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.

@TheHouseILiveIn it’s quite funny really because I do have a mortgage. I know full well the costs of driving, but unfortunately when I went to uni/turned 17 I didn’t have the money spare. I’ve lived alone since I was 17, worked 2 jobs so I didn’t have to borrow as much for uni - the debt I mentioned is tuition alone. My national insurance is set to rise the same as everyone else- we all have lots and lots of costs.

I will start repaying soon, but the interest on the loans are so high I will never pay it all off. I think it’s a good thing the threshold is reducing - it’s taxpayers money and needs returning. However the interest being so high is what is wrong here. It will increase more than I can pay off each year.

I want to clarify I will be paying but I won’t ever get to the point of paying it all off in full because of the interest. That’s the problem here.

Thanks for the invitation to open my eyes, but I already have. 2 part time jobs to stay afloat doing 30 hours per week and still not over 20k 😊

@PattyPan

It’s difficult to get out of the cycle though *@PlanDeRaccordement*, it’s going to be difficult to save for my DC to go to university when I’m still paying for myself. My parents saved for me but only managed about £3K which was swallowed up pretty quickly since almost my whole maintenance loan went on accommodation (the cheapest one on offer).

Yes agree. Student loan debt hampers the graduate during their working life and also affects their DCs life prospects. It makes it harder to get on property ladder, harder to pay for their DCs education and harder to accrue a decent pension.

And not only that, but the government is not saving any money. The interest is so high, that when they write off the loan thirty years later they are still paying at least as much as they would have if they had simply paid the students tuition and maintenance up front.

The student loan system was a inter generational money grab. You see. The older generation had their education paid for by the generations of tax payers before them (those that were working and paying taxes when the older generation was aged 18-22). But when they came of age, they did not want to pay for the generation after them, so student loans came about. But all they did was defer government paying for university education for thirty years. It’s a temporary cost savings. At the thirty year point, taxpayers will start paying for the education of the generation older than them...

To me student loans systems are a failed experiment that shows how not to do higher education in a society. They are a truly terrible idea.

@PattyPan

It’s difficult to get out of the cycle though *@PlanDeRaccordement*, it’s going to be difficult to save for my DC to go to university when I’m still paying for myself. My parents saved for me but only managed about £3K which was swallowed up pretty quickly since almost my whole maintenance loan went on accommodation (the cheapest one on offer).

I started saving for my two to go to uni but as the fees kept increasing over the years I abandoned that plan and the money I saved will be used as a house deposit instead

why can’t students borrow from a high street bank instead of tied into 30 years of dealing with the student loan company

Because banks can't do affordability checks on the basis of guesses at future income & expenditure. They're not allowed to lend money to people who have no evidence of ability to repay.

Students shouldn’t have to borrow or be saddled with a horrendous debt at the start of their working life. Education should be free to all, not just those whose parents can afford it. I would happily pay more tax to equal up this aspect of society . We will all benefit in the long run from a more educated diverse workforce.

Having well educated citizens benefits the whole of society, why on earth would a country not invest in its young?

I totally agree but in this country we have equated well educated with 3 years at university at £9k a year.
There should be plenty other routes equally well respected.

My father in law was a highly educated chartered engineer, member of institute of mechanical engineers.
He left school with very good qualifications and joined the training scheme of a large company, the fore-runner of graduate apprenticeships I guess. He had an amazing career and was a high earner. That is still a well respected route in other countries, why not here?

In plenty of other countries, university education is easy to access and is either free or close to free. But in the UK the government has so quickly educated its citizens to believe that higher education is a privilege which should be paid for - and paid for several times over (once the interest has been paid).
So how do countries like Germany, France and the Netherlands afford it, if it's so unaffordable?

I have more of a problem with the above RPI interest rate than the wage at which it becomes repayable.

I also saved for DS Uni but it is only enough for me to pay the top up required from me, it won’t mean he gets to avoid the loans he will take for fees and the basic maintenance loan.

