Government to lower threshold for repaying student loan

[whatareyalaffinat]

Article in the Financial Times late last night, reporting that the government is considering a number of measures relating to student loans. They want to lower the point at which a graduate starts repaying their loan to £20k down from £27k.

This is to push more people into ‘useful’ and vocational subjects. They want to decrease the amount of debt that is never repaid.

This is not a graduate tax, this is another slap in the face for our young who have given up so much these past few years. This also hits those most who don’t come from families with wealth. This is in essence a tax on being poor.

What other loan contracts can be changed by the lender at a second’s notice?

The government can borrow money at 0.5% but student loans are 6%+ and set to rise.

A complete farce.

I think looking at starting salaries is a red herring though. Much more realistic to look at salaries 10 years later.
Some professions hit a ceiling fairly soon. I am a health professional in a specialist area with 30 years experience. I earn £14k more than a new graduate.
In many other professions such as finance, law, engineering, technology I would likely earn twice as much as a new graduate by this stage.

@Lowhum

Notthemessiah - I have had conversations in the past where some friends have said that they are more than aware that they will never pay it back and have no intentions of finding a graduate role. This was mainly due to the belief that it will be scrapped if they fail to pay it off over x amount of years (I can’t remember how many).

In school it was presumed that if we were in top sets that we would be going to university and that was the path that was set for us. It was ok to go because you could just take out a student loan and get a student bank account with an overdraft. I can’t really remember it being sold to us as a path to a great career, it just seemed that it was what 18-21year olds did and had a great time partying.

Doesn't quite answer my question though. Are they deliberately not looking for jobs or promotions that would earn them 27K?

Because it would seem a bit strange to me for someone who could earn more to then choose not to do simply in order not to pay their student loan back.

@Piggywaspushed

That simply isn't true : the improvement in lifetime earnings and even life expectancy for working class people (especially white males...) who gain a degree is totally measurable.

Well seeing as that can only really be measured for people who graduated well before any man and his dog could go off and build a 'university' (and charge £9 a year for attending it), I really don't think that can be said to apply to those graduating now, or in the last 10-15 years.

@Piggywaspushed

Make it so more and more jobs and careers 'require' a degree, even the lower paid ones that don't really need it

I still want to know what jobs now require a degree that didn't and in which there isn't some sort of benefit to the employee, society or the workforce? Because otherwise I will jus think this is some sort of coded sniping at nurses having ideas above their station.

DP was a nurse and would be the first to agree that there is no need for nurses to have degrees. Training yes, degrees no (and there is a difference).

Also know several policemen who would say the same.

Degrees for nursing have nudged up starting salaries( not enough) and professionalised the workforce enabling nurses to take up more specialised roles.

Notwithstanding, I don't think that's the same as an unskilled job requiring a degree as has been alluded to. I thought people wanted young people to go into vocational and STEM careers.

It's interesting that people believe university only benefits the people who go and therefore funding HE should not be a social obligation. How many of these people see a GP, nurse or pharmacist if they are ill? Use electronic equipment, vehicles, buildings etc designed by engineering graduates? Send their children to school? See a solicitor for legal advice? The list goes on really. A well educated population with people in graduate jobs is essential to a modern, first world lifestyle.

@DrCoconut

It's interesting that people believe university only benefits the people who go and therefore funding HE should not be a social obligation. How many of these people see a GP, nurse or pharmacist if they are ill? Use electronic equipment, vehicles, buildings etc designed by engineering graduates? Send their children to school? See a solicitor for legal advice? The list goes on really. A well educated population with people in graduate jobs is essential to a modern, first world lifestyle.

Absolutely

@Piggywaspushed

Degrees for nursing have nudged up starting salaries( not enough) and professionalised the workforce enabling nurses to take up more specialised roles.

Notwithstanding, I don't think that's the same as an unskilled job requiring a degree as has been alluded to. I thought people wanted young people to go into vocational and STEM careers.

I think the workforce was fairly professional before and there is no need for degrees for people to take up more specialised roles in other fields (like IT for example) so don't see why they would be needed for nurses.

I think you're failing to see the difference between a degree being required TO DO a job (i.e. it wouldn't actually be possible to do the job without it) and being required FOR a job (i.e. the employer is asking for any old degree as a lazy way of differentiating between potential employees - so much easier for HR to tick a box saying degree than actually look properly at a CV).

The latter happens all to frequently these days, even for jobs in call centres and the like.

People always quote nursing however there are many skilled roles that 25 years ago did not require a degree.
Computing, electronics, graphic design, hotel management, estate agents, HR, advertising, surveying, golf course management, outdoor centre management.

These were all areas where someone leaving school with A levels would join the training scheme in a large company. They would train on the job, day release, sit professional exams and assessments and be fully qualified at the end as well as having plenty of real work experience.

These opportunities have all but disappeared now because the government decided n the 90s that 50% of school leavers would go to university.
So now if you want to be a surveyor you go to university for 3 years and pay £27k in fees. No other options because these schemes were all phased out because "university was better"🤷🏼‍♀️

@wooliewoo

People always quote nursing however there are many skilled roles that 25 years ago did not require a degree. Computing, electronics, graphic design, hotel management, estate agents, HR, advertising, surveying, golf course management, outdoor centre management.

These were all areas where someone leaving school with A levels would join the training scheme in a large company. They would train on the job, day release, sit professional exams and assessments and be fully qualified at the end as well as having plenty of real work experience.

These opportunities have all but disappeared now because the government decided n the 90s that 50% of school leavers would go to university.
So now if you want to be a surveyor you go to university for 3 years and pay £27k in fees. No other options because these schemes were all phased out because "university was better"🤷🏼‍♀️

Quite. Universities are now businesses first, 'life experiences' second and places of education a distant third.

