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.

@Elephantsparade

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.

I think this is true. More girls from my school went to uni than boys, but the boys that didn’t go to university mostly went into trades whereas the girls went into retail, office admin type work, nursery nurse or care worker all of which are much worse paid than trades. And they have tended to have children quite young as well which also impacts income.

I am genuinely struggling to think of a so called lower paid job requiring a degree. There is a lot of rhetoric here about degrees being a waste of time and a con because suddenly some 'unworthy' (that's the implication) jobs 'require' degrees. I must be missing something because I am not sure what people mean by these jobs. Ceratinly there are grads in non grad roles. That's different.

I can , however, think of many definite grad jobs that start between 20 and 27k.

@Piggywaspushed

Such as??

If you asking which jobs are either increasingly asking for, or requiring degrees, nursing and policing spring to mind.

I don't think it's fair to change the terms of the loan that was agreed under other terms. But I do think it needs to be changed so not as much is written off

They haven't changed the terms.

I was always written in that the government can vary both the threshold and the interest rate. To quote from @NoNotHimTheOtherOne

People have tried to make this clear to students & their parents since the loans system started. This is the only loan you will take out where the lender can unilaterally change the conditions, and you have no protection from consumer credit legislation and can't challenge the contract on the basis that the terms are unfair. They could increase the interest rate to 10% pa and lower the threshold to £10,000 pa and there's nothing you can do about it

But those warnings were drowned out by the usual chorus of "scaremongering!" and "project fear!"

I appeared to contradict myself there : what I mean is that people are implying that there are people doing jobs which require a degree and somehow the world would be better if we stopped frivolously requiring degrees for such basic jobs. Can't think of one.

@Piggywaspushed

I am genuinely struggling to think of a so called lower paid job requiring a degree. There is a lot of rhetoric here about degrees being a waste of time and a con because suddenly some 'unworthy' (that's the implication) jobs 'require' degrees. I must be missing something because I am not sure what people mean by these jobs. Ceratinly there are grads in non grad roles. That's different.

I can , however, think of many definite grad jobs that start between 20 and 27k.

And yet lots of people have clearly gone to uni and have only got jobs that pay under £27,000 (or why would they be lowering the threshold).

This can only be for two reasons:

1. There was no need for a degree to do that job in the first place (in which case we can happily cut half the university sector).

1. There are jobs that are requiring degrees (or only taking graduates, meaning that essentially there is no difference) that are paying below £27k for many years after graduation.

I know of jobs which require a degree and more, and pay minimum wage.

Haha, so true!

Nursing has required a degree for a long time. Policing requiring a degree is an aim to professionalise the force. These aren't low paid basic jobs to which a degree wouldn't be beneficial. Policing degree apprenticeships are funded. Given you can't join the police direct from school anyway, it makes some kind of sense.

@Theendoftheworldisnigh

I know of jobs which require a degree and more, and pay minimum wage.

OK, tell me which!

I don't link pay to happiness and success anyway , but the argument is that there are jobs which require degrees and shouldn't. Surely they are now paid more because of degree requirements?

I think the interest is a bigger part of the farce than when people start paying them back, but I can see why they want to tweak that as well.

I can understand the ire at them possibly changing the terms people took the loans out at 27k (I hadn't realized it was that high now) and why some who still support the move prefer it being students going forward; however, there are also people paying back student loans on income over 10k, over 15k, over 18k - this has been a gradual push up from the early days of student loans.

I'm not sure if this is part of their plan, but I could see them trying to get around some of this backlash and make a move to equalize this at 20k for everyone still paying. This could get more support from those who've been paying back longer on lower wages and pull some currently paying student loans out if done this way.

not , I know : that was my whole point. If the threshold goes below 27k it actually brings in a lot of recent graduates. At 20k not so much.

I guess they won't as planned now put up the teaching starting salary as they can get loan back earlier now...
I am used to hearing people say that there are loads of sociology grads working on tills but the claim that companies are 'requiring' degrees for things which never used to require a degree does need a bit of investigating.

I think the article said they were more likely to go with £23k as £20k was probably too low.

First NI, now this. It's just another tax rise masquerading as something else.

I do feel sorry for young people and increasingly those in their middle years. I'm not surprised many are deciding not to have children at all. I don't think I would have any in their shoes either.

@Notthemessiah

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.

I meant to quote this post with my 'so true' comment

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.

A lot of jobs in the charity and arts & heritage sectors require a degree and are low paid. Probably a lot of jobs regardless of pay don’t require an actual degree they just require a certain level of skills which could probably be acquired elsewhere. I’m thinking of things like HR, marketing, civil service, consulting, generic grad scheme type stuff that you can do with a degree in anything.

Someone taking out ~£21k in their first year will have a grand in interest added to it by the time they've done their first year. If they took the same out the next year their original loan is already £3k higher than the amount they took out by the end of their second year. It's a scary interest rate. And don't get me started on the fact interest accrues from the moment you take the loan out....why not from when you graduate?

Yes, but it is perfectly valid for them to require a degree. Not all degrees are vocational. Other skills and knowledge is acquired. People working in the charity sector without a degree will be lower paid and not access promotion so readily. Arts and heritage sectors have long employed graduates in eg history, drama, English, art history. That is not new. Most people love those jobs and want to do them. Pay is not the motivating factor there.

Using the rule of 72 I make it that at ~ 5% interest a loan would have doubled after 14 and a half years due to compound interest

I can understand the ire at them possibly changing the terms people took the loans out at 27k

Although not everyone on plan 2 did take out the loan when the threshold was £27k. If you were in the first years to go to uni with the new fees, it was £21k (see link). And the threshold for paying back on the new plan has increased by far more than the threshold for the old plan over the same time period (2016-now).

I’m not saying therefore I think it should be dropped, btw. Obviously those on the new plan have far more total debt than on the old plan, different salaries will work out better for different plans.

www.gov.uk/guidance/previous-annual-repayment-thresholds

@Piggywaspushed

What on earth is a teapot degree?!

One that is "as much use as a chocolate teapot"

My mother was an excellent teacher in the 1940s and 50s. She did school certificate, then did 2 years of residential teacher training and was teaching (primary shcool teacher) by age 19. I really don't think she was a worse primary school teacher for being Cert. Ed. rather than BA PGCE. Many nurses were pretty good without degrees and simply nursing training like my great aunt.

..school...

Right... I see.... love a mixed metaphor.