Page 4 | To think student loan shouldn't be deducted from nmw

HolidayBurden · 2024-02-03T11:35:37+00:00

The threshold for plan 1 is so low now that from April 33 hours a week at minimum wage will trigger the deduction. Surely they should raise the threshold now? I can't see any information regarding this changing. the oldest plan seems the worst for this. It is distinctly possible I've missed information about future changes and will be very grateful to any knowledgeable posters with advice.

XenoBitch · 03/02/2024 21:21

I have a student loan from 1999. I have only ever managed to earn enough to pay some off about 3 times (and that was due to doing overtime, and it was an amount like £9). I have no idea how much it is for now.

Spendonsend · 03/02/2024 21:44

KvotheTheBloodless · 03/02/2024 18:48

Part of the argument for asking graduates to (partly) pay for their degree, apart from fairness, was to drive up quality - the idea was that people would be less likely to study business or film studies at a 3rd rate institution if it meant having to repay that money over the course of their career.

I'm not sure we've reached that point, tbh. Most graduates never pay back the full amount, and there seem to be as many young people going to university with poor grades at A-level as before things changed.

The aim of the state subsidising educating people to degree level is to create useful workers that add value to society through using the knowledge or skills they learned at university. If they then go on to work in manual jobs or call centres then what has society gained from their degree? They might as well not have bothered.

It is a bit backwards. If your degree is useful you pay for it and if it isnt the tax payer pays it when your loan is written off.

As a tax payer who didnt go to university, id be keener on paying towards degrees that were useful than ones that werent.

XenoBitch · 03/02/2024 21:49

Spendonsend · 03/02/2024 21:44

It is a bit backwards. If your degree is useful you pay for it and if it isnt the tax payer pays it when your loan is written off.

As a tax payer who didnt go to university, id be keener on paying towards degrees that were useful than ones that werent.

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I just read a news article about a man in his 90s who has just graduated university. I don't think he is going to be working in his field of study.

Kona84 · 03/02/2024 22:23

I took out my student loan in 2005 and finished uni in 2008. I didn't do anything with my degree and decided it was safer to be in a 9-5 during the crash. I left uni owing £12880.
if it had started 1 year later it would be written off after 25 years but plan 1 sent written off until 65.

I got a statement in September- I owe £12780, I pay £56pm but the interest just eats it back up

AcridAndStanLee · 03/02/2024 22:59

Kona84 · 03/02/2024 22:23

I took out my student loan in 2005 and finished uni in 2008. I didn't do anything with my degree and decided it was safer to be in a 9-5 during the crash. I left uni owing £12880.
if it had started 1 year later it would be written off after 25 years but plan 1 sent written off until 65.

I got a statement in September- I owe £12780, I pay £56pm but the interest just eats it back up

We have a very similar story. Even the same years. Mine got up to £16k before I started paying it off.

However, I did think that plan 1 still gets written off 25 years after you started paying it off?

Dotchange · 03/02/2024 23:03

MarieG10 · 03/02/2024 12:03

And for someone in £33k, £84 per month is huge especially given the cost of living in the U.K.

I'm very much a freewheeling, low tax person but I do think that student loans were a huge mistake in loading our young people with debt and also enabling the study of some totally useless degrees which were never going to benefit the student..

For those like a senior nurse and a police sergeant with student loan repayments, they are now experiencing deductions of 49-53% of their income with their pension and student loans etc, and when hitting £50k their marginal tax and deduction rate is now at 79% to 83% when allowing for tax, NI, student loan repayment, pension and child benefit tax. It is utter madness and it utterly affects and diminishes incentives to do better and earn more. Why on earth would they work additional hours when you receive £17 for every £100

I have said this on other posts, but many industries and the public sector are finding that employee behaviour is being totally driven by the student loan, tax and benefit system. We have staff reducing hours to reduce income for a variety of these reasons. When some get promoted the same happens. I am incredulous a Conservative government has presided over making work so unatractive.

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£84 on 33 grand is not ‘huge’.

However, if someone has a degree and is on minimum wage, then they need to consider their options.

LetsgoLego · 03/02/2024 23:14

XenoBitch · 03/02/2024 21:49

I just read a news article about a man in his 90s who has just graduated university. I don't think he is going to be working in his field of study.

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He also won't have had a loan. You can't get them over 65.

Tiiredofthiss · 04/02/2024 01:06

AcridAndStanLee · 03/02/2024 22:59

We have a very similar story. Even the same years. Mine got up to £16k before I started paying it off.

However, I did think that plan 1 still gets written off 25 years after you started paying it off?

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It depends which year you took it out, plan 1 changed slightly in around 2006. Before the changes the loans weren't written off after 25 years, they were written off at 65.

