A Labour minister has just tried to explain on LBC why U.K. society requires young people who attend uni to pay a graduate tax

[EvangelicalAboutButteredToast]

And I’m confused. He was trying to say it was a student loan and then accepted it was a graduate tax and that society deemed that the right thing because they were more likely to out earn those who didn’t attend uni.

I thought that was what income tax was for alongside all the other taxes. Are uni courses subsidised by the government. Is it that?

https://commonslibrary.parliament.uk/research-briefings/cbp-9774/

Sharia-compliant loans coming. That is going to be interesting and a political minefield as well.

The only alternative is bank of mum and dad. I know a Muslim family who remortgaged their own house to give their son the money. As the mortgage was Sharia compliant, but student finance not. It would be fascinating to know how different cultures here are dealing with this student loan system.

I think well-educated people make an important contribution to society (financial and otherwise) and the state should see education as an investment, not something you can have if you/your family can afford to pay for it.
I mean academic degrees and also vocational/practical training and qualifications.

If it was a loan it would appear on the student's credit record. It does not.

If it was a loan the student would have to make repayments from day one, regardless of earnings. They don't.

If it was a loan it would not be written off after a period of time regardless of the amount owing.

It is not a scam loan, however much you keep shouting this. You have yet to identify a single thing that makes student loans a scam. A scam is a dishonest scheme to get money from someone fraudulently. The student loan scheme is a way of giving students the money they need to get through university without any guarantee that they will pay any of it back.

And your comparison with mortgage rates either shows that you are being disingenuous or demonstrates how little you understand what you are talking about. A mortgage is a secured loan. The lender knows they will almost certainly get their money back because, if the borrower cannot pay, they can take the house. A student loan is unsecured. Interest rates for unsecured loans are much higher - around 7.5% typically. And an unsecured loan of over £50k for a borrower who does not own a house is pretty much impossible to find.

As I have already pointed out, students are not compelled to take a loan from SLC. If they can fund their degree some other way, fine. But good luck finding a lender who will give them that much money on terms anywhere near as good as those they get from SLC. Commercial lenders are not banned from giving loans to students, but they don't because no student would use them as the terms would be so much worse.

The problem is, the government has washed its hands of paying much at all towards tertiary education ( one could argue further education also)

We don't have 50% of our young going to university - isn't it closer to 40%? Many other European countries have over 40% of their youth in tertiary education and it's funded more generously by the government.

Besides, someone on the other student loan thread, pointed out that pre-university expansion, close to 50% of people received some kind of tertiary education - paid for or subsidised heavily by the government.

In my family, my FIL and father did not go to university but ended up with an HND and PhD between them - probably funded by employers but subsidised by government.

I just graduated with a degree in Egyptology.

So now I am qualified to teach more students Egyptology. I'm beginning to think this is some sort of pyramid scheme.

But there are students that start university under 18, perhaps not common amongst English students but quite common with Scottish, the level of debt will be lower (if they choose to study in Scotland), but they are entering into a contract with a 40 year term, and starting their courses before they are legally allowed to buy a drink.

They are asked to ratify the contract once they turn 18, would be interesting to see what would happen if they did not ratify.

It’s a loan.
its a loan
its a loan with VERY high interest.

The problem with the constantly repeated "10% used to go to university, now it's 50%" is how many careers have been shifted to be degree based, and often for good reason, such as nursing. (Or the expansion of many healthcare careers in general, jobs that simply didn't exist 50 years ago.)

It would be helpful, IMO, if there were additional help for those who went into necessary but not necessarily well paid public sector jobs such as teaching and nursing.

I was going to point that out too. Not sure where that utter nonsense came from about “no student starts uni at 17” 😅

Your point here was interesting They are asked to ratify the contract once they turn 18, would be interesting to see what would happen if they did not ratify. Two of mine have started uni at 17, neither was asked to ratify the loan at 18.