The £27,000 threshold was the last sop to pretending that they were anything else. Reduce that to £20,000 and you might as well remove it completely and stop pretending at all.

The problem is that so many people started going to university, at a time when it was still free, that the employers started asking for degrees, despite a job not needing it. Now that degrees are so expensive, this needs to change. But it's not changing. It won't change until a substantial number of people stop going to university.

@Mollymarvelous

I also believe higher education benefits our society and economy more than just the individual and the cost should be shared not just placed on the individual.

Interested to understand your perspective on this @ItsNotMeAnymore

I dont know what I would do without all the facts and figures. I think I support student taking on the bulk of the costs of their education but I agree that universities and the work they do benefit society as a whole so it seems fair that everyone contributes.

Pretty sure that if I were a minimum wage worker I wouldn’t be thrilled at my taxes being spent subsidizing universities though.

I didn't go to university after leaving school but did get my professional exams whilst working. I had to pay for all my courses and exams out of the low trainee salary. I lived with my DPs so it was manageable but we couldn't afford to get married and move out until I had qualified.

One of my DCs is a graduate, another did an apprenticeship. The graduate is earning over the threshold and therefore paying back the loan. The other is earning under the proposed £20k threshold so I do think it is fair as the degree has provided a higher salary.

@Mollymarvelous

Already lots of kids from low income families struggle to go to university with the cost of living if not topped up by parents. Would this not disincentivise them to not go even more?

Yes it will.

Also, they went to uni on one set of terms and now the loan contract has changed for them after they've had the money. That should be breach of contract, and illegal.

@Piggywaspushed poilce now requires a degree and lots of jobs will say perferable just office based not all but some
I was told when i applied for a basic school job ( didn't require a degree) that I was not successful as people who had degrees had applied etc so my qualifications not good enough

Yes, people applied with degrees : doesn't mean it was required though!

Police discussed upthread. Many people consider this a good move...

Also, they went to uni on one set of terms and now the loan contract has changed for them after they've had the money. That should be breach of contract, and illegal.

The 2020/21 Student Loan Ts & Cs state that the contract may change at any time during the repayment period:

When you take out a student loan you must agree to repay your loan in line with the regulations that apply at the time the repayments are due, subject to the regulations being amended from time to time.

People need to be more aware of this.

That ability of the govt to change rules, interest rates, collection rate, thresholds etc is why none of mine have taken student loans. I know I am lucky to be able to pay fees etc but if you are used to paying private school fees it is just continuing that spend for another 3 years. I think it is worth it not to burden them with a debt and an additional tax for potentially the rest of their working lives. The whole “it’s not a debt, it’s a tax” line doesn’t wash with me. It is a debt, the terms of repayment of which are subject to change at the whim of a government. And if it is a tax… well I would be pretty unhappy paying a further 9% income tax, I don’t know why my kids should have to suck it up when I can afford to ensure that they don’t have to. I know masses of wealthy people who could afford to pay their kids fees and expenses out of income without noticing and don’t. I really don’t understand why they burden their kids in this way.
But as I say I appreciate the majority can’t afford to lift that burden from their kids…

@Ekofisk

Also, they went to uni on one set of terms and now the loan contract has changed for them after they've had the money. That should be breach of contract, and illegal.

The 2020/21 Student Loan Ts & Cs state that the contract may change at any time during the repayment period:

When you take out a student loan you must agree to repay your loan in line with the regulations that apply at the time the repayments are due, subject to the regulations being amended from time to time.

People need to be more aware of this.

I agree. There has been a lot of it is not what signed up for when actually it is they signed up for but they never read read terms.

6% loan surely means families will look at other cheaper loan providers. It will be worth some parents getting the loan themselves instead.

Delphi, same here - I just continued paying as if schools fees which when my daughter went was about £10k a year including £1k university fees- same as her then school fees and with the twins who graduated last year it was more - 9250 fees plus rent but not too different from their £18k school fees.

New, it is about 0.5% interest in practice if you earn £30k however given how it works as a 9% tax on earnings over £27k but much higher if you earn £100k so not in a sense the same as the interest rate and what you pay is 6%. They are complicated sums to do.
(Above on the basis of £50k "debt" of paying 9% of difference between £27k and £30k. If you bring that down to £21k threshold that is 6k more at 9% which is an extra 540 a year - so then our person on £30k would pay £900 a year in student loan interest which is about 2% on a £50k debt. So still a lot less than 6% in reality for those who will never repay the capital.

So many threads on Mumsnet defending the most right wing of the government's ideas, these days, and quickly too. And in droves, and often quoting this or that rule.

Does central office put you up to it? I swear in future years we will find that this invading of social media is a part of Cummings legacy.

@Tinpotspectator

So many threads on Mumsnet defending the most right wing of the government's ideas, these days, and quickly too. And in droves, and often quoting this or that rule.

Does central office put you up to it? I swear in future years we will find that this invading of social media is a part of Cummings legacy.

Agree.

So many threads on Mumsnet defending the most right wing of the government's ideas

Umm, setting it up so the government can unilaterally change the threshold and the interest rate was done by Labour

Tuition fees were introduced by Labours as well (though if they had increased in line with general inflation, they would be around £6k not £9k)

I know masses of wealthy people who could afford to pay their kids fees and expenses out of income without noticing and don’t. I really don’t understand why they burden their kids in this way.
But as I say I appreciate the majority can’t afford to lift that burden from their kids…

God, I wish I could afford it...I'd do it in a heartbeat