MarieG10 · 04/02/2024 05:22

mis typed

MikeRafone · 04/02/2024 05:39

employers need to be paying proper wages, they are far to low. If you have been to uni, gir a degree and now earning NMW which is £13k below average wages - something is terribly wrong with the wages

confusedbythesystem · 04/02/2024 06:20

Whatapickle23 · 03/02/2024 16:04

Someone said "we knew what we were signing up for".

Well, not really. In 2008 when I took out my first student loan, the minimum salary for repayment was £15k. In 2008, this was the salary for a starting graduate job, it was seen as a good wage. Rents were cheaper, food was cheaper, bills were cheaper. Making student loan repayments on £15k a year was definitely affordable.

16 years later, rents are eye wateringly high, so are bills and food. £15k is now less than minimum wage for a full time job. The repayment salary has gone up to just over £20k for Plan 1 but this is around minimum wage for a full time job.

Minimum wage means the absolute bare minimum you can expect to live on - except we all know that's not true as most people living alone can't expect live on it because it's not enough, they end up in debt and reliant on foodbanks. Minimum wage means no disposable income for most people. This means nothing spare to make student loan repayments.

The student loan thresholds should be set at around £30k now. Everything is too expensive now and even someone on £30k isn't rolling in it.

According to the Bank of Emglad inflation calculator, £15,000 in 2008 is now equivalent to £23,403. So the current Plan 1 threshold is much closer to the 2008 level mentioned by @Whatapickle23 than their new suggestion of £30,000.

Furthermore, someone starting a 3 year degree in 2008 wouldn't begin paying student loan back until 2011 at the earliest. Inflation rates were lower then than in 2008 and the BoE calculator states £15,000 in 2011 is equivalent to £21, 228 today.

Living costs have increased but that's what inflation accounts for. So the threshold for Plan 1 today is at a very similar level to 20-25 years ago.

AcridAndStanLee · 04/02/2024 07:58

@Tiiredofthiss thanks for that nugget. Looks like I'll be paying it for a lot longer than I expected. I wonder if it gets written off when I die.

AcridAndStanLee · 04/02/2024 08:03

Didn't want to sign in and see the negativity but look at this cunt. I earn the average wage of the country I believe. What a joke. It hasn't gone down since I last looked two years ago.

To think student loan shouldn't be deducted from nmw

Soontobe60 · 04/02/2024 08:14

MarieG10 · 03/02/2024 12:03

And for someone in £33k, £84 per month is huge especially given the cost of living in the U.K.

I'm very much a freewheeling, low tax person but I do think that student loans were a huge mistake in loading our young people with debt and also enabling the study of some totally useless degrees which were never going to benefit the student..

For those like a senior nurse and a police sergeant with student loan repayments, they are now experiencing deductions of 49-53% of their income with their pension and student loans etc, and when hitting £50k their marginal tax and deduction rate is now at 79% to 83% when allowing for tax, NI, student loan repayment, pension and child benefit tax. It is utter madness and it utterly affects and diminishes incentives to do better and earn more. Why on earth would they work additional hours when you receive £17 for every £100

I have said this on other posts, but many industries and the public sector are finding that employee behaviour is being totally driven by the student loan, tax and benefit system. We have staff reducing hours to reduce income for a variety of these reasons. When some get promoted the same happens. I am incredulous a Conservative government has presided over making work so unatractive.

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What you’re describing isn’t the norm. People I know who are either PCs or medics have what could be described as a good lifestyle despite their outgoings. They will have a decent pension on retirement.
If people choose to go to university they should pay for the benefit of doing so.

Soontobe60 · 04/02/2024 08:19

MikeRafone · 04/02/2024 05:39

employers need to be paying proper wages, they are far to low. If you have been to uni, gir a degree and now earning NMW which is £13k below average wages - something is terribly wrong with the wages

How do you work that one out? The salary you earn isn’t anything to do with whether you have a degree in anything or not. It’s to do with the actual job.
I could choose to take a job in a factory on NMW, despite having a degree and Masters, that’s my choice. Both my DDs have degrees, both have jobs with salaries over 100k. Both paid off their student loans before they hit 30. Most of their colleagues are in the same position.

Soontobe60 · 04/02/2024 08:21

Tiiredofthiss · 03/02/2024 17:54

Lots of industries pay very low salaries for jobs that require degrees. I have trainee accountant friends with degrees, and paralegal friends with 1-2 degrees, who earn barely above minimum wage. I have other friends who did degrees and haven't managed to find a relevant job and are working minimum wage jobs while they keep looking for work relevant to their degrees.
I finished uni about 9 years ago and have only just started earning enough to pay a very tiny student loan contribution myself. There has been several times in my career where I've had a pay rise as minimum wage was rising to above what I was bring paid, and my wage then went up to 30p-80p over minimum wage.

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As a trainee accountant on a graduate training programme my DDs first salary was £28k at aged 22. She’s on far more than that now, 8 years later.

