To not feel very sorry for some student loan whiners

[Viviennemary]

There's been a lot of complaining about student loans and its wrong they seemed to have move the goalposts re paying back. StillI I read about this woman complaining her student loan is £120k and is going up every year. She was a student for 10 years fgs. Just as well the tax payer wasn't funding her. I hope these folk arent just going to be let away with not paying.

Also we are increasingly being told the lower level training roles in many companies are going to be replaced by AI (eg in law, junior employees would often draft a document that someone senior would then correct /amend, it was a training g exercise for the junior member of staff, now that role isn’t needed if the first draft can be crafted by AI tools). As such, we will still need people who can step into higher roles without the on the job training step.

So university level training rather than on the job training (many degree apprenticeship roles might disappear to this, don’t bank on them still being offered in the same numbers in 10 years time).

If we are going to need most people to step into jobs at a higher level for first job in that industry (or not get into it at all), we are going to need more in higher education- and masters level education- not fewer. And that needs to be paid for.

I've always said it's a graduate tax only the rich can avoid.

I only borrowed 12k but still paying it 20 years later. That said, my degree got me a job I wouldn't have otherwise. I always worked as well and my parents couldn't afford to give me anything.

I saved like mad and some of that loan money was my house deposit.

Two maternity leaves and part time earnings mean that it isn't really going down. I've considered paying it off but it's a pretty small monthly amount which has helped me achieve a better quality of life so I just treat it like national insurance/tax.

Well, my DD is band 6, so 39k, not an amazing salary but not low paid either, her payments are crippling, she was actually better off as a B5 on 30k, with far less responsibility.

The amount a person pays back rises as their wage goes up, what commercial loan does that?

Is that why people do post-grad courses? To avoid getting a job? I never knew.
I must have dodged a fair few jobs with my PhD and MBA then. I’m obviously very lazy. ☹️

Loan repayments are something I have to factor into my financial planning all the time. When I think about whether I can afford kids (and especially sky-high nursery fees) I still have to factor in the fact that several hundred pounds a month will be going to my student debt, which I have barely managed to reduce at all.

The loan reduces my ability to make overpayments on my mortgage, and it makes it harder for me to save or invest because I simply have less disposable income than I otherwise would. Even when I get a promotion at work my first thought is "how much of that money am I going to see, and how much will just be taken by the SLC?"

I accept that the taxpayer shouldn't have footed the whole bill for my education, but it really is a burden trying to pay this down and knowing that it will probably be with me my entire working life. These loans are a significant burden on young people, they were sold to us when we were often barely out of our teens, and I wish people like the OP could see that.

Wealthy enough to have 3 DCs?? I have 3 DCs on a household income around £45-£50k The eldest 2 on their 4 year courses have or will finish with over £80k debt, including max or almost maximum maintenance loans (youngest hasn't gone yet). Eldest (1st in Stem subject) is now earning barely above min wage in a science/lab job that needs his degree. But with the threshold freezes he's expecting to be dragged into paying it back before too long.

The original premise was that graduates could expect to earn a premium salary so the loan repayments were justified - the degree was necessary for them to earn that higher salary. Now, with the stagnation of graduate pay (so many trades now earn more) and freezing of thresholds, those who go to uni stand a reasonable chance of earning less than their peers who didn't go to uni, but will still have to make loan repayments for most of their working lives.

I think the whole thing is a shitshow.

I graduated in 2007, so I didn't have the same issues. But my plan, as others mentioned, was supposed to go on until I was 65 if I didn't pay it off. When I was on maternity leave and then worked part-time, the interest rates were more than my payments, so there was a huge gender inequality to it.

And for every student loan repayment, I had less available to put into a pension (especially as this was before workplace pensions were a thing). Considering now, there's even less to put into pensions, and combined with the fact that this generation probably won't ever own their own homes, so won't have any assets to sell, this is storing up a HUGE clusterfuck in 40 years' time....

I personally believe that loans should be interest-free - no one should be denied an education. And I also believe that if you work in the public sector afterwards, e.g. teaching/NHS/social services and you're putting back into society, your loan should be wiped off.