For most student loan schemes the current interest rate is 3.2%. Only graduates on plan 2 pay more (new students are on plan 5), and even then it tops out at 6.2%. Given that the average interest rate for an unsecured loan of this kind of amount is 7.5%, it is not remotely high interest. And to say again:

If it is a loan, why doesn't it appear on the student's credit record?

If it is a loan, why doesn't a student have to make any repayments if their earnings are low?

If it is a loan, why do payments stop automatically if your earnings fall below a certain level?

If it is a loan, why do the repayments depend on how much the student earns?

If it is a loan, why is it written off after a fixed period, even if the student has not made a single payment?

If it is a loan, why do many borrowers never pay the full amount? Indeed, why do many borrowers never even pay off the amount they borrowed, making the interest rate academic? The interest rate only exists so that high earners pay more in total than low earners.

In all practical senses, it is a graduate tax.

@ElizabethsTailor I quoted from the governments own website 😂. Maybe it’s newish!

www.gov.uk/government/publications/scottish-student-loans-a-guide-to-terms-and-conditions/student-loans-a-guide-to-terms-and-conditions-2024-to-2025

@bookmarket - The proportion of young people who start university by the age of 25 is just under 50%. The lower figure relates to those who go straight to university from school.

No, I agree with you. It’s just that you mentioning it made me realise it hadn’t happened. Checked with both of them this evening and they were clear that it’s never been asked.

There is huge interest paid on the loan which pays for uni fees, this is in effect a graduate tax already to add an additional tax is inexcusable. This government punishes those who work hard and try to improve their life prospects so that they can lavish money on those who sit back and let the idiots pay for their living. This is the Labour way.

@prh47bridge It’s around 37% directly from school. I think the 50% of up to 25 years old relates to all of HE. So could be HND level or part time. However it’s no bad thing to train the workforce. I do agree the numbers doing degrees is too high and the expansion of universities and lack of courses for below degree level is a real problem. Local colleges of HE used to deliver courses to suit local employers and offered some specialist degrees. These are now universities and that was a mistake. We’ve lost the building bricks between school and a degree for less academic dc. Apprenticeships could bridge the gap but there’s not enough of them and some are poor.

As for the idea the student loan is a standard loan! It’s absolutely not. It’s clearly based on earnings, not amount borrowed or interest. Length of repayment is altered by these things. If dc don’t want to pay, don’t do a degree. It’s not forced on them.

I ve explained plenty of times why the scheme wouldn't be eligible under FCA rules..ie its a scam, 17yo's are not allowed to take out a loan under FCA rules but are for tuition fees, no colling off period, no financial advice.....but i'm not going to keep writing the same things, only for you to dismiss them.

One last time.. its scam because people are making the repayments but the total debt keeps increasing, thats the very definition of a scam loan.

You bought up mortgages, they are in a competitive market place, dozens of lenders, offers etc etc.
As one pp said "Anyone got a Tracker Mortgage + 3%?"

You still cannot show where the word TAX appears on any SLC paper work... so its just your opinion.

The Loan doesn't appear on a credit record BUT it is taken into account when a person might look at another loan, such as a mortgage but despite making regular repayments, SL's don't help build a credit record...

The student also is charged interest from the moment the money appears in their account, so charged interest for between 3 and 5 years before the student can make a single repayment.

You bang on about alternatives but the reality is the only alternative is to have wealthy parents, student loans punish the least well off.

More worryingly though is you don't know what you re talking about, you believe the figure of young people going to Uni is 50%, its around 36/37% on par with other comparable economies and way below the numbers in the USA, the western worlds fastest growing economy....

You and Ohdear111 are just wrong.

over 55% of under 25 year olds in England went to university in 2022. That figure has since increased. You are quoting an incorrect government figure which only refers to 18 year olds and so misses the many thousands of kids who have gap years etc.

in 2022 it was 55..4% of under 25s. It has now increased.

