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

I agree the system needs reform but don't fully understand your "Whatever happened to equality of opportunity!?" argument. Even if student loans were completely fair, that wouldn't magically give everyone the same opportunities. Your £90k over 30 years example could equally apply to an individual's parents paying for their private education, or giving them a house deposit - the difference on which they benefit from that over a lifetime vs renting could dwarf £90k.

Personally I think the maintenance and tuition fee grants should be separated. By all means make repayments fairer and lower the interest rate, but I don't think the maintenance element should ever be written off until it's repaid. The tuition fee repayment being proportionate to how much you earn isn't particularly logical but the maintenance element also being tied to it makes no sense at all.

Regardless of whether you've used your degree within your working life, you lived in the accommodation, ate the food, wore the clothes, etc. you bought with the maintenance loan, so it should be repaid by you - not by other taxpayers, including people your age who didn't go to university but did apprenticeships or started work instead - they didn't get their housing costs or food or nights out funded by the government so neither should students.

Employed graduates are also tax payers. It's not about using "free taxpayers money". It's a loan that is paid back with a huge additional interest to pay on top. Graduates have paid their taxes back tenfold for the privilege. If degree courses are classed as full-time how else are students supposed to fund living costs.

I think that employers should pay the graduate tax. If they insist that the job they are offering requires a degree, then why should they not pay for that degree? It might make employers think twice before insisting on a degree for a glorified admin job, and offer more in house training themselves.

It’s not huge additional interest though. The government has to borrow that money from the markets and pay interest on it, so what students are paying is in reality is far less than what they borrowed (or what the government has had to pay to borrow that money).

I like this idea. If a job is advertised as having a degree being essential then the employer pays an elevated rate of National Insurance - that could have a significant knock-on effect at improving prospects for non graduates and encourage more people to think twice about taking on such a,debt if it's not going to improve their prospects.

I'm on the fence.

On one hand....we knew it was a loan that was expected to be paid back. On the other hand I went around the time Tony Blair and co decided everyone ever needed to go to uni 🙄🤦🏻‍♀️ which in hindsight was not the right choice for me. But at the end of the day I studied for 3 years and got a degree out of it. So in my head it's only fair I pay for it. Though I feel the many varying levels of repayment schemes and different rules shouldn't have been a thing that was allowed to happen, I feel it would be clearer if everyone was on the same plan with the same terms.

But obviously that doesn't take into account the changes in tuition fees.

I was the last year where tution fees were capped at £1500 a year. And actually a relative paid that. Though I did take out the minimum patience loan which I obviously still need to ay back.

Unfortunately ending up disabled and being limited to working part time was not on my goddamn radar at 18 😭 in all honestly I'm not sure I'm ever going to earn enough to ever pay it back. Actually haven't had a SLC statement in well over a decade so I actually have no idea how much I now owe but last time I checked the interest was more than I'd actually borrowed 😳😬

I'm one of the post 2012 students. It's bullshit. I'll be paying it off almost all my working life. It's an extra £100 or whatever a month I could save for my daughter, or etc. I'm a band 6 nurse so it's not a bad wage but I'll never be loaded.

My partner is German and her degree coat €500 a yea for tuition. That's it. Tuition is free in Scotland. It manages to be cheap in other places. Other countries manage to provide education this way, so why can't we?

Obviously we couldn't fund perpetual students, but I truly believe you should be able to complete one undergrad degree for free, particularly in vocational subjects like medicine, nursing, teaching, etc.

One thing I do think is overlooked is that students are largely told on a whole (looking at you Martin MSE Lewis...🤨) that taking it student loans will not have a financial impact on you later in life as it's not judged the same as other loans.

Which unfortunately isn't true , as when you're applying for a mortgage...guess what quite obviously gets taken into account? 🤦🏻‍♀️😬 And I fear for those with later loans, especially those who could be paying it off into their 40s/50s may very well be negatively affected by this

The thing is this was kind of true at the time. The threshold was set at around the median wage and the tax burden and housing costs were not as oppressive as they are now.

