Active discussions

Meet the Other Phone. Flexible and made to last.

Meet the Other Phone.
Flexible and made to last.

Buy now

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To say people don't realise the trap they're getting in with student loans

248 replies

septemberbaby7 · 09/09/2024 06:34

I graduated 10 years ago and I've been repaying from my salary ever since. But due to interest rates I now owe more than I did 10 years ago!

I am one of the 'lucky' ones, as I am on Plan 1 which is wiped after 25 years and my tuition fees were still approx £3k rather than £9k. The newer plans are not wiped for either 30 or 40 years.

I pg approx £70 a month which is less than the interest added. I have accepted this will be an additional tax I'll pay until my 25 years is up, as it will be wiped before paid off. Maybe if the interest was lower I would have had a chance of paying it off but no chance as it is.

I went to university as it seemed the natural progression and I wasn't sure what to do with my life. But I don't think it helped me get a job - I did an additional course after uni to get into my chosen career and a degree was not required.

At 18 you're basically signing up for a lifetime (in your working life anyway) of an additional tax when you've only just entered adulthood.

OP posts:
LGBirmingham · 09/09/2024 07:11

septemberbaby7 · 09/09/2024 06:34

I graduated 10 years ago and I've been repaying from my salary ever since. But due to interest rates I now owe more than I did 10 years ago!

I am one of the 'lucky' ones, as I am on Plan 1 which is wiped after 25 years and my tuition fees were still approx £3k rather than £9k. The newer plans are not wiped for either 30 or 40 years.

I pg approx £70 a month which is less than the interest added. I have accepted this will be an additional tax I'll pay until my 25 years is up, as it will be wiped before paid off. Maybe if the interest was lower I would have had a chance of paying it off but no chance as it is.

I went to university as it seemed the natural progression and I wasn't sure what to do with my life. But I don't think it helped me get a job - I did an additional course after uni to get into my chosen career and a degree was not required.

At 18 you're basically signing up for a lifetime (in your working life anyway) of an additional tax when you've only just entered adulthood.

You're not wrong. I'm on a plan 1 loan too. But actually the younger people don't have to start paying it untill they're earning a lot more money than us. So they will probably pay less for their degrees than us. Even for us the amount you have to earn before you start paying it has increased loads. It was 15k when I graduated it is now something around 25k I think? This has led to me never paying any back so far. I've always worked part time and come under the threshold for paying.

Original poster
septemberbaby7 · 09/09/2024 07:12

stripybobblehat · 09/09/2024 07:02

It's really not an issue it's just a tiny amount out of your salary each month to pay back the 3 years study

It's not always a 'tiny' amount, the more you earn the more is taken from your salary, and if you are on a later plan you may have borrowed £9k a year (plus maintenance loans) and you'll be repaying for 40 years with interested added all the time. You would have to be on a super high salary to have a chance of wiping it.

OP posts:
GiveMeSomeWaterItsHot · 09/09/2024 07:12

It’s crazy! I will actually pay mine off next year but I’ll have been paying it for 13 years. I think I owed under £10k as my course had a non-repayable grant. I just got greedy and also took the loan in the first two years. I came to my senses in the third year, thankfully, and didn’t take a loan otherwise that’d be another 3-5 years of repayment probably. I pay £130 a month so I’ll be glad to have that back.

Edited to add, I got free tuition as it was an Allied Health degree. They charge for them now!

aramox1 · 09/09/2024 07:14

Solent123 · 09/09/2024 07:06

I agree - its a 30 year tax, as much as I am a fan of Martin Lewis I think Dave Ramsey's approach to student loans is better - e.g. try and cash flow it, apply for any scholarships and pay down as quickly as you can.

Dave Ramsey is writing about the American system- it's different.

GertrudePerkinsPaperyThing · 09/09/2024 07:16

newtork · 09/09/2024 06:54

Martin Lewis has an interesting take on this where proposes that it is called (something like) a 'student tuition payback contribution' rather than a loan. Ie it should be proposed that for X years after graduation you pay X% of salary (above a minimum) as part of this contribution system, in turn for having your tuition paid.
It does make seem a bit more transparent and understandable to me!

