan interest should NOT accrue when someone is on maternity (or paternity or adoption) leave.

I'm not sure where you've got the idea it means someone is paying 50% tax from at all - student loan repayments are fairly small on a below 30k wage, then increase as wages do. It doesn't put tax up to anywhere near 50%?

The wealthiest people I know (income in millions) encourage their kids to apply through a student loan too as it’s often a lot cheaper (even with interest) than dipping into lucrative investments. But their salary expectations after graduation are much higher too so they may not miss the monthly payment

As @Seeline says, if you had to pay back the loan regardless, lots of people from poorer households and people on courses which lead to poorly paid jobs would just not go, and that causes huge problems. I graduated over 20 years ago and am still not paying back my loan (although I think I am just over the threshold on the newer loan payment terms, but I had an OLD OLD loan with better terms) and I don't see that I will ever repay mine. My wage is below the national average, even though I see it as comfortable for me (I earn more than most of my friends) so why should I be repaying the same as say, a law graduate earning four times my salary?