We've got the highest tuition fees in the world www.statista.com/chart/11058/bachelor-tuition-fees-international-comparison/

Tripled in the last 10 years I believe. Always the young who are targeted by the nasty party

My DD just got GCSE 7, 8 , 9 s and is at 6th form. The huge amount of dept for university was already a worry
I will be HEAVILY advising her that she cannot afford to go :(

The student loan system was a inter generational money grab. You see. The older generation had their education paid for by the generations of tax payers before them (those that were working and paying taxes when the older generation was aged 18-22). But when they came of age, they did not want to pay for the generation after them, so student loans came about.
I object. It wasn't our generation that came up with this idea. It was New Labour. They were the experts at kicking the can down the road regarding finances. Hence Liam Burn's infamous "there's no money left" memo.

@StayAGhost

My DD just got GCSE 7, 8 , 9 s and is at 6th form. The huge amount of dept for university was already a worry I will be HEAVILY advising her that she cannot afford to go :(

Oh please don't do that. If she's got the potential to do well, and is fully informed, she SHOULD go. Please support her if that's what she wants. Don't drag her ambition down.

I agree - just suggest to her that she researches the career destinations and employment stats for her chosen course/university vs what she would do if she didn’t go to university.

The average salary of those who go to university is higher, regardless of degree followed. A degree adds value across a lifetime.

The impact of having a degree on earnings is bigger for women too. I can only assume that there are teaditionally male jobs that dont require a degree that pay more due to risk factors, unsocial hours etc. (Obviously women can do those jobs too) and the jobs more women tend to do without a degree pay less.

Yes, although it's complicated as it is also bigger for MAME groups , but still overall lower on average for women and BAME than white men. Twas ever thus. Regardless, it does still give a bump to potential earnings. There may well be an impact on these groups, however, if this decision moves forward as they tend to be the lower earning groups. Hmm. Needs an equality impact assessment.

The idea that she will be £10, 000's in dept, and never be able to pay it back is terrifying to me :(

I'm showing her apprenticeship's but she's missed all the school leavers one's

I guess you have to ask yourself , what would she do otherwise that will give her qualifications, satisfaction, potential higher earnings and a sense of worth?

You have to admit it's a cunning plan.

Make it so more and more jobs and careers 'require' a degree, even the lower paid ones that don't really need it, so you funnel more and more money to your friends in the higher education business (and forcing kids into university just so they can get any job) whilst at the same time dropping the threshold at which the loans get repaid so your friends in the financial sector also get more cash.

If university was a guarantee of a well paid job, why would they need to drop the threshold to £20k? Surely this is tantamount to admitting that many degrees lead to shitty, badly paid jobs that never needed a degree in the first place?

Higher education in this country is a scam - this is just underlining the fact.

Most of my friends who went to uni have huge student loans and even though they graduated 10+ years ago, they have still not started to pay it back.
I have been chipping away at my loan for that same amount of time and have finally paid it off. It gave me a great sense of achievement to pay this off. Seeing your pay slip each month with pension, NI and student loan each month deducted is part of being a working adult.
It’s a loan, not a grant. It should be paid back.

@Franklin12

I agree with it as well. Surely if you arent planning to get a higher paid role why go to university and incure the debt? Unless people are looking for something for nothing.

It doesnt penalise the poor does it because if you are under the threshold then you dont have to start to pay it back.

I'm sure most people who go to uni are certainly hoping to get a higher paid role. The problem is that a degree is definitely no longer a guarantee that this will happen, whilst at the same time increasing numbers of jobs that are definitely NOT higher paid are requiring degrees, for no good reason.

Such as??

@Lowhum

Most of my friends who went to uni have huge student loans and even though they graduated 10+ years ago, they have still not started to pay it back. I have been chipping away at my loan for that same amount of time and have finally paid it off. It gave me a great sense of achievement to pay this off. Seeing your pay slip each month with pension, NI and student loan each month deducted is part of being a working adult. It’s a loan, not a grant. It should be paid back.

Are you saying that your friends are deliberately staying in jobs that pay under the threshold?