Actually makes more sense because everyone then pays that the same, rather than those who can pay tuition “up front” without a loan paying less overall.

GertrudePerkinsPaperyThing · 09/09/2024 07:17

I find it difficult to justify the fact it’s not still free tbh.

Tralalaka · 09/09/2024 07:18

It doesn’t bother me or my kids. It’s an investment in their future. Eldest wouldn’t have got his job without a good degree from a decent uni and youngest wants to be a clinical psychologist so needs a specialist degree. Obviously it begs the question about whether people should go to university for your sake of the experience but I certainly don’t think it should be free

SingingRobin · 09/09/2024 07:18

I'm worried about this.

I have a 15 year old very academic child and another one coming up. I went to uni but disabilities have meant I don't earn well. We are just above UC cut off.

Im really worried that her going to uni is going to set herself up for a life of debt.

And of course cost of housing.

We live in a tiny house, hardly any pension etc. I feel so frustrated.

FragileIsAsFragileDoes · 09/09/2024 07:18

Completely agree with OP. I have friends in their 30s with 100k of debt earning mediocre salaries in medicine who despair.

It is really sad but true - don't get the loan unless you are doing something vocational, and/or with a likely well paid, in-demand career at the end of it. The days of a degree as a way to spend some time thinking about direction and growing up are gone, unless your family can pay for this luxury.

However, lots of good degree apprecenticeships that didn't used to exist. Definitely worth exploring.

crumblingschools · 09/09/2024 07:19

Isn’t the argument it is better to save to give your child a deposit for a house rather than pay uni fees for them, as they may never pay off the whole loan and it will eventually get written off. That is what we are doing for DS. Obviously if you can afford to do both that is great.

If people are paying off large amounts every month that must mean you are on a high salary, so surely you factor that in when making other lifestyle choices eg size of house/mortgage

Singleandproud · 09/09/2024 07:20

I have a plan 1 and a plan 2 loan, so I'll be paying them back for forever more but I earn considerably more than had I not been to Uni in the first place so it still works out better for me. Should I become ill or unable to work for any reason you stop paying so it's fine.

MigGril · 09/09/2024 07:21

septemberbaby7 · 09/09/2024 07:12

It's not always a 'tiny' amount, the more you earn the more is taken from your salary, and if you are on a later plan you may have borrowed £9k a year (plus maintenance loans) and you'll be repaying for 40 years with interested added all the time. You would have to be on a super high salary to have a chance of wiping it.

Show quote history

But you don't need to worry about wiping it out, that's kind of the point of it being a graduate tax ob the income you earn.

I must admit it's taken me a while to try and get my head around it but on the old plans most people never fully pay them off before they come to the end. The new term of 40 years means supposedly 60% of people will pay if off. But they ha e changed the interest rates so they aren't as bad as the old ones.

I do think we could have a better system so it not as confusing for everyone and also certain degrees that we really need in the work force should be funded or subsidised so students are more likely to pick them. And I would never just encourage my children to go to university for the experience they need to be going looking at job opportunities.

Morph22010 · 09/09/2024 07:22

i went to uni years ago when tuition was free and just had a maintenance loan which I paid off in a few years. I went on to work accountancy and if it was now I wouldn’t bother with uni. We take graduates and a level students as apprentices. The a level students do tend to struggle abit more initially and it takes them slightly longer to complete the studies but they still qualify at a younger age than graduates once you take out the 3 years or uni and have no debt plus have been earning through those 3 years. I’d definately recommend the apprentice path over uni for accountancy now. Once you have your professional qualification no one know or cares if you went to uni or not. Uni is a good experience but is it worth the cost nowadays, I’d say no unless you are doing something like medicine where you can’t get round having a degree.

shockeditellyou · 09/09/2024 07:24

stripybobblehat · 09/09/2024 07:02

It's really not an issue it's just a tiny amount out of your salary each month to pay back the 3 years study

It’s not a tiny amount - it’s hundreds of pounds on a fairly average salary, and it’s an effective tax rate of something like 60% on anything over £60k.

So graduates are in a position where the repayment rates are so low they never make a dent in the capital, and yet they are high enough to cause a serious dent in income for decades.

