Student loans- feel sick

[Lazy56789]

I did a degree around 15 years ago, and a Masters around 10 years ago.
A repayment is taken out of my salary each month based on my earnings, but when I received a letter from student finance today I saw my balance was 41k! And over 2k in interest was added in the last tax year.

It's terrifying, I'm not in a position to pay off huge amounts, how does anyone do it? The figures are eye-watering, I feel like i must've done something wrong for it to be so high?

I think the previous government changed the company administering the loans to another company and they put the interest up. It is a disgrace.

@ellyeth that is a completely inaccurate statement.

The Student Loans Company is government owned and non profit making. It administers the loans on behalf of the government and devolved administrations. It does not set policy, it does not set interest rates, it does not set repayment terms, it can’t sell off the loan book.

what possible reason would you have for suggesting otherwise?

This summarises the previous student loan book sales.

https://commonslibrary.parliament.uk/research-briefings/cbp-8348/#:~:text=End%20of%20the%20student%20loan,total%20of%20£15%20billion.

Mortgage style loans introduced in 1990 lasting until 1998. All of that loan book was sold off to private investors a a result of three separate sales which took place between 1998 and 2013.

for those with failing memories 1997 to 2010 Labour governments, 2010 to 2015 Tory led coalition government.

Labour introduced the Sale of Student Loans Act in 2008.

two subsequent sales of income contingent loans, covering loans that entered repayment between 2002 and 2006, and the second covering a further tranche that entered repayment between 2007 and 2009. Face value approx £7.5bn, sold for £3.6 bn.

Less than glowing NAO report, budget 2020 confirmed no further sales. Current Labour government have not changed the no more sales policy.

current book value,England, around £250 bn, so previous sales a tiny fraction of that.

My parents didn't go to university but they did move to the nearest big town and stayed in quasi-student digs - like "boarding houses for young men/women" type things while they did apprenticeships and got their first jobs.

That's probably 90% of "the experience" right there!

Except that it was possible as a student to party hard 5 nights a week, be hungover and good for nothing every morning, and scrape a pass through the end of year exams. First-jobbers/apprentices would have got sacked doing that.

Not really.

The monthly repayment amount is taken into account as an outgoing when looking at affordability. But the actual debt amount is not factored in. So if you owe £40k in student loan that is not treated in the same way as if you owed £40k in credit card debt or car finance

I feel for you!

When they first came out there was no interest and tuition fees were paid automatically.

I know a few people who have no intention of ever paying it back by ensuring they don't hit the minimum earning criteria. (Mature students looking for income other than work)

But for you younger ones just trying to get a degree it's tough and unfair. Xx

Which makes sense because the amount owed might as well be 40k golden bananas in a video game, but I do know quite a few people who were taken aback when the bank asked them to list their monthly repayments for the affordability (i.e. the actual cash money going out) and I think this is directly a result of the well meaning "it hardly even counts as a debt!!!" message.

I have 2 student loans that total about 100k. Swap??

In seriousness though it has no impact on you other than a monthly payment and eventually will be wiped. I work in NHS so will never pay it back.

The monthly payment may have quite a big impact, depending on how much it is. Say its £150 a month. That's nearly £2k a year that could have been spent on holidays, hobbies, car, clothing.. or saved up.

No impact you say.....

Indeed @Chinsupmeloves

when they first came out £1000 - equivalent to just under £2,000 today (based on BoE inflation calculator). Payable up front - so a very different approach to today, but also means tested.

in 1998/99 only 35% had to pay the full amount, 20% a partial amount and 45% had no contribution to make. That mix did shift a bit 45% full and 14% partial in the year before they were raised to £3000.

Very different times. Though perhaps worth remembering that the Higher Education Act 2004 that brought in the increase to £3000 only passed with a majority of five in the House of Commons.

The frozen threshold is the most unfair part of it, as the interest rates are aligned with inflation, and wages rise with inflation, but the threshold doesn't meaning that every year the overall percentage paid goes up.

https://researchbriefings.files.parliament.uk/documents/CBP-10155/CBP-10155.pdf

Tuition fees in England History, Debates, and International Comparisons

Yeh but what is she going to do, fork out a tonne of money she clearly doesn't have if she only pays back £50 a month, on a high interest loan for years????

Exactly - hardly anyone has a minimum of £50k lying around to pay for fees and living costs or is stupid enough to take out a loan with a huge interest rate that will have to be paid every month, regardless of income.

It’s a tax on the poor. It’s an education tax on the poorer and middle earners.

My dad used to call the lottery a tax for poor people, lol.

Sadly, I think most schemes in this country are a complete and utter farce. Most workers in this country are getting fleeced in a myriad of ways, and the more complex, the worse it is for us to understand and thus more exploitation can take place.

I pay a student loan back each month for a job that isn’t that well paid but I’m an essential worker, and I had to go to university to qualify for the type of allied healthcare role I am in. On top of that, I pay a service charge for the road I live on because the council refuse to adopt it. So lots of ways that I’m being shafted out of money in this country. It’s become really quite exploitative in my opinion.

But it is a tax on the ability to earn more. Statistically graduates earn more. We get free education until 18 then you can work or carry on in education. You chose to carry on. For me and my cohort that wasn't even an option. You pay a very reduced fee for that further education...then moan when you have to pay it back over very generous terms.

Next time don't go to university...simples.

Government likes to claw back and generate as much money as they can!!

Well, that “choice” has become unaffordable for many. With inflation, that ability to earn more is actually not in any way worth it. I’m so thankful I was one of the last students on the 3k a year tuition fees!

Also this all just creates and maintains generational and socio-cultural gaps in education and wealth. It’s shite if you come from a poor or minority background.

But I said affordability. That’s what I meant.

So you’re saying people should stop going to university if it costs too much? So only wealthy people should go? You think this is a better idea than just taxing everyone who goes?

Sorry but they have to be profit making. I’ve paid my student loan back but only covered the interest and a few hundred quid.

Most universities should be closed down. There's not really any need for many beyond the Russell Group. We need to go back to sending the top 5% or so to University, there's no point spending money to go to university for 3 years only to end up in a job that does not require a degree.

That's not my point.
My point is that the way these loans have evolved since the 90s is a disgrace.