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?

This is nonsense. Nurses have lots of opportunities to progress via clinical or education routes. Some specialist clinical roles will pay band 7 or 8A. They don’t have to go into management.

I don’t think there is anything fundamentally wrong with Plan 1 I think it was sustainable on the whole and doesn’t need reviewing, so the ‘race to the bottom’ statement doesn’t work with that I’m saying. It’s plan 2 and later that needs reviewing, the picture has changed since those of us did plan 1, with fees dramatically increasing.

People like the OP are trying to jump on the band wagon to improve their own situation without understanding just how disadvantaged plan 2 and later graduates are. OP needs to suck it up and pay, like the rest of us.

All great opinions. Each person has different circumstances and a different view.

It's up to you if you think that all Plan 1 loans are completely fair and should be left alone but I don't think that. I think there is systemic unfairness throughout and yes I am jumping on the band-wagon!

It's the first time the treasury are completing a review, yes they are giving considerable focus to Plan 2 loans but ALL plans are within the scope of the review so am putting in my pennies worth so to speak.

The treasury are specifically looking at fairness across the board so we will see what they find and what the outcome is.

The more evidence they get from people the better. Deadline is April 14th to submit your evidence and views guys.

Op is saying plan 1 the length of the term is unfair and disproportionately affects women.
This is a fair statement.

Yes, that's the basis of my issue with Plan 1. I got screwed by 2 lots of mat leave plus working pt while the kids were wee. Now stuck barely paying the interest on it and it will never be paid off. While DH who has never taken a career break and worked ft since graduating paid his plan 1 loan off 7 years ago.

ETA: I earn more gross now than DH but take home less due to student loan repayments.

@Sammy900 if you want to rally the “guys” to your individual cause (I say individual because there is very little public outcry for a review of plan 1) you really need to educate yourself to make your argument convincing. Your post and comments are littered with nonsense.

1. why do you think your loan will not expire after 25 years? The write off period depends on the date of which you took out the loan, the terms were not changed after the fact, it depends if you took the loan out before or after 1/9/06.
2. the term graduate tax has not come from the the government or SLC, this is a concept used by Martin Lewis to help students and parents understand how student loans operate differently to commercial loans, it was not a term officially used to trick people into them.
3. you mention standard loans have shorter time periods, you’re comparing apples with pears, commercial loans are tailored to the interest rate, purpose and customer. Commercial loans do not have write off periods.

That is just what Ive taken from your opening post alone.

I can concede that like the pay gap there is definitely something in the way it impacts women that could be studied and explored, but let’s not pretend the OP has cobbled together a coherent enough argument for that (and if I’m remembering the thread correctly it wasn’t her that raised it, someone else did). It’s a hugely complex issue that is not resolved by simply scrapping interest.

I don’t think the length of plan 1 is unfair, plan 1 is much more sustainable to pay off, and there are a ways to have it written off if you become disabled. I was also acutely aware of my term when I took out my loan, unfairness would be not knowing. So no, I don’t think it’s a fair statement.

Completely unfair. My parents could pay mine which is a privilege but it’s very unfair that if you have the money up front you avoid the interest - it’s a barrier to young people from lower income families accessing higher education. Plus professional class not paid well in UK after university which is another disincentive. My view is that the “ruling” class in the UK do not want a highly educated population though - might lead to questioning things like inherited power (house of lords!!), why so many prime ministers come from one or two uni courses, the tax exemptions one can get if wealthy, where government contracts go etc.

@Psychologymam I don’t necessarily disagree with a lot of what you said, but let’s be realistic, we can’t (won’t) even fund primary and secondary education appropriately in this country, look at the SEN bin fire, I think before we get into universal higher education we have got to fix what’s happening in state education under 18/19. But I cynically agree with you it’s not in the interests of those who really control the country.

As my loan was taken out pre 2006 it is under the age-65 rule. As far as I'm aware this hasn't now changed to a write off after 25 years. That would be great if true!

The government treats student loan repayments like a tax by taking automatic payments through HMRC PAYE system

Yes there are pros and cons to having a commercial loan and a student loan, apples and pears as you say. Student loan debt lasts a lifetime, commercial debts are written off sooner. Negatives and positives for both.

I don't particularly appreciate the condescending tone, you seem to have it in for me ha. Not helpful, so not responding to that anymore. You are entitled to your views though as am I so thanks for that.

Ambitious young people also need to realise that they are taking a serious gamble on their ability to finish the course.

I know several young people who didn't graduate for various reasons, including cases of complete burnout and exhaustion (3 years into a 5 year course), parental bereavement, and serious illness.

