Thoughts on the Student Loans Scandal?

[HK04]

Own 2pence worth: Feel really bad for young graduates, especially post 2012 in England.

There are only a few ways to be truly socially mobile: luck (likes of lottery, when/where born etc), advantageous marriage, inheritance (again accident of birth not own merit)… and education/hard work (one of few ways own merit a factor yet even that is getting much harder!)…

To have to pay £27k tuition plus maintenance loans and despite paying £250 a month or more, (9% loss of salary) for 30 years still likely never repaying it is immoral. Martin Lewis is right. Imagine if that same sum was going into a pension?

Reeves always trots out the fairness argument…why should tax payers pay for someone else’s education and graduates earn on average more over a lifetime etc…

Here’s the thing: it’s nowhere near as simple as that.

The richest can avoid taking loans altogether thus increasing inequality.

The brightest poorest kids can be the worst off. Not only did they have no hand up or head start they are forced to take on a mountain of debt that can’t ever be paid back.

If someone didn’t train where would our teachers, doctors and nurses (and many others) come from!?

Reeves also tries the shady politician’s deflection of linking to our love of the NHS ala ah but we brought down waiting lists… eh? Not only is that unconnected (or were students meant to pay for the NHS? Thought it was tuition fee etc), but the irony is the NHS now full of young Drs and Nurses saddled with the plan 2 loan shark rates…

Plus what is fair about playing Monopoly if the board is already owned?

Not to mention there are many who never pay tax for whatever reason but if graduates pay more tax over their working lives surely that’s also their contribution back to society?

For Reeves to freeze the repayment threshold meaning even more low earning students are crippled through fiscal drag is imho indefensible.

Not only do young people face on balance chance of not being able to buy a home, cost of living crisis, likely no pension… they are saddled with this debt… they can’t even - no matter how dire their financial situation ever declare bankruptcy if need arises to clear the balance.

Reality is as an example we could have two nurses working side by side, one lucky enough to have been bank rolled by Mum/Dad and over 30 years having an extra 90k to enjoy whilst the other had no option but to take out loans who loses that and more, just due to accident of birth compounding the initial inequality even more. Whatever happened to equality of opportunity!?

Who are the student loans company anyways?? Anyone know!?

YABU What’s the problem? Keep the system as it is…

YANBU We need an affordable, fairer deal, for all our young people, system needs urgent reform

Here's an old-fashioned and probably wildly unpopular POV. Back in my day, the most intelligent kids passed the 11-plus to the most academic grammar/direct grant schools, then, if they got good A levels and a university place, received a full grant for tuition, and dependent on family circumstances, a grant to cover accommodation and living expenses. These were all covered by the local authority.

I believe this led to far more social/class mobility than we have now. I was at school with girls who came from very low-income families, were the first in their families to go into higher education, who became teachers, doctors, and academics. Without the grant support they would not have done this, and nowadays might not get the academic support or the encouragement at school that they need to get the grades necessary for university, and may well be put off by the sort of debt they are facing.

I know comprehensive schools are supposed to cater to all abilities, but when there is a huge spectrum of abilities, kids may be discouraged from being seen as "swots" by their peers, and not perform as well as when there is an expectation of academic application.

Martin Lewis seems to be changing his opinion recently on student loans. Yes it can be viewed as a graduate tax, but it’s a long time to lose a couple of hundred pound a month for, literally your whole working career.

My DC are fortunate their dad has paid (or will be for DD who goes this year) for the uni as he has worked overseas for many years of their childhood. So whilst that wasn’t great, the fact he wasn’t around much, it does mean they start their working lives without debt. DS will be a high earner, so he would repay all of it due to the career he chose. If you’re a nurse / lower paid profession then you may never pay it all off and does seem incredibly unfair having so much hanging over you. Rachel’s argument doesn’t stack up with careers like nursing, as they are never going to be a high earner, so why shouldn’t society fund it. Or at least some of it.