But very shortly the repayment threshold will be only around 10% above minimum wage, basic rate tax payers have a marginal tax rate of 37% and people are struggling to afford rent in a house share.

And interest is so high that some people are on track to repay four or five times more than they borrowed in the first place.

I've been in full time work since I graduated (16 years), with deductions every month, and I still have thousands left to pay.

That's a very good point actually. In comparison I think looking back it perhaps wasn't such a huge proportion of income and obviously cost if living has risen significantly.

Honestly the interest rates feel crazy 😧 🤯 it's scary how quickly and rapidly it can build. Many people are paying and have paid for years and yet not even made a dent in the amount paid back due to increasing interest rates

In still cross at Martin Lewis for completely ignoring Scottish students at English universities in all his information. Everything he wrote at the time applied to Plan 2 loans, which is what I based my borrowing on. I'm not even convinced he was aware of the fact Scottish students were still on Plan 1 (which was later transferred to Plan 4).

Don't agree with the sudden crisis over student loans however... who paid Reeves' education if not the taxpayer...
Agree with the nonsense nhs agenda.

I graduated in 2002, I was the second year of £1000 tuition fees. I did graduate with about £20k of debt rather than maybe £15k as I was estranged from parents and took additional hardship loans. I reflect on that time and totally agree with 17-18yos not really understanding what they are signing up to. Young people are obviously excited about their next step and for most a student loan is the only way to do it.

Anyway, I have had a decent career in business and cleared all debt by 30 and before I bought a family sized house and started a family. I’ve paid my way in a timeframe that feels fair. The current system is an absolute farce and is saddling young people with horrific amounts of debt for their whole working lives.

I currently work in a big corporate and last year a grad in our team mentioned she has £60k of debt. In hindsight she wished she’d joined our apprentice scheme rather than done a degree. The pay difference to join us at 18 is only £4k less and no debt!

Martin Lewis also has a lot to answer for. I know through my job how extremely influential he is with the general public, and has long touted an overly positive view of these loans and the system. He’s all of a sudden completely changed his tune, but the damage is done.

In researching ahead for my own son, I much prefer Dave Ramseys advice to minimise student debt and also stay local if possible. Obviously US system is completely different, but that principle stands.

There is no way my son will take out one of these loans if he wants to go to uni, but recognise that is a highly privileged position to be in. I am savings in S&S to cover his fees and the compromise will be for him to go to uni locally and leave debt free. We are too obsessed with living away from home in the UK and not the same for students in many other parts of the world.

Still, this approach does not work for the majority of families just trying to get by. I hope the momentum currently exposing this awful system leads to action.

Surely then employers not going to pick the poor graduates who had to max out on loans, they're going to pick the wealthy graduate who had mummy and daddy support them through uni and comes without debts. Which is only going to widen the inequality.

Why would the repayments stop completely if working part time? Mine haven't, and they aren't tiny either - at least not to me they are not. It's a chunk of money out of a family budget, given the cost of living.

My son is starting to think about uni when I'm still paying back my own loan. I have no idea how we will make it work him, but will find a way if that's what he wants to do. I worked a lot as a student so he'll need to do the same. I also got a grant which he won't get so it's a lot to think about. Something that people from wealthy backgrounds don't have to consider. It perpetuates inequality and limits social mobility, when the system was intended to do entirely the opposite.

I meant they woukd stop completely if part time wages fall below the repayment threshold, which ought really to be obvious to any graduate. When I went to 50%fte my salary went below the threshold.

Obviously for everyone the money they have to pay is money they could spend elsewhere if their education was free but my post was purely about how someone who has a career break or goes part time is not as far as I can see disadvantaged in any way compared to someone who spends their whole 30 year repayment period after graduating in full time employment.

