Graduated 2015 - shock of loan cost!

[goingmadinthecountry]

Dd1 graduated last year and her fees loan (didn't have maintenance loan) has increased already from the £27,000 for fees to £30, 160! Obviously lots of people are in the same boat but I'm truly shocked at the amount of interest already. Next year's MSc will be another £10500 before living expenses. Can't see her buying a flat anytime soon!

I think it's the amount of interest that's shocked me the most.

Thanks titchy

It's £60 on a 30k salary is what we are saying Art.

If you're each paying £520 then you must be on about 90k of a salary.

But at 520 a month, you'll have paid it off relatively quickly.

Or each on 55k and paying just over 250 each (not sure if you mean you pay that each or combined)

Either way, I still don't see the hardship in comparison to not doing the degree and being stuck on a much lower salary.

I supposefor all who aaren't the offspring of millionaires, you 'choose your hard', and I know which hardship I'd choose.

Its like a mortgage really - better not to have one if you can - you buy a house for £200k but will pay back £400k over 25 yrs (ok not quite so much now that interest rates are so low but you get the picture) - your house effectively cost £400k and you gave £200k to the bank....
On student loans it is the interest that I would object to - if she pays over in that time frame her fees will have cost OP's DC £38k - she is £17k worse off than if she hadn't needed to take a loan.
I looked into a student loan (pre-fees, so for living expenses) in the late 90s as a mature student. They were being pushed to us really - part of the enrolment - next go here and complete your loan forms...I found out (then) you could apply at any stage so thought I'd try and manage without (and I did) -if nec I would have got one when it looked like I was going to really need it and got the minimum amount -at least saved a bit of interest....

Aye the millionaire's child paid £17k less for their education than OPs child...who is subsidising the ones who never manage to pay any of their loan off...

The repayments will be a large percentage of disposable income (after mortgage/rent, car, food, utilities come off). I think a lot of people are going to be very shocked in a few years time.

I put together a spreadsheet with different salaries, different increases in salary and different interest rates to see what my DD could be paying back under the different scenarios if she took a loan. It was frightening.

£520 is both mine and Dh repayments together . Yes we can afford. But we would be much better off £6000+ a year atm if we didn't have that. It's only that high due to interest. With two children, that could easily be used for better purposes

unlucky - the millionaires child paid the same amount for their education - they just don't have a loan to pay back, so they aren't paying any interest in the price of their education. It isn't like they actually got a discount.

Yes you can pay off the loan in a lump sum at any time but bear in mind the interest is RPI plus 3% while they are students . This is why OPs DC's loan has already increased from 27k to 30k before they have even finished at uni. I find this the most infuriating aspect of the loans.

What no one is exploring is whether one should look into other ways of funding years at university. Personally, I believe if parents can help pay some or all of uni fees, then they should look at this option.

Alternatively it may be worth increasing your own mortgage to fund the uni fees. This will definitely be cheaper IF your DC is embarking on a well paid career. The down side is it will be your debt, rather than theirs. So you would have to trust them to pay it back.

I just believe people should be looking properly at other options.

And what would you be earning without your degrees, would that be better?

The interest doesn't change the amount you pay back each month, only the duration for which you'll be paying it.

Oubilette ok I'll reword - the millionaire's child effectively paid £17k less for their education... it is the interest I have an issue with -not fees or loans as such.
That £17k could be used towards fees for OP's future GC - which would in turn save them £17k ...

Aye - neither of us work in jobs related to our degree. So our degrees are worth nothing really ( well £520 a month!)

The millionaire is or at least should be funding their child with money they have already paid tax on. So whilst their child may pay less interest on the price of their education, the parent has surely already contributed to the system via taxation. Whereas income from a student loan is untaxed.

jeanne

I totally agree with you and was what I meant upthread about students having to rely on parents for longer.

I appreciate that there has always been parents funding uni, but also many students like/want to self fund.

Why parents have to be involved in the loans I have no idea, they should be classed as independent at 18.

We had a discussion and both dd brothers will give her an interest free loan for one year study between them, me and dh will loan her another year and contribute some extra bits and pieces for living costs.

She will have to fund the rest of living costs, some rent, and the other 2 years study, as it's four years.

Hopefully she will be able to save quite a lot of this before she leaves school, through working.

She is also looking at applying for a sponsorship deal, and some charitable organisations for funding. We have helped her compile a list from suggestions from her current and future schools and colleges lists.