I see schools and parents pushing young people with less than optimum mental health or questionable maturity or motivation onto university courses, out of the very best of intentions, but they are at serious risk of never graduating and being indebted for life without any of the benefits, and having lost the opportunity to ever go back, because you can only get undergrad student finance once.

And don’t get me started on the unfairness of the household income assessment.

The whole system is fundamentally unfair on so many different levels and needs to be scrapped and redesigned from scratch.

Commercial loans are not written off, why do you keep saying this? If you think that’s how they work why don’t you just take out a commercial loan and pay off your student loan with it? See how you like the terms and conditions of that loan in comparison?

I think op means bluntly. After 6-7 years it would drop off your credit report. Again fine for rich who don't need to declare ccj's for mortgage not great trashing credit rating for us average earners.
But blunty yea they wouldn't have to pay it back or with little interest if do a DRO or A DMP .

I meant if people are unable to pay them back they are written off sooner. I should've specified this. Meanwhile student loans could sit there gathering interest when people are under the threshold to qualify to be able to pay them back - ready for a huge accumulative debt when they finally are able to pay and this could go on to last a life time.

Yes thankyou I meant this.

@H202too but again that’s not a feasible comparison. You can technically make your student loan disappear if you work cash in hand forever or disappear abroad without setting up the payments. Nobody takes out a bank loan with the view “it gets written off after 7 years”, firstly, because it very much doesn’t, second of all because for you to get to the point of it ‘disappearing’ a very certain set of circumstances have to occur for the limitations to apply. And lastly, as you state, there are severe financial repercussions that occur. It’s just such a moot point it does nothing to add to a discussion about student loans.

I think students need to look closer to home for uni therefore negating the need for such large loans. I realise this isnt for everyone but most people have a uni they could commute to.
They dont have my specific course viscerally just code for I want to move out and party.

But they’re not just written off, they may not be financially responsible for that specific debt anymore but the financial ramifications of having debt that isn’t cleared are huge, it can literally impact employment. You know yourself you’d much rather have a student loan sitting there accruing interest than you would having a black mark against your name for unresolved debt. Student loans are specially designed so you don’t have that kind of black mark.

But I would just like to take the opportunity to apologise for my tone, I did get unnecessarily condescending towards you.

I also don’t think student loans are perfect, I would welcome a wholesale review of higher education and how it is funded, and if that was what the petition said I’d have signed it, just scrapping interest is rudimentary and doesn’t get to the core of the issue. And would likely cause a lot more.

I doubt students take out student loans with the intention of never paying them back. Surely they are just doing what is necessary to pursue their chosen career and fully intend to pay it back when they can. But you know life circumstances change, finances change as they do for people who take out commercial loans. One has an unfair life long debt that has grown when they are in a better financial position and another person now is debt free and has a clean credit score 7 years later.

Thankyou for the apology, I'm no financial expert. Just sharing my views. You have raised some good points for discussion

I think you've misunderstood what happens if you can't pay a commercial loan, though. Unlike a student loan, where you just pay nothing under threshold, they don't just sit around for 7 years to see if you'll start paying again or not. And if you think the interest going up in a period where you don't earn enough to pay a student loan is bad, you really wouldn't like the way that penalties and interest start to mount up for many kinds of loans if you fall behind the payment schedule.

This is why I also feel torn about the argument that it discriminates against women. Yes, two mat leaves definitely extended my own student loan. On the other hand, it was pretty great that, unlike other debts like the mortgage, I had absolutely no obligation to make a student loan payment when I was on maternity pay. In that regard I think it's much more friendly to women, and to anyone taking a less conventional path, than most kinds of debt. In the US student debt is more like all other debts - they still want paying even if you're unemployed - and I wouldn't want to swap to that at all.

My friend only has one child, and they stash all their child benefit and save other money aswell for their daughter, she is now 14. They’ve told her that if she goes to one of their local uni’s (they live near tonnes of choice!) and lives at home they’ll pay it for her and so she’ll have no debt. They’re in the process of using this money for a rental property and then they’ll use the rental income to pay a mortgage and the excess for their daughter and then she’ll also have a foot on the property ladder.
We have 3 kids and no way could we do that but it’s great if you can.

Where I live universities thankfully are free of charge. You actually recieve around £700 a month to attend.

We need people to go to university and hopefully get a job to contribute to society, so they should be free of charge. Or at least you shouldn’t spend the rest of your working life paying it back.

I think it is opening people's eyes to the costs of uni. A lot of the people currently being encouraged to go to uni (by parents, teachers, social media) are not destined for high paid careers that justify it as an investment. These young people basically should not really be going, and definitely should not be going where they can't live at home while studying. The investment will not pay off & they will be paying for it for life.