This whole discussion gets distorted by talking about those with rich parents. I think it’s something like 95% of students take out student loans. The system needs to focus on them. There will always be rich people.

And in fact these rich people as a group subsidise the system because they pay for their education in full. Their repayment if you like is 100%. For the group of people who take the loans - and I emphasis the group, not individuals, but at a group level - they have to be subsidised by the taxpayer because only 50% pay back in full. Even for Plan 5 where the interest rate is only inflation, only about 65% are expected to pay back, so again, as a group, they are subsidised by the taxpayer. If a rich person didn’t pay upfront, there is always the chance that they get disabled, can’t work or decide to work in a low paying employment, or move abroad, and then they would never repay their loan just like anyone else in that situation. You may say this is an unlikely scenario, but it’s possible, and by paying upfront they are foregoing this possibility (to the benefit of the taxpayer!).

I know that will blow some people’s minds.

(It’s the same reason that Martin Lewis, & others, is cautious of telling people to pay off some of their loans if they get a windfall.)

One of the left leaning think tanks suggested that families with household income over £100k (is that rich?) shouldn’t be entitled to student loans at all ie they should be forced to pay themselves. I think a lot of people really don’t understand how govt finances work.

The money the govt lends to students isn’t free money, they have to go out and borrow it in the markets and pay interest on it. There is also a cost of running the student loans system. In life, if you pay for something upfront it is generally cheaper because it is beneficial to the seller, as well as the buyer.

If the interest on student loans was cut to zero as some suggest everyone would take out the full loans, including the rich who pay up front. Why wouldn’t you, it’s free money! So it would cost the govt (ie the taxpayer) even more.

And the 70s is 50 years ago - half a century that’s like comparing 1900 to after two world wars.

The UK needs exports or investment to just sustain itself. We don’t have a huge amount of land we have few natural resources to exploit, what we do have, for now, is a robust high end manufacturing industry, invention, services, ethics and cultural output. We have these because of our university education, and as we move through ages and we sell less and less physically it makes sense that we expand further education for our younger workforce.

But as with many things the older generations want to pull up the drawbridge on this as well. They want bigger pensions, to keep their bigger houses but pay less council tax, they abhor any policy that might mean their house price drops, no one wants to pay for their own old age care AND they don’t want any investment or financial leeway for youngsters. No wonder so many leave or aren’t having children. Who wants to pay tax here for this bunch of moaning minnies!

(We will pay for our teenager’s university because they are our favourite thing to spend money on and what they want to do they need the additional education before they get anywhere near anything fun)

Martin Lewis is always 100% right

Why does that matter?

The woman OP is referring to chose to take multiple loans to take multiple degrees and now thinks “We should wipe the loans and have every graduate pay a tax. That way the older generation who got their degrees completely free still take the burden.”

She can fuck right off. I didn't get my degrees completely free. I chose to live at home so I could minimise living expenses and worked my arse off working nights, weekends and multiple jobs in the holidays to be able to afford uni. I got a funded MSc place. I've never been a supporter of student loans but I also absolutely do not agree that the taxpayer should have to subsidise perpetual students.

Personally I never get the complaints about it. You aren't forced to go to uni, you know that you have to pay for it somehow, the loan has a lot going for it... only paying after reaching an earning threshold, it's ignored by mortgage companies.

Plus statistically you will earn more as a university graduate than if your not.

I will stress again university is not compulsory

Over 50s, like all groups, contain some who have been working and paying into pensions all their lives and others who very much have not.

In terms of children, the UK birthrate went below replacement in the 1970s and hovered around roughly the same levels until the 2010s which is when it started to really drop.

https://www.statista.com/statistics/270362/fertility-rate-in-the-united-kingdom/

Perhaps it might be worth thinking about things that have been delaying family formation in recent years?

They arent ignored by mortgage companies. They arent treated like other debts, but they are part of affordability calculations.

They've already paid for their own bloody loans, why should they pay for yours too? They've paid their taxes, earnt their use of the NHS. The absolute entitlement and lack of personal responsibility from younger generations is gob smacking. And by the way, most people in their 50s are still working and paying their taxes, some of them will be surgeons and doctors that treat you, so how are you financially supporting them, or did you want it to be a one way street?