Whatsinthebag2 · 04/02/2024 08:22

The thing is when I signed up for it then rhetoric was 'you will all have one so you'll all be the same'. Well no, because I work with people older than me, late 30s, early 40s and they've paid off their loans.
On about 48k I pay almost £400 in student loans every month, I have a number of plans, it's a chunk from my salary I could do without. My childcare is 2000 a month. Every £100 counts. I wish I had really, at age 17, thought through what my life could look like mid 30s. I pay and pay and the balance goes up!!

Soontobe60 · 04/02/2024 08:23

Hubblebubble · 03/02/2024 18:14

@ComtesseDeSpair I've got a degree in English with TEFL, a PGCE in Secondary English and I'm currently doing a part time online MA in creative writing whilst working in publishing. Since graduating I've taught in the UK and overseas. I now work in educational publishing. All relevant to my degrees. All fulltime work. I've never earned more than 22K.

Why did you do a PGCE if you chose not to teach? Seems like a waste of money if you ask me.

Scottishshortbread11877 · 04/02/2024 08:25

ComtesseDeSpair · 03/02/2024 11:42

The guidelines for repayment thresholds were clear when the loan was taken out. If NMW has risen significantly enough that many people who previously earned too little money to make repayments now earn more money, that’s a good thing overall, not a bad one. Besides which, people with a Plan 1 loan have also had a significant amount of time since obtaining their degree to advance their careers and increase their pay above NMW - as should be the case if you have a degree.

Edited

Haha (cries in English literature graduate)

Scottishshortbread11877 · 04/02/2024 08:29

DataBatman · 03/02/2024 16:14

And still getting off lightly as paying student loan of a few pounds per week will never come close to actually paying the amount outstanding of the loan

I once worked out that if I stayed in the same job with a 3% annual rise (optimistic as we'd had years of pay freezes at the time) I'd have paid off my student loan at the age of 64 having paid 55,000 in repayments on an original 12,000 pounds of borrowing.

The original repayment threshold was 10,000 when I took my loan out though.

I don't think that's right. It would cancel after 30 years?

Scottishshortbread11877 · 04/02/2024 08:34

Hubblebubble · 03/02/2024 18:31

@ComtesseDeSpair My skill set is English and education. I'm a search engine optimisation digital copywriter for an international educational publisher. It couldn't be more inline with my skill set. However, it's horrifically underpaid. It has other perks and I have my (non financial) reasons for staying. I don't regret my qualifications. Im just explaining how many highly qualified people in graduate jobs are paid about the same as a waitress.

Edited

But you don't need to do a 22k job. There's plenty of civil service roles you're skills could be transferred to and then you can move about once you secure a cs job. I would not be that qualified and work for 22k, it's unsustainable. It must be £1300-£1400 a month after tax on the £10k over your personal allowance, national insurance and pension?

Scottishshortbread11877 · 04/02/2024 08:36

XenoBitch · 03/02/2024 21:21

I have a student loan from 1999. I have only ever managed to earn enough to pay some off about 3 times (and that was due to doing overtime, and it was an amount like £9). I have no idea how much it is for now.

You can check on the gov website. Have you not received annual statements?

PleaseBePacific · 04/02/2024 08:41

Threshold definitely needs to be raised in line with nmw rises. I earn just over 30k and pay back around £77 a month. That is a huge amount to me. The interest rate is also not that low. They charged me more in interest than I made in repayments over the last year, and the rate is comparable to loans elsewhere. Quite honestly I wish I'd never bothered going.

Scottishshortbread11877 · 04/02/2024 08:43

I took out my first loan 2005, I had 4 years 2005-2099 so I would have had 2 before 2007. Does this mean the whole loan balance will be written off when I turn 65 or 30 years after I became eligible to repay - whichever comes first. Or will the loans from 2005, 2006 be treated differently from my 2007 and 2008 loans? Or does it mean when I first applied ?

OrangeMarmaladeOnToast · 04/02/2024 08:51

Kazzyhoward · 03/02/2024 12:11

Nail on the head. There are so many "pinch points" at all different income levels where working extra hours or taking a promotion, etc., is just not worth it. And yes, workers are deliberately reducing their hours etc as they realise the loss in net wages isn't much and they decide their time off is worth more than a bit of extra money, even moreso with costs of commuting or loss of free childcare or child benefit. Likewise, I can't believe that this has happened under a Tory government. They're insane. We have a shortage of workers, yet the tax/benefits system actually encourages people to work less and not get promotions/better jobs, etc.

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Yep. I'm in this position due to working part time rather than low wages, but I simply wouldn't bother increasing my hours because I sit a little below the student loan repayment threshold, and the student loan is the tipping point that makes it not worth me bothering. There are plenty like me, at varying points on the income spectrum.