Was I the only one who didn't realise what you start paying interest on your student loan from the first day of year 1 ?

[CobsNobs]

For some reason I had heard (maybe misheard) Martin Lewis saying that you don't have to worry about student loans until you finish uni and start working and in my head took that to also mean that you wouldn't start accruing interest until that time.
Obviously I was completely wrong but just in case anyone else had made the same assumption I am posting here.
My son is doing a 4 year course and will be borrowing £54k but at the end of year 4 that sum will have increased to approx £64k.
Scary!

(In my defence I am not from the UK and never had a student loan).

The student loans of 20yrs ago are day and night different to the ones that rolled out this past 23/24 school year.

@SummerFeverVenice I know, I doubt my kids will be able to go or if they do it'll take a lot more thought.

It is scary to think on. The student loans were meant to enable disadvantaged bright kids to get a degree and then have upward social mobility in a meritocracy. But they have turned into a money making scheme by the government selling the loans to businesses and so that has driven a number of regressive changes that ensure these disadvantaged kids stay disadvantaged all through their working life until pension age. 40yrs is too long.

No, @CobsNobs, I also didn’t realise that the interest started accruing from day 1 of the degree, until we went to a finance talk at school when my eldest was in year 12. I think I must have thought that it would start accruing from when they graduated, and were therefore in a position to earn money and potentially start to pay it back. Silly me…

I'm on £29k and pay back less than £15 per month. I was also able to save the maintenance loan so I have savings too. Am I missing something? I can't see the issue with the arrangement.

Quite a large number of uni students live at home now. At dn's Uni, a fair few who could, moved back home after price hikes as living on campus wasn't affordable anymore.
It's a shame as kids aren't getting the full uni experience anymore but it makes sense to stay at home if able (and want) to do so.

Indeed.

My children will be on different plans for repaying their student loans which seems pretty bloody unfair on the youngest. :(

I have no idea what my total is, but it will be extortionate. I did my first degree in 2002 with full tuition fee and maintenance loan. I am now at the end of another 3 year degree and have had full tuition fee and maintenance loan again, but it's a longer course so expended. It wouldn't surprise me if my total was £100k but it means nothing in the grand scheme of things.

I think the BBC did a freedom in information request to the Student Loans Company, and the current person with the largest student loan had a balance of something like £262k (apparently they had done ‘multiple’ degrees - not sure if that is two or more). But yes, it is essentially a tax so in some ways the total doesn’t matter.

@SummerFeverVenice

You are totally wrong. Grants and awards were made to the poorest to go to uni prior to the loans system. Every poorer dc could go then, as now. I worked in an Awards assessment section at my LA.

Loans are to pay for university expansion so more dc can go. It was never about the poorest. The unis needed the money and still do. Maybe read about it? Lots are nearly bankrupt. The Government effectively makes nothing but funds the debt that gives the students the money in the first place! It then picks up the tab for students who cannot repay. Maybe if we all understood that loans help to fund unis, we might have a better discussion! Plus overseas students fees etc. The government is a huge loser in this. To reduce loans, reduce uni places and students attending. Would that be better because the tax payer cannot pay any more.

@UpUpUpU

You chose to do two degrees. Who do you think should pay? Twice.

The reality is that the only benefit to the current system is that some low earners will not pay back the amount they borrowed. Also there could be some higher earners who cut their careers short for some reason. Everyone else will owe far, far more than they ever borrowed.

If you genuinely don't think you're going to earn very much then really it's probably time to ask what the point is in incurring the debt. Its a massive amount of debt.

If you're fairly confident that you'll earn well then there are loans with better terms.

The system is broken. The fees simply have to go up for both home students and international students. The universities cannot afford to keep doing what they are doing with this level of income. So many of them have large financial holes. The tuition fees need to go up to circa £14k per annum and the three tier England/Wales/Scotland system needs to become a thing of the past.

I think posters don't understand that many unis owe squillions! They are close to being bankrupt and the Loans don't generate enough to keep them going. I think the unis are asking for at least £12,000 fees but I might be wrong .

I totally agree: many students won't get value for money and should avoid uni. Where I differ is that loans from any other source will have to be paid back! They will also start payments from the day the loan starts. The uni loans are deferred until first wage. There's no possible option of paying back over 40 years with most loans. It's very difficult to make a case for an alternative commercial loan.

There has been a massive boom in the HE sector over the past 20/30 years, and we're now about to see a massive bust at the current rate. I don't think that the current offering is good value for students at all.

That's because you're a low earner. But if your earnings were higher then unless you are getting over 7% (plus inflation) on your savings then having your savings would be foolish when you were simultaneously being charged compound interest at a high rate on the loan.

There's also the big issue of what "earning well" means? Most students don't repay early. If grads earn below the average wage it's difficult to see how its value for money yet parents still think dc should go. If the career needs a degree, then go, but if it doesn't I would look at other routes.

Also, posters are not on the new repayment contract. The huge expansion we didn't need was the one in 2013 when the cap was lifted. We could not afford it, didn't need it and it's caused housing shortages. We need to trim the sector. It's urgent or we con students into paying for something that's pretty useless.

It also needs to be more common to have gap year to earn some money so that you don't have to take the maintenance loan and also to go to local universities and live at home in years 2 and 3 where possible.

We have reassessed and are going to pay the fees for our DC in years 2 and 3 with a view to them paying us back rather than having such a lot of debt hanging over their heads.

In fact for DC2 who hasn't yet started, we will pay for years 1 and 2 to reduce the amount of interest accruing (we can't pay the full 3 years for each of them)

Me? I have been in my previous high paying job and will continue to (at a much lower rate) when I qualify as a midwife in summer.

im not sure what you are getting at @TizerorFizz ?

@Era

Of course if you have money you can pay fees etc. Home uni by default is another matter. Ours is in bottom 10% of country and didn't do MFLs DD1 wanted or Fashion DD2 wanted. So not possible.

When it comes to uni, not only does uni matter but subjects available does too. Eg - local uni does a couple of Construction Bsc courses but no MEng courses at all. So no, local uni isn't a good idea. The big issue is that those of us not near a fantastic uni are even more out of pocket