Fees are needed because the previous labour government increased university attendance - to keep down youth unemployment. Aiming to get 50% of people to go to university has actually devalue degrees - hence more people doing masters and Phds to distinguish themselves. And it is has led to the drive to make 'everyone' need a degree to do 'anything'...
People who do 'pointless' degrees are unlikely to ever earn enough to pay the whole loan back - maybe not even start paying it back so don't need to worry about it and people who do get a higher paid job because of their 'worthwhile' degree (and possibly a higher degree) will pay it back - or at least some of it thereby subsidising the pointless degrees
Well said - should be on a banner outs ide every school!

I'm really grateful to the OP for posting this, as was told a few weeks ago by a parent with a DC in my DS's year, both about go to Uni, that no interest is accrued before they graduate!
My DS however was emphatic that this is not true, accrues during the course - which is borne out by the OP's DC situation
We will now pay the fees upfront.

MrsGuy. Why on earth would you want that as a banner at every school? This is a serious question btw as I am puzzled as to what message you want students to take. Is it:

1. Do a worthless degree so you won't have to pay back your loan?
2. Celebrate the fact that other more sensible and hardworking people will subsidise your worthless degree?

Am I missing the sarcasm that isn't always apparent online?

Yes, DS got his first statement through this month too. Only took the tuition fee and basic minimum maintenance loan due to our income. His is now £40k - he hasn't even started paying it back yet.

I try and see it as a graduate tax too, otherwise it is terrifying.

Again, no objection to paying it back, his decision, did very well at Uni and learnt a lot and now has good career prospects but £40k debt at 21

The debt could be £270,000 and it wouldn't make any difference to the amount she'll actually have to pay back. It's a not a 'real' loan and very few expect to ever pay it back (which is why it doesn't impact on credit scores, etc.)

It's much more of a graduate tax than an actual fee loan, and the 'amount owed' is essentially the maximum that she'd ever be required to pay back (so that those in fantastic jobs don't have to pay back indefinitely). They're so high precisely because so few people pay them back, and if everyone pays what they can (small contributions once earning enough) up to the maximum, it evens out to the point that HE gets funded.

It's really nothing to worry about at all.

I think offering bursaries etc based on parental income reflects the reality that parents don't stop helping their 18-pluses - ever in many cases! And if the parents have money, that is often part of the help. You can never be fully fair (I look forward to the day when the government pays a wage for internships for example - ha ha) but I think it reflects the reality. And its one we're used to too - my parents had to top up my grant, though admittedly I don't think they or I were very happy about it. But had they been really broke, they wouldn't have had to.

Replying to a much earlier post there (newlife) - got interrupted in the middle of writing that!

I think the subsidising of ineffective degrees aspect is going to be a big scandal once it becomes properly apparent.

There are degrees out there which (in contrast to what the universities teaching them will tell you) are not high quality and have very, very poor outcomes for the students. The vast majority of graduates from these programmes go on to jobs that you don't need a degree for (even in today's degree for everything culture) and many of them find they have to go back to college to get a level 3 qualification to do what they want to do! The majority of those graduating with those degrees will never come close to paying back a student loan and may never pay back any of it.

It's utterly ridiculous for the government (and the tax payer) to be subsiding higher education that neither improves the life chances nor earning potential of graduates (and which doesn't even broaden their mind or any of the less instrumental benefits of education). The proposals for a TEF won't necessarily improve this (and may actually make it worse because those taking better degrees will just end up paying more and further subsidising the crap ones).

It's totally fine for people not to have high earning careers (and, indeed, absolutely vital to the country that people do all sorts of jobs). But it is completely stupid and not at all helpful to funnel as many people as possible through a very expensive HE system, parts of which do not offer much value to society or the individuals taking the degrees.

StepAway

We are a music family so take an interest in Arts and Entertainment industry.

I can remember reading an article by the woman who plays Tracy barlow in Corrie.
She was just coming out of Uni when she landed the role and they were talking about why Degrees were necessary in the Arts, rather than a performance diploma.
The answer is because the degrees are available employers ask for them.
If there were fewer degrees then the employers would look for other aspects for employment like talent, portfolios, professional achievements.

MrsGuy, ask the finance dept if there is a reduction if you pay the tuition fees in full up front. We got 2% off ds's fees for his first year, as we paid it in full. Every little helps!!!

scaryteacher
Thx - will do!