The initial entry rate to higher education for young people under 25 in England was about 55.4% in 2022/23, reflecting those who enter university within a few years after finishing secondary school

This has now increased further since the last published stats are four years out of date.

the student loan and fees situation is different in wales and Scotland so I have included them in the stats but if you added in students from wales the figure drops slightly in 2022 to 49.9%

studebt loans are not a scam. It’s a system whereby you can potentially access higher education and if you never earn much you only pay back a small fraction of what you borrowed. There are people jumping up and down screaming hoping the government caves and cancels their debt. This won’t happen since it would be unfair to millions who have paid theirs off or who have funded in other ways and we frankly can’t afford it as an economy.

Stats.... From the Commons library:

• The higher education entry rate among UK 18-year-olds increased from 24.7% in 2006 to 30.7% in 2015 and peaked at 38.2% in 2021. It fell back to 36.3% in 2025.

You do realise there is a substantial drop out rate too.... anecdotally, 90 students started my DD course, by year 3, it was less than 40 students (healthcare related course.

Very very few students on the 9k plus fee plans have paid off their loan.

How come almost all of Europe don't charge 9k+ per year and have similar levels of uni attendance?

If we want a high wage high skills economy and stop relying on immigration, we have to reform this sector.

Again- you are citing stats for 18 year olds. Many kids have a gap year

The initial entry rate to higher education for young people under 25 in England was about 55.4% in 2022/23, reflecting those who enter university within a few years after finishing secondary schoolexplore-education-statistics.service.gov.uk

...and the numbers of u25's in France attend or have attended Higher education... are around 50% too and don't pay 9k + per year, similar in Germany.

I don't see how taking a large age range is relevant here... the thread is about the student loans scheme not number attending... however, approx 30% of uk born people have an HE qualification, way below many comparable countries....

You simply can’t point to one single aspect of public spending and say it has to be comparable to other countries where their public spending is completely different.

if students choose to go to university and they choose to do so using a student loan rather than other options such as working for a couple of years first then they have made that choice knowing that the money needs to be repaid (unless they earn too little).

Interest accumulates and changes the amount owed as it does with any loan.

A good idea might be to fully fund the degrees we need such as engineers, doctors, nurses etc with the proviso they work in the UK for ten years. All the rest of the vanity degrees can use the student loan.

You keep saying it is a scam but you have not given a single way in which it is a scam.

ts scam because people are making the repayments but the total debt keeps increasing, thats the very definition of a scam loan.

Wrong. The average student will have the debt will borrow around £53k and, over their lifetime, will pay back around £63k over 40 years. That is an effective interest rate of less than 1%. If the student's earnings are such that their total debt keeps increasing, they will have their debt written off. It is not a scam loan no matter how many times you say it. You cannot simply ignore the fact that most students will have some or all of the debt written off simply because it doesn't suit your argument.

As one pp said "Anyone got a Tracker Mortgage + 3%?"

And, as I pointed out, the interest rate for most schemes is RPI. There is only one scheme where, for high earners, the interest rate can get as high as RPI plus 3%. And, for all your claims, even RPI plus 3% is lower than interest rates for unsecured loans from commercial lenders. These average 7.5% and can be over 19%.

You still cannot show where the word TAX appears on any SLC paper work.

The fact the word tax doesn't appear on any paperwork is because it is structured as a loan. It is, nonetheless, as any money expert will tell you, a tax with a lifetime limit. Show me a loan where the borrower doesn't have to start making payments from day one, where the borrower doesn't make any repayments unless their earnings are above a certain level, where the repayments rise and fall depending on their earnings and where the loan will be written off after a fixed period even if the borrower hasn't made a single payment. You can't, can you.

You bang on about alternatives but the reality is the only alternative is to have wealthy parents, student loans punish the least well off.

I only mentioned the alternatives because you went on about there being no competition, so I explained why there is no competition.

More worryingly though is you don't know what you re talking about, you believe the figure of young people going to Uni is 50%, its around 36/37% on par with other comparable economies and way below the numbers in the USA, the western worlds fastest growing economy....

Thank you for demonstrating once more that you haven't got a clue what you are talking about. The figure you quote is for young people going straight from school to university. As I've said a couple of times, the 50% figure is the proportion who start university by the time they are 25.