Student loan repayments are completely unfair

[Sammy900]

I've thought for ages that student loan repayments are a complete rip off. I'm so glad they are now all going under review.

They were mis-sold at the time as a minor "graduate tax" that you'll barely notice and there weren't any other options available to enable low income households fair access to higher education.

I didn't realise then that this would turn into a lifelong debt, with snowballing interest that makes it impossible to clear.

I'm on the original plan 1 which just goes on and on until I'm 65.

The next plan 1 deal after 2006 then decided that 25 years was a fair term (not 47 years!!). Such a huge difference in what will be paid back.

Any other standard loans have much shorter terms.

It was based on the assumption that you would continue to be a low earner for the rest of your life and not move up the career ladder.

I really think that the government / treasury should look into the fairness of the terms of the original plan 1 loans too not just Plan 2.

I think you can submit your case to your local MP and with the treasury committee if you feel that you are paying back a student loan on unfair terms and now is the time to do so.

I really hope this gains momentum and something can be done about it finally.

What are your thoughts?

Plan 2. Mine will never be written off. Tbh im envious of those who's debt is written off

I've always wondered why a 2 year fast track option has never existed. I guess it would mean more work for teaching staff and shorter holidays?

I'm 40 and still owe £27k. It will never be paid back, due to a combination of a career change in my early 30s (so I've done 2 undergraduate degrees and took a loan for both), taking 2x mat leave so being out of work for 2 years, and now working part time on a band 6 NHS salary. There have only been about 4 years in my whole working life that I've earned enough to pay back more than the interest that accrues; otherwise than that it just gets bigger every year.
I mostly ignore it to be honest. There's nothing I can do about it and I have enough stress trying to pay the mortgage and my immediate living costs without worrying about that.
I do think it would be interesting to see a breakdown of the proportion paid back/ still owing by sex. I suspect women would be disproportionately represented in the group that still has a significant amount left to pay / will never pay it back.

I don't understand why you'd get a loan to pay it off quicker? If you're in a position to pay more than the required student loan payments to pay it faster you can just do that directly, either through an additional monthly payment or through lump sums whenever you have the money - and, unlike many other kinds of debt, there's no charge or cap on overpaying.

I wonder if mine was different as Scotland?

loan 2006-2010

band 5 nhs job, paid off after 5 years

the interest rates people are quoting are astounding. Criminal.

Accelerated degrees do exist, but most universities don't offer them and there are many more options in some subjects than others: https://www.thecompleteuniversityguide.co.uk/student-advice/what-to-study/what-are-accelerated-degrees#whichuniversitiesofferfasttrackcourses. They tend to only be offered by universities that are teaching-focused rather than teaching and research.

The only reason I can see is it forces the higher months repayments whereas OP doing this herself relies on self discipline to make a higher repayment each month which many would struggle with.

Financially it's bonkers cos double interest.

At some point there'll be massive enquiry lasting 6 years or so, which will both make and break several careers, there'll be endless court cases to test the water for compensation, and when/if those who are now about 25 years old reach 80, they'll get a couple of grand compo. Then there'll be more court cases etc, until everyone who started it or has been affected by it is dead, and the only people benefiting from it are the children of the lawyers who will have made a frigging fortune.

You can set up a standing monthly additional payment to SLC if that's the concern.

On plan 1 though the maximum fees were around £3k a year though weren’t they? Rather than the 9k on plan 2? I can see that making a huge difference to assumptions about when the majority of graduates would pay it off.

Exactly.

When I went to university many moons ago I paid nothing at all. My fees were fully paid and I had a maintenance grant to which my parents paid their small assessed contribution; I had a Home Office grant for maintenance and fees for my post-grad studies, and this even included an amount to support my husband who was still a student! I left university with no debt whatsoever.

I have been horrified by what my offspring have been confronted with when financing university.

The other huge difference is that when I went to university only about 4% of the relevant population did - because degrees were more or less all academic. Broadening the degrees on offer to incorporate non-academic subjects has helped no-one. As the quoted poster says, those who wish to gain the valuable non-academic skills that we all need so badly should have the option of paid apprenticeships. They need hands-on. Pulling all this into the degree system has burdened so many young people with huge debts and also skewed attitudes into thinking that only a degree is worthwhile and anything else is second best - which is clearly nonsense.

The whole parental pride in being able to say "my child has gone to university" needs to be turned on its head to saying "my child is studying for his future career."

I think things are creeping back in the right direction now. Critical to this is that society needs to value these skills on a par with academia.

I watch my graduate GS struggling to find a job after years of study and a good degree and knowing he will be paying back for years for this white elephant.

I really feel for these young people.

I think anything pre 2012 was fair. People have been shafted since then. I wouldn’t encourage a youngster to go now unless they had parents paying for everything or a very specific career path.

We do seem to shaft young people in this country

I think it’s different if you hit the high interest era or not. I’m not a high earner and I was chipping away at mine. Mine was ~21k when I left uni got it down to around 11k and it was slowly coming down.

Interest rates shot up and I pay £100 off and £200 interest is added so now mine if back upto 15k and increasing.

I’m the exact same years as you. And mines increasing now (see my above figures).

I agree re the length of time the plan 1 is paid back.
unfortunately this hasn't been mentioned in the media it is all plan 2 which is bad is obviously bad. Just annoying there is no mention of plan 1.

Plan 1 wasn’t that bad. I know loads of people who paid that off without too much hassle. Those who haven’t were probably sold a myth that they had to go to university but ended up with the kind of salary and job they didn’t need a degree to get into.

The silly notion that 50% of people should go to university has led to this.

I’m finishing paying off plan 1 this year (having spent much of my 20s lower income, on maternity leave and part time due to having children young while starting my career). I’ve paid most of it off the last 5 years (not additionally, just the minimum required).

Plan 1 is not an unreasonable plan in my view, my payments only got substantially bigger as my pay did, I’ve paid very little interest on plan 1 in comparison to those on plan 2. I don’t think it would be sustainable to just pay the loans of everyone who hasn’t progressed, it’s the interest that’s the issue and that’s a much less prevalent issue in plan 1.

I’m 48 and also paid mine off years ago, but they were quite a bit different back then so you can’t really compare. The terms changed significantly after we both took our loans out.

The current system is really unfair and Plan 2 even more so. I’m saving like mad so that my children aren’t reliant on them

You can get a short term personal loan with a fixed rate of around 5%, which is much lower than many people are paying (or have been paying) on their student loans. Which, in itself, is criminal. If RPI goes up, which it is expected to with the war in the Middle East, student loan rates will go up again.

It’s the compound interest that is the killer so I overpaid my student loan monthly. When I was on low income when my dd were little it was just enough to cover the interest but overall I cut down years and I was glad to get it off my back.

It could be arranged but the main problem in the past is that it’s not been popular with students. This may change.

The kids finish A levels in June and start uni in Sept. I really think if they instead started uni in January it would give them a chance to earn more income before they start uni and they would need less living loans. Especially in the lead up to Christmas there are more short term jobs around.

I pay back £35 a month for both my masters and undergrad however I was classed as a Welsh student for my undergrad so I do have a lower loan anyway . But It doesn't bother me paying it back as it allowed me to get a job that I wouldn't be able to get without a degree and to get out of a low income family situation.

It’s not a bad idea. It would also allow offers to be made on actual grades, not predictions, which would be better for equity of opportunities.

It would also reduce some of the accommodation anxiety.