My ex and I were the final year to qualify for a student grant when we went. I was a teenage mum, and no way I would have gone even a year later when fees were a lot lower. I do think student loans are dismissed on here and in society as just another form of tax, but that on top of other taxes most of your working life is a lot, in this climate.

Reality is as an example we could have two nurses working side by side, one lucky enough to have been bank rolled by Mum/Dad and over 30 years having an extra 90k to enjoy whilst the other had no option but to take out loans who loses that and more, just due to accident of birth compounding the initial inequality even more.

Even worse than that. You could add a 3rd nurse and she trained not that long before these 2 but she was fully funded and got a bursary....

I agree with you @HK04

I think if you a public services worker - nurse / teacher (exact roles and thresholds could be agreed - but nurses rather than doctors, classroom teachers rather than leadership maybe) then after 5 years of full time work your loan should be reduced by a % (maybe a third or even half) and then wiped after 10 years full time service.
As previous posters said - we need people to do these roles.
I only got my degree because I needed it to be a teacher. I had no wish / desire to go to university beyond that end goal.

But you’re talking about a time when around 5% of people went to university. We’ve moved away from an industrial economy and we need ‘knowledge workers’ (vom) rather than labourers.

Good point @AeroChambre

From my point of view it never seemed that bad, we take fresh graduates at £38k with reasonable pay progression so I assumed they paid it off at a reasonable rate but have never looked into it.

I also know families who are certain their DC will never earn enough to even start paying it back so they may as well have a few years at uni doing a fun degree before a lifetime in a near minimum wage job.

I guess it's the people in the middle who are really impacted. These may be the degrees which don't directly lead to a job. There used to be far more apprenticeships, I think they're making a comeback.

Wiping the debts earlier or limiting the amount paid back to 2 or 3 times what was borrowed seems fairer.

Student loans have been dodgy as fuck for a long time. When first introduced it was going to be 0% interest. Who owns this debt book now, where have all the personal details been sold off too?

We also need an end to this crap ideology that ridiculous fees are chargeable because only the graduate benefits from increased earning potential. The reality is now that there is no increased earning potential: and it always was that, in a specialised economy, everyone benefits from more educated staff particularly those in the specialised health, education and information sectors. Of course they’re trying to kill all three off in favour of producing an impoverished workforce of uninformed and uneducated powerless morons, as seen in America.

But they don’t need the knowledge they’ve gained at uni, by and large. The majority of people’s uni experience contributes nothing to their work except maturity. Obviously medics, nurses, accountants… they are all specifically training for their work place. But the people doing an English degree, or Media, Tourism even, probably aren’t.

Employers should be investing in their young employees again, and train8ng them on the job. Instead we run at such a pace we don’t have time to train each other and do the job.

What about criminal lawyers who work long hours on low pay?

What about lowly paid graduate inland revenue civil servants?

what about the graduates on the front line in the Ukraine walking for NGOs?

The gov needs to intervene now and help all the students on plan 2.

Otherwise I think they should get together and sue the student loans company .

YANBU

Its a complete sham and I don’t know how it will be resolved.. all I know is we are and will be terribly short of people in jobs than we really, really need.
You are spot on about the huge impact on social mobility.

I graduated in 2011. Still have 10k of debt left and I'm never going to pay it off, should be wiped off in another 10 years. Every year the interest added by Student Loans Company is higher than the repayments I make through PAYE. I mean, what is the point?!

Completely agree!

Finally now the Treasury are looking into how unfair things are and are calling for evidence and opinions. There are a few petitions going too.

Now is a great time to get your views across and share your experiences.

Fingers crossed they take it to Parliament and something is done before prospective students and youngsters are put off altogether!!

If you graduated in 2011 then you must have had a cheap degree as higher fees didn’t kick in until 2012. How have you not paid that off?! And why shouldn’t people like you pay it off?

100% agree with you OP. Particularly sad for the poorest students who have to take the max amount and don’t have the professional connections or social know how (that cultural capital again) to get into the high paying roles.

