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.

@Gizmo98765 I think your examples are quite extreme and actually insulting to say people from lower income families likely to have lower income jobs themselves.

@Newgirls

Of course they are. Martin Lewis needs to change his rhetoric.

The student loans are high % and need paying back. This was a Tory policy by stealth from years ago.

I agree

@Okki agree that’s the point . There must be many people in the 20-25k bracket who can then start paying in for up to 30 years . That generates more government income .This is just another tax hike. These earners are not high earners and they keep being squeezed in every direction.

I’m still angry at how high the interest rate is, that’s why none of the loans get paid back because the government keep adding to the bill at an alarming rate.

A bill that the government chose the size of in the first place when they made tuition fees 9k.

I took out just over 50k of student loans, my total bill with the interest is now over 70k only 6 years later.

@puseyst your point?

@Elephantsparade

The main issue I have with this is at 20k that scoops up a lot of jobs that when i first started work, were A level entry but now require a degree because employers can ask for one rather than the job needs one so if forces people to take on debt. Full time work at minimum wage for a 23 year old is 18.5k so not far of this threshold.

But i do see the current issue with student loans is that a lot arent paid off and the way it works is we've sort of pushed the debt to a future set of tax payers to pay off when they reach the point at which the debt is written off. Are we at 30 years of the loan system yet?

Not quite, I think it was 97 or 98 tuition fees came in, so 22 or 23 years.

[quote VanCleefArpels]@puseyst £20k or thereabouts is a common first grad job salary out with the big law firms/ management consultants etc[/quote]
No it isn't . In London they offer 35k +

@VanCleefArpels

Drawbridges and all that. Textbook stuff.

Isn't it the case that this would be on new loans going forward so that potential students can weigh up the pros and cons. They can't shift the goalposts on those who have already weighed up the calculations.

@HungryHippo11

Higher education will become unachievable for many Why? You only pay it back when earning over 20k and then it's a percentage of your earnings over that. If you're earning over 20k then you're not "poor"

What?! £20k is practically minimum wage. You must be trolling

Not to my child! In a profession. RG graduate. Not an outlier amongst their peers.

I mentioned this was going to happen on the last thread about U.K. student loans and all the Martin Lewis cult members did not believe me. U.K. student loans are not a graduate tax, I hate how Martin Lewis calls it that because it acts nothing like a tax. So no, this is not a “tax on the poor”. It is simply requiring a debtor to pay back sooner and more towards what they borrowed.

They are loans with a very high interest rate which is going to be even higher as it’s linked to the RPI (Retail Price Index). And the government has the power to change some of the T&Cs at any point in the life of the loan. Other loans have similar mechanisms to change T&Cs, how many of you have a 20-30yr mortgage but the interest is only fixed for the first 3-5yrs? How many of you took advantage of the mortgage holiday?(that was a T&C change that benefited the debtor instead of the lender).

They have to get more money back from the debtor because the cost to all taxpayers, including the poor 50% of population who never went to university, when the loan balance is written off is immense. The student loan being “written off” means the government pays off the remaining balance in full, from tax revenues.

@puseyst I really don’t understand your expression, sorry. And prob dangerous to make assumptions about my wealth (or otherwise) and/or political leaning

@WorriedMutha

Isn't it the case that this would be on new loans going forward so that potential students can weigh up the pros and cons. They can't shift the goalposts on those who have already weighed up the calculations.

Actually yes they can.

They haven't said whether they will, but the T&Cs mean it's possible

It always makes me laugh about these "rich" students with "rich" parents. What does rich look like? If it looks like me then I've been had.

Surely the point of a university education is that the "poor" student is raised up, so able (in theory) to earn more. Something is wrong if one is still judged on one's parents' income when you are 35. In fact, bring it on! Dh would love to be taxed according to fil's circumstances! Anyone who does better than their parents would be a total winner

I think the student loan should not expire. Dn, eg, did a BA then an MA and then became a SAHM . Should someone escape the loan their entire life? I think the 30-year cut off is too generous and the student loan should form part of someone's lifelong estate. You could win the Lottery or receive major inheritances and still not be liable to repay a penny.

Once again those under about 40/45 being screwed over. Perhaps everyone who did a free degree years ago should have the terms changed and now have to pay it back with all the interest? I think the fees today are ridiculous and the interest even more so. Many industries now won't even look at those without a degree for what would have been entry level jobs in the past.

@HungryHippo11

Higher education will become unachievable for many Why? You only pay it back when earning over 20k and then it's a percentage of your earnings over that. If you're earning over 20k then you're not "poor"

Jesus Christ, I started on £27k TWENTY TWO YEARS AGO

It really is a race to the bottom

Frankly the whole student loan system is a joke.

Essentially we’re educating the majority for free as most never pay all of it back.

The whole higher education system needs overhauling, maybe it will limit the amount of students who go to university to study wishy-washy degrees just to say they’ve been to uni.

Companies need to be less prescriptive re requirements and offer more apprenticeships etc.

But let’s face it, in the majority of cases it’s not a loan, it’s a gift of sometimes £30k plus.

@DottyHarmer

It always makes me laugh about these "rich" students with "rich" parents. What does rich look like? If it looks like me then I've been had.

Surely the point of a university education is that the "poor" student is raised up, so able (in theory) to earn more. Something is wrong if one is still judged on one's parents' income when you are 35. In fact, bring it on! Dh would love to be taxed according to fil's circumstances! Anyone who does better than their parents would be a total winner

I think the student loan should not expire. Dn, eg, did a BA then an MA and then became a SAHM . Should someone escape the loan their entire life? I think the 30-year cut off is too generous and the student loan should form part of someone's lifelong estate. You could win the Lottery or receive major inheritances and still not be liable to repay a penny.

So we shouldn’t educate SAHMs to a university level? Nice.

Also, if I never earn above the threshold to pay the loan back, my original loan of 50,000 would be over £1,000,0000 with the current 6% interest rate if I die at 80.

I don’t think they’ll be getting that back from my estate.

@SickAndTiredAgain

I agree with it too. I thought they should’ve done it 20 years ago. I paid mine off long before I earned the salary requiring me to pay it off.

What do you mean they should have done it 20 years ago? I went to uni 10 years ago, before the fee increase, so my threshold for repayment is £19,390. This proposal will be talking about plan 2 loans (from when tuition fees went up to £9k) that didn’t exist 20 years ago.

This poster is talking out of their arse. People who didn't have to pay tuition fees shouldn't be smugly commenting. Talk about pulling the ladder up after you!

@HeartsAndClubs do you think people are entitled to an education even if they can’t afford to pay ?

I agree with it. Most people know they won't repay them their student loan, why should the government pay for them to go through university? It's tax payers money so it is right that it can be given back. You choose to further your learning and you go into it knowing you have taken out a student loan. It's all choices.

of course not saying that SAHMs shouldn't be educated - but what I am saying is that it should not be a lifelong escape clause, so the 30-year rule should not apply. Likewise people going to university when they're 60. They are never going to repay their fees.

It's not fair to the schmucks in the middle. As per absolutely usual.

@DottyHarmer I do see what you are saying, but when I (and many) took the loan that isn't what was signed up for. Changes should be upfront so people have the choice before taking the loan in the first place.

I think this is a divide between people who fundamentally believe education should be heavily subsidised/free / available to everyone for the good of society/ economy ( which in reality we know to be ‘unaffordable’ versus those that see higher education as an option for those that ‘deserve it’ that should be paid for by the individual and a private service which is what the loan system is now moving us towards