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?

OP - have you got any figures on the proportion of students (not overseas) that actually pay their fees out right? And the proportion that don't apply for any part of the maintenance loan?

My daughter has just started uni and the money needed has taken us by surprise. Neither of us had been and she’s one of the first from my family. Financially on paper we ok - we had explained to her about the loans etc I think it went in! We did have a conversation around whether apprentice or uni path. She wants to be a social worker so the uni path is the one she’s taken. It scares me how much debt she will be in especially as we can’t afford to help as much as we would like to!!

I don’t know what’s ‘fair’ in life there will always be more wealthy people who earn more or parents help them buy a house etc that’s life. Sadly!

If I could, I’m not sure I would pay the fees for her anyway, as she needs to be responsible for her own future and choices.

OP simply doesn’t get it. The system does exactly what they are advocating for, both through the student loans system and general taxation. It’s like they are arguing for something that already exists.

i am doing a masters right now, and i can take out a loan for the fees (or £12k max)

and its only repayable if i earn over £30k in the next 25 years.

now i am nearly 50 and winding down in my professional life, doing this for interest. I can choose to only work 1-2 day a week and earn just up to the £30k limit in consulting roles.
Therefore there is a big incentive for older people to do these courses with no repayment (though there is a cut off of 60? to qualify for the loan)
NB you won't get a loan if you already have a degree for a 2nd degree unless its a specific ones (usually health care related)

I choose to just pay it, as i can afford it. But i could have just taken the loan and odds on never repaid.

The repayment threshold for a masters loan is £21k per year not 30k

I think that student loans should be written off for people like Teachers once they’ve done say 10 years in that profession, either that or not increase in line with salary rises.
I know my DD now pays a fortune in repayments for her Maths degree and she was lucky to get a stem bursary for he PGCE.

But wealthy people pay the same tax on their earnings, often more, so either way they pay.

Are you suggesting everyone who goes to uni should pay a tax to reduce the burden on those from poorer families, thus taxing the wealthy twice?

@Tryingtryingandtrying

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.

Your maths isn't correct though 😩 you need to learn the difference between tax bands and effective tax rates. Can't be bothered to write out the maths but just Google for some worked examples.

Equally it's an opportunity for people from low income backgrounds to have a right old wheeze at uni and if they don't score a job over whatever the cut off is, may end up never paying it back.

@burnoutbabe

i am doing a masters right now, and i can take out a loan for the fees (or £12k max)

and its only repayable if i earn over £30k in the next 25 years.

now i am nearly 50 and winding down in my professional life, doing this for interest. I can choose to only work 1-2 day a week and earn just up to the £30k limit in consulting roles.
Therefore there is a big incentive for older people to do these courses with no repayment (though there is a cut off of 60? to qualify for the loan)
NB you won't get a loan if you already have a degree for a 2nd degree unless its a specific ones (usually health care related)

I choose to just pay it, as i can afford it. But i could have just taken the loan and odds on never repaid.

At least you’re paying it, I really find it sickening those who take the loans out to do fun degreees and have no intention of ever paying it back. And there is plenty of them about. Taking places off of kids who would have got that place in clearing or wherever if the fun degree person hadn’t taken it.

You have interest on the loan though. So can end up paying back more which I guess is OP’s point

Exactly

repayments should start from six months after the course finishes regardless of what the person is doing career wise

🙄

[quote Tryingtryingandtrying]@comefromaway Over £40ish k it is 40% tax or 49% for those with a loan. And 40kish supporting a family is not megabucks. So that 9% will be felt every month.[/quote]
Your maths is wrong.
It's 9% above the threshold not 9% of your whole salary.

It's not a tax, it's just that some people pay up front, and some don't.

I am all for publicly funded higher education, but it doesn't need to involves some weird after the fact tax.

I'm happy with my graduate tax. Its catapulted me from a cleaner on NMW to top 10% of earners.

We will probably pay our children's university fees, we pay for private school so it's a continuation for us.

I understand the argument for and against, the careers they both have in mind would have them paying it all back anyway. They will both be expected to get a Saturday job to contribute.

I think the way student finance is worked out is awful.

It's not a tax, it's a loan. How is it regressive?

For various reasons I was very afraid of getting into debt when I was young. I went to university as a mature student in my late twenties, after having saved enough that I could get by without taking out any loans.

I know most people here would say that's a bad way to do it, but it worked for me. Point being that it isn't just rich people paying upfront, and I wouldn't be best pleased about having to pay an extra tax after I lived very frugally for years to avoid the debt to begin with!

@BasicDad

It's not a tax, it's a loan. How is it regressive?

It's regressive because the amount paid back is lower the more you earn. While it's fine for low payers who won't pay anything back, for middle income earners they pay proportionally more of their salaries in their lifetime on their loan than high earners do.

A graduate tax proper wouldn't be (as) regressive because those high earners would be paying throughout their working lives.

The repayment threshold in England is just under 28k. Many graduates will never earn that. I’m in my 50s with a first class degree from a top university and I only just earn that now.

@titchy That's how loans work though right? The quicker you reduce the debt, the lower the capital charge. It's not a tax, it's a loan.

If you never or hardly breach the earning threshold, it's the cheapest loan you'll ever take. How is that regressive?

It's regressive because the amount paid back is lower the more you earn. While it's fine for low payers who won't pay anything back, for middle income earners they pay proportionally more of their salaries in their lifetime on their loan than high earners do.

A graduate tax proper wouldn't be (as) regressive because those high earners would be paying throughout their working lives.

Eh?
Are you suggesting that everyone pays a tax to allow low income families to send a child to uni?
Because as you were pointed out, this is a loan.
It's like buying a fridge, high incomes will just buy the fridge outright and that's the end of it.
A low income family may need to use credit to buy it and end up paying more, as well as that fridge taking up considerably more as a proportion of the family income.
That is just a fact of life

"A graduate tax proper wouldn't be (as) regressive because those high earners would be paying throughout their working lives."

The higher earners are already paying more throughout their lives - you know through tax.

It may not be perfect, but the current system is better than any of these daft double taxation suggestions.

[quote Tryingtryingandtrying]@comefromaway Over £40ish k it is 40% tax or 49% for those with a loan. And 40kish supporting a family is not megabucks. So that 9% will be felt every month.[/quote]
You don’t understand how taxes work, clearly.

@ChequerBoard

"A graduate tax proper wouldn't be (as) regressive because those high earners would be paying throughout their working lives."

The higher earners are already paying more throughout their lives - you know through tax.

It may not be perfect, but the current system is better than any of these daft double taxation suggestions.

Errr yes - that's what would make an actual graduate tax system less regressive than the current system. That's the point I was making