My part time wage is not below the repayment threshold. I still make repayments every month. The only time they stopped was while I was on statutory maternity pay.

Fine. That's not part of the issue The post you are arguing with was where I said "her repayments will stop completely while she isn't earning and will be tiny, if anything, with her part time wage" for someome om 50%FTE. I guess the word "tiny" doesn't apply and should be replaced by "less than half the size" for the small number of people whose 100%FTE wage is £100k+ but I was talking about normal people in normal jobs and even for Ms £100k+ the actual point is that her payments are still a lot lower than they would have been without the career break and the part time arrangement and I cannot see that there is any disadvantage between a person who takes such arrangements vs someone who works full time for 30 years without a break. I am not disputing the fact that you personally have to make payments on a part time wage - your payments are lower than they would be on a full time wage and your debt will be wiped off at the same time as it would have been on a full time wage, despite you having paid less.

Whether or not having repayments at all, for anyone, is fair - is a separate issue. The specific point that I am making (and you seem to be relying on irrational irrelevancies to argue against) is that the terms and effect are not not particularly more disadvantageous for people who take career breaks or go part time compared to people who do not. Whereas you are seeming to claim disadvantage based on comparimg the terms and effect are on people who take career breaks or go part time compared to people who live in a world where student loans aren't a thing, which is an entirely different point and irrelevant to this question.

I'm interested in the garden tax idea being mooted.

Does anyone think it is serious?

Would it apply to any graduate including those of us which paid no fees and took no loans (because we are old?)

It makes me wonder re trying to help dc as if they will end up paying the same as taking the loan then there is no incentive to try to avoid? (We don't have savings of this magnitude so it is all fantasy anyway)

I'm a nurse for the NHS who has a student loan and it's very disheartening (and anxiety inducing) reading my loan statements. I make regular payments every month but it doesn't put a dent in it and the interest just keeps accumulating. I don't know anyone from my cohort that has paid it off in full. Most of the people I qualified with including myself, worked on wards through COVID full time as well as studying, as part of our final and qualifying year. It was that or deferring indefinitely. The cohort just before us had the bursary, it was pulled for our cohort and then out back in place for the following cohort. We have tried to campaign regarding a partial settlement to our loan with no success. It is what it is I suppose.

It's supposed to act just like a tax for most people. I do agree with PP that NHS nurses and other people vital to the wellbeing of the country ought to be a different case - but that asside, unless you are a top-10% high earner, the experience of the debt amount hardly going down or even increasing is totally normal. However, is supposed to be irrelevant because the debt amount has no bearing at all on how much you pay - it's a purely fictional number, so it doesn't matter what number it is and shouldn't be disheartening. Your "real" debt is 9% of what you earn in excess of the threshold each year across 30 years from graduation (or 40 years for those on the most recent plan)

Assuming that you graduated in 2020 and assuming a "basic" career path (which you may well do better than obviously) of being in Band 5 for approx 8 years then being in band 6 for the next 20ish years the total you will pay across 30 years will be approximately £60,000 and it doesn't matter what interest is added or what the statement says. If you take a career break or go part-time the amount you actually pay will drop, there will be no penalty, in 2050 when it has been 30 years since you graduated the statement will come in saying that you now owe £0.00, no matter what your salary has been

The "actual amount owed" number is only relevant to really high earners, who have generally been catapaulted into that state via their university choices (unless they were born into wealth) - these are the people who have some hope of paying it off entirely. For the rest of us ordinary mortals it's better to just pretend it's another kind of income tax and ignore the statements.

Nobody cares about being seen as a swot, it’s cool to be smart now. And it doesn’t matter anyway because there aren’t really any meaningful grants for good grades anyway. Not any that are more than around £1k which isn’t enough to even pay for a terms accomodation.

It is madness we have significantly reduced financial support for nurses who have to complete placements.

Nursing is the one profession where we should fund or forgo loans after a set period of working in the NHS.