It's an absolute farce. Dd1 went in 2013. She didn't qualify for max loan but owes £100k easily.
Dd3 is due to go in 2027. She wants to train to be a primary teacher. Why there is a charge for teachers and nurses god knows. I think it should be wiped after 10 years of state service

Having your student debt wiped if you give 10 years of service in state education, (NHS) nursing or Doctor work or other professions that are of general benefit to the country would be an excellent reform.

The loans should be interest free during the actual years of study and should be inflation-only thereafter.

The threshold for repayments to start should be pegged to a half way point between the amount that someone on minimum wage earns for a 35 hour per week job, and the amount where the Higher Rate 40% tax kicks in. The amount where the Higher Rate 40% tax kicks in should be pegged at a rate that is calculated to be sufficient for a comfortable and financially secure lifestyle ie the amount you would need in order to pay the mortgage & all bills insurance services etc on a 3 bedroom average house somewhere average (not London), run a decent not-too-elderly car, buy plenty of fresh healthy food for a family without having to scrimp and worry, and have a generous budget for entertainment, leisure, holidays etc for a family ie you pay 40% on the money that is in excess of what you need for comfort and security.

The structure is as a loan for purely political reasons, they were trying to move the expenditure on universities off the government balance sheet but it didn't work. In theory it could be transmogrified into being a tax instead. In theory there's a benefit to it being a loan because it means the people who go to work overseas are still supposed to pay - I wonder how many do?

Yep if it’s a job like Doctor, Nurses or Teacher or similar it should be an incentive to stay in the UK by having your student loan cleared after a certain amount of time.

I agree OP.
The system is very uneven.
DD graduated in 2023 and took out Plan 2 (the one they have fiddled with to change the payback rates ... not sure the FCA would allow a bank or building society to do this??!).
She worked 2-3 jobs to support herself through Uni (London) and we helped where we could.
She managed to get a job in her chosen profession, has worked for 3 years and has been paying back her Student Loan -- on which she now owes more than the original amount.
She will never be able to save, let alone buy a place of her own.
She's now having to rack up more debt on a credit card to pay for driving lessons.
The financial burden of the loan is something students will carry for most of their working life, and it's particularly hard on those in careers that are not highly-paid.

I wish we were rich parents and could wipe it all out for her :(

https://blog.moneysavingexpert.com/2026/01/beware-plan-2-student-loan-repayment-freeze/

You didn't mention the inequality that women face in all of this too. More likely to take breaks for maternity leave, while the loans keep accumulating interest. Then women are more likely to work part time or in lower paid jobs, with young children, while the interest continues to mount up.

I'm not familiar with plan 2, I'm on plan 4 which is much more favourable but I'll still never clear it. It is thousands more than I borrowed and I can't even dent the interest. I'm at pretty much the top of my earning potential for my age (mid 30s) and sector (charity).

That's not necessarily to women's detriment though.

If a man and woman both graduated in 2015 and both got jobs paying £20,000 and then both stay in full time work and have annual pay rises averaging 5% per year (mix of inflation payrises and promotions as they gain experience and skil) for the next 20 years then plateau with 2% payrises thereafter they will both pay exactly the same on their student loans (sorry I am not going to do the maths for the exact amount) and will both have the same remainder written off in 2045 after 30 years.

If the woman instead takes a 3 year career break from 2023-2026 and then goes back to work at 50%fte her repayments will stop completely while she isn't earning and will be tiny, if anything, with her part time wage. The amount of debt will increase but it doesn't do her any harm, her repayments are very low. Her debt is still wiped off in 2045 and she's paid much less for her education than she would have if she'd worked full time. How has she suffered?

It should be replaced by a graduate tax, say 3 or 4% higher rate, for life. With universities properly funded for their teaching and research, and not spending money on fancy buildings or lowering standards because the students are effectively consumers.

Proper funding would also mean less dependence on overseas students.