This is a really good point. Compounded interest can add a quarter onto your debt before you even start working. These shouldn't be treated as commercial loans. They are to facilitate access to higher education at a reduced tax payer cost which us a reasonable position for a Government. But it is not unreasonable to have some element of subsidy in this area. After all, these loans taken out pay to keep the Educational Institutions running which empoy thousands and pay millions in tax. Also, society needs these graduates. It's not just about all graduates earning thousands more so repayments are no issue, we know this just isn't true.
A loan at cost is a reasonable compromise with interest starting 1 year after graduation. There will be some public subsidy element to this, but there is public money in loads of areas that benefit society and individuals. Higher Education shouldn't be any different.

While only 50% may pay it back in full, they’ve spent their whole working life making payments to a debt that never ends. Never mind the financial implications of that, psychologically it must play on your mind, influence decisions about promotion and hours that they work. If people will drop hours to avoid paying a percentage in tax, how much more will they limit their working lives if they see an increasing proportion of their salary going to make payments on a debt that will never end.

I’m not affected in that I didn’t use student loans but I can see it would be utterly soul destroying to never see that number decrease.

It’s pretty dire and I don’t think everyone knows what they are getting themselves into at 18. DP and I are both around 7 years out of uni now, we both owe more than we took out (borrowed around 60k each and now owe around 85k each. We are paying around 150k/year in tax each year so it feels like we give a lot back but have been ripped off by SFE.

Hmmm, not so sure really. I remember at the time that ours went to uni he was very much advising people that they'd never get a cheaper loan and to take out the SLE finance.
I distinctly remember at the time that his advice was influential in our decision making.

Now DD (age 27) is paying back £350 a month as she did a masters following her undergrad and therefore has two sets of loan to pay back. Yes, she has a good job but it's still a heck of a lot.

I think you’re wrong OP.

and for those posters saying that university shouldn’t be an automatic choice post a levels, I agree. However, there seems to be little alternative for our @8year olds right now - apprenticeships are scarce and jobs that don’t require a degree or experience ever scarcer.

they’re in a no win situation.

It's not compulsory in the strict sense, but a great many jobs which previously would have been accessible to non-graduates now require a degree as a bare minimum. Nursing is a good example (yes there are a few apprenticeships to get into nursing but they are far from ubiquitous).

I had dinner recently with a now-retired solicitor who told me that he'd trained as an articled clerk - he'd never been to university. Good luck trying to become a solicitor without a degree these days.

So yes, nobody has to go to university but it is much harder these days to start a career if you don't have a degree.

Excellent point.

We already know this is having an impact on some people's decisions about how much they work. That's a real problem, in a society with a worker and skill shortage. It's infinitely more important than people's self-indulgent whining about sympathy.

I came here and then worked in the UK, and paid into the UK tax system, for several years before “choosing” to go abroad. I actually left because after Brexit, my 70 hours a week job in London went down to paying just above minimum wage. Would you do 12-hour days in London for £30k a year?

The degree hasn’t given me “everything”, ha, I wish. I ended up doing two further postgraduate degrees while working full-time in another EU country, (completely free of charge), and those are the ones that have made it possible for me to get my current job. My UK degree isn’t even recognised in the EU yet, and the degree conversion process is further complicated by England not being fully aligned with the Bologna plan (even before Brexit).

Nobody should fund me studying, but I also shouldn’t be charged four times more, simply because my parents were poor. Uni costs £36k if you’re rich, £120k if you’re poor? How is that fair, or motivating kids to go to university?

Yabu and the Times campaign on this seems to make decent suggestions.

Sadly there are lots of younger unemployed too .. some struggle to get jobs in the difficult job market. I know my daughter had a nightmare applying for jobs through ‘Indeed’ Rejecting GCSE grades despite her having A levels and a degree ( presumably AI screening) . She also kept being told she had no experience!!! She worked throughout college and uni so wasn’t idle!
Equally I see plenty of who’ve never had jobs and will grow up not contributing a penny into the system… but that’s another story!

Thanks very much for the links-
Indeed there are lots and lots of factors that influence birth rates.
i do feel very sorry for the younger generation, my children and my grandchildren. Wars all over the place, ridiculous house prices etc