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Higher education

Talk to other parents whose children are preparing for university on our Higher Education forum.

Original poster

Student loans - please demystify me

10 replies

camilamoran · 23/10/2013 16:06

OK, I know we've hashed out this subject before so I apologise for bringing it up again. But I still just don't get it and I know there are some people here who do.

I gather that you don't pay back until you earn enough, you pay back at the same rate whether your fees were 9 grand a year or 6, you stop paying after 30 years. Some people will pay back the whole loan plus interest, others will not. How does this actually add up, I mean from the point of view of the student loans company and the government?

Does this mean that the state is still spending just as much on higher education as before, but hopes to claw it all back in loan repayments in the future, but without actually knowing how much it will claw back?

OP posts:
rightsaidfrederick · 23/10/2013 17:48

Does this mean that the state is still spending just as much on higher education as before, but hopes to claw it all back in loan repayments in the future, but without actually knowing how much it will claw back?

Essentially, yes.

Though estimates suggest that 40% of graduates will never pay their loan off in full. Frankly, I'm surprised the figure is that low.

creamteas · 23/10/2013 22:14

HE is costing them as much money now.

But because loan books can be counted as 'assets', whereas direct payments to universities were a cost, the move appears in their accounts as decreased public spending for the current government.

Original poster
camilamoran · 23/10/2013 22:38

rightsaid, creamteas, that's interesting.

What happens if they got the figures wrong? If a lot less is paid back than expected? Or - am I right in thinking that universities now decide the level of their fees. Suppose they keep putting the fees up - does the student loans company have to recalculate everything? Or is everyone just winging it and seeing what will happen?

OP posts:
titchy · 23/10/2013 22:45

They can't keep puting the fees up - Govn sets a maximum fee of £9k a year for a full time student.

What happens if they found out students don't repay enough? Well current repayment estimates are being quietly revised down. But it'll be another governments problem in a few years...

Moominmammacat · 24/10/2013 08:09

I believe the current loan system is actually costing more than the old but it's batted so far into the future no one (apart from me) is bothered.

rightsaidfrederick · 24/10/2013 11:24

Titchy is right - £9k is the legal maximum (with the exception of a few private universities, but you can only get a £6k tuition fee loan for those anyway). So, unis can't put their fees up further. However, there's nothing to say that government won't change the law and remove the cap entirely - Oxford has been clamouring for this of late.

What will happen when they realise that the loans aren't being paid off? Well, it won't be the Coalition's problem as they'll have left government, so naturally, it doesn't matter.

holidaysarenice · 24/10/2013 11:30

So many of my friends who got maximum suppport at uni - so massive loans are now sahm's using dh salary so not payback. Or single parents with benefits or low incomes - so no paybacks.

The middle class kids who got little loans are the ones in jobs paying back their loans.

So those who got the most pay back very little. Those who got the least pay back the most.

Work that one out in years to come.

SlowlorisIncognito · 24/10/2013 19:50

At the moment, universities can't put their fees up. However, this doesn't mean universities don't want to, and representatives of The Russell Group (and no doubt other universities/lobby groups) are pushing for this. Universities are in a very difficult situation with funding right now, as many courses cost a lot more than £9k to deliver, and students are also expecting more for their money. I don't think it will be that long in the future when home students are expected to pay as much as international ones.

At them moment SFE doesn't look that sustainable, and in the future it is very likely to become a problem that they have paid out a lot more than has been paid back. As the first students in the new system don't graduate until 2015, this is currenly not an imediate concern. There's also an election in 2015, and depending on who wins, everything is likely to change all over again.

Original poster
camilamoran · 26/10/2013 08:40

Well, I feel less mystified, but not more comfortable.

OP posts:
dotnet · 27/10/2013 18:29

I hope, when the General Election comes up, people will remember who screwed up higher education for children in England.

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