I don’t consider £50k+ that good a salary for graduates in your mid thirties, especially if you are trying to save for a house and pay childcare. The whole thing is a disgrace.

TickingAlongNicely · 09/09/2024 07:24

I've just been applying for a mortgage. There's questions about how much I pay for my phone every month and transport...
None about student loan debt.
It doesn't count.

SingingRobin · 09/09/2024 07:26

"I don't consider 50k a good salary" that's more than teachers nurses OTs etc all who need to go to uni.

What jobs do actually pay more than £50k then?

JasmineTea11 · 09/09/2024 07:26

I don't think its unreasonable for graduates to pay, what's essentially a graduate tax.
Nobody is forced to go, but it usually makes for a better life if you do. It's up to people to make it worth their while. It's not just about earning more, it gives you options.
Can you imagine the furore if any government said they were going to scrap the fees and go back to grants?
Not going to happen.
It's also possible to reduce costs by doing a degree at a local college, or with Open university (for mature students).

Suzuki70 · 09/09/2024 07:29

I'm on a plan 1 loan but I graduated in 2007 and I also owe more than I borrowed (10k). This is because I have also worked part time for the last 5 years as per previous poster and they put the threshold up from £15k to £25k.

I have had £10k several times. But honestly it makes more sense to overpay our mortgage with it. When DH got down to £3k we did pay it off.

As for mortgages, most lenders do ask what your monthly payment is (not balance) in the same way they ask what your pension contribution is but your broker will just enter it off your payslip.

Oh, and I feel like uni was absolutely worth it for me despite lower earnings because I got to do my year abroad!

TemuSpecialBuy · 09/09/2024 07:31

YANBU

I had one of the earliest finance plans. It wasn’t great but fair enough (I thought at the time) Seeing the later ones I was horrified.

Put it this way… Our (admittedly tiny) children won’t be going to uni to study philosophy at Leeds uni if I can help it.

thats no shade on philosophy or Leeds uni… its shade on our successive governments sneakily moving us to a US style education system with no transparent, appropriate or fair financing structure. At least in the US you can a. Chose your lender a. Earn enough to pay it back (dr salaries in is vs Uk aren’t even comparable)

socialdilemmawhattodo · 09/09/2024 07:32

Doggymummar · 09/09/2024 06:51

I never understood why Martin Lewis and others say not to worry about paying student loans off. The interest is high and to my mind needs clearing asap. I made mine a priority and cleared it within about 4 years for this very reason.

I felt the same for a long time. Crazy attitude and it put me right off any other advice he gives.

Pandasnacks · 09/09/2024 07:32

I actually didn't realise they get written off. So is the 25 years from when the loan was given? Or when I graduated? I don't understand when the 25 years count begins

Maireadh · 09/09/2024 07:34

I don’t know where you got this information but plan 1 loans don’t get written off after 25 years? They’re not written off till you’re 65?

Motheranddaughter · 09/09/2024 07:35

No fees for our DC as we are in Scotland
We paid their rent and spending money so they don't have loans
I went full time to fund this

Pandasnacks · 09/09/2024 07:35

Maireadh · 09/09/2024 07:34

I don’t know where you got this information but plan 1 loans don’t get written off after 25 years? They’re not written off till you’re 65?

Depends when you received the loan, I just googled this. If you got it before 2006 it's at 65, after 2006 is 25 years

SlugsWon · 09/09/2024 07:36

SingingRobin · 09/09/2024 07:18

I'm worried about this.

I have a 15 year old very academic child and another one coming up. I went to uni but disabilities have meant I don't earn well. We are just above UC cut off.

Im really worried that her going to uni is going to set herself up for a life of debt.

And of course cost of housing.

We live in a tiny house, hardly any pension etc. I feel so frustrated.

It's not a lifetime of debt, not the way you think of it.

I pay a similar amount as @septemberbaby7 . It's very good value for money. I also did a degree without an immediate career path, and the first job I went into was part time, not well paid, so I didn't pay back my loans. As I progressed in my career I started earning more, and starting paying back my loan (or some of the interest on the loan I suppose). My student loan is the smallest 'tax' that I see on my payslip, far less than taxes and NI!

I needed my degree to have a fulfilling career, it's been worth every penny