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

[septemberbaby7]

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.

With £45K student loan debt, a plan 5 graduate on £40K will pay £112 a month, someone on £50K will pay £187 a month, someone on £100K will pay £562. These are relatively tiny amounts, so why the handwringing?

My two Dds have just graduated this year.
One STEM - decided she could not work in the field she learned - and paid over £27 thousand pounds tuition (in loans) for.
She has gone onto a PGCE which provides a large bursary (for STEM subjects) - pays for tuition plus about £20k living. It's like a breath of fresh air not having any finance issues, but I do worry about her reading all about teacher burn out on here.

Other took English. Very academic, studied here and abroad for a year, is going on to do a part time masters (with a part time office job), gains a small bursary for continuing at same uni... it won't pay full tuition though... but I think she's just stalling as she doesn't have a clue what she wants to do... so more loans, this with a higher repayment rate. Her choice... not necessarily one I would have made.

Because the total amount repayable over the 40 years far, far exceeds the original amount borrowed. It's a crappy deal.

But why should anyone care? It’s clearly not putting off students and they’re the ones with the ‘burden’. Graduates on the whole aren’t fretting about the repayments (it seems to be mostly their parents who are) because on the whole they don’t notice them coming out.

It is how borrowing works.
I borrowed (using a mortgage) to buy my house.
I borrowed £70k, I paid back £131k over 25 years.

The student loan issues and just how uni are in general now was a big part of why my oldest went the sponsored cadetship route for marine engineering rather than a uni and my second went into an apprenticeship straight out of GCSEs. They have the mindset that if they can't earn a way to get paid to continue on, then it may not be for them yet and to keep the one time the government will pay in their back pocket for later rather than risk wasting it at 18.

I think some schools are part of the issue particularly when all the people in leadership position all took the same academic routes from school and don't get that there other options. I'm a careers governor at a local secondary and the Sixth Form deputy head is obsessed with getting as many as possible into top unis, will not stop talking about the students he's helping to apply for Oxbridge like the man has never heard of Provider Access Legislation.

He and the head have both said the phrase that they'd support apprenticeships "for those who need it", and seem oblivious how in an area of high deprivation that we're in that having so many great apprenticeship providers, including of higher and degree apprenticeships, in our area is an amazing opportunity, but that the students will need support to get through the very different process of applying. Sixth Form literally told the Career Lead to just get all the kids interested in apprenticeships together at one time and give them all the support at once, that's just not how this works - it's like saying you can support people applying for jobs all at once and it will work. No matter how much me, the Career Lead, the Enterprise Advisor, and others that are part of it explain the types of support these kids will need, that like jobs, some apprenticeships have multiple rounds of interviews and group practical interviews for engineering, and it all falls on deaf ears and that bringing in askapprenticeships is enough to tick the boxes. It's despairing and part of why I'm leaving at the end of my term.

or save some of the money upfront if possible, overpay as quickly as possible and save yourself paying tens of thousands in interest rather than giving an extra 9% of your earnings for the next 40 years to the government.

I paid mine off when I had the funds to do so - folk though it was stupid as they are eventually written off but I am glad I no longer have to worry if someone will try to change the terms and conditions etc. I do think that some students really have no option but to get one, even with parental support and a part-time job, because the costs of Uni are so high. It's also why I would suggest people seriously consider if they definitely want/need to go to Uni and explore any other options that might exist for them.

You absolutely need to declare if you have a student loan when getting approved for a mortgage, along with number of dependents, childcare bills, credit cards or other loans. This is the most basic part of affordability.

The whole system needs an overhaul. Part of being a successful country is having universities doing research and producing good graduates.
Im so annoyed that if we still lived in Scotland then DD would go for free, however I know there are lots of issues with that too.
I think loans should be low interest personally.
DH stayed at home for uni as did all his friends, but that’s because there were 3 universities on his doorstep. If you don’t, like us, it’s another cost. I’m saddened how expensive the OU has become now as it was such a great option for those with limited choices to move away.

I am in the same position as you - but I viewed it as a tax from the very beginning.

I will never pay it off and don’t intend to make any effort to do so as it will expire in 12 years anyway.

You don't plan to ever earn enough to start paying it off?

Because it’s a lot of money - particularly when it’s over 40 years!

It would be deemed utterly unaffordable for people if the tax rate up went by 9 percentage points. But for graduates they’re just supposed to absorb it - and much of the time, the qualification isn’t relevant for their job.

It means a 50% tax rate from £50k which is absurd, and a 71% rate from £100-125k.

Not only is it a huge amount of money, you have no idea what the total cost is when you take out the loan. So how are you supposed to know if it's good value or not?

Oh no I do earn enough to make some payments. But after years of earning very little it will never fully be paid.

The career I went into unfortunately doesn’t pay well and I wouldn’t choose it if I had my time again.

@stripybobblehat it’s really not a tiny amount. Between dh and I we pay over 500 a month

You both must have well-paid jobs. It’s all relative, the repayment amounts.

If you’re clever enough to go to uni, you’re clever enough to understand student loans.

I graduated ten years ago and made my last payment last December, so it isn’t always a lifetime of paying back (accepting Plan 2s will be for more people!).

Well, I had over £50k of student loans when I graduated 5 years ago. During studying I met my now husband. I was a mature student (mid twenties) and he was a high earner in his 30’s.
I graduated 5 months pregnant and havn’t worked a day since. One of our children (we have 2 now) is disabled and I’ll probably never work again due to caring. So that’s a massive loan they’ll never be getting repaid, they can add whatever interest they like, good luck to them!

I work at an RG uni. Surprise, surprise, it it not always those who did best at A level that do best in their degrees (probably the best performers are those who got mediocre A levels and took a few years out before coming as mature students at the age of about 21). The hallowed "top 10%" are also not necessarily those who go on to do something constructive with their degrees (despite us having to build employability into the courses at every opportunity). So I would be very wary about encouraging a large drop in university numbers based on only the "brightest and best" going, particularly, as @crumblingschools points out, there was very little social mobility when only a small % went.

It’s always been at the rate of inflation.

The problem is that we are still framing student finances as loans, when in reality it's a tax that students will be paying off until retirement, as the vast majority of debts are never going to be paid off.

Saying to a student that they will have 50k of "debt" is scary, even if in reality they will never, ever repay anywhere near that amount. So let's just call it what it it is - it's a tax. Give everyone the full loan they are entitled to and call any repayments a tax on earnings that is in no way tied into how much was originally borrowed.

You then end up with a system which is far easier to administer and crucially puts everyone on a level playing field.

How would it only be 10K? That would only cover the fees. What about accommodation and food etc? I graduated in 2011 after 4 years and still have loads to pay off. I think it started at around 23K.

This is incorrect, the way the interest rate is calculated has changed over the years.

Currently:

• 4.3% if you’re on Plan 1
• 7.3% if you’re on Plan 2
• 4.3% if you’re on Plan 4
• 4.3% if you’re on Plan 5

It varies from base rate or RPI, to RPI, to RPI+3% depending on when you studied.

I am well off and could pay the fees and loan without a blink to be honest. I wouldn’t dream of it and neither would anyone I know. I know one person paying the fees. Just no point in my opinion. My kids need to invest in their own education and I would far rather put the money into a property. I could do both but can’t get worked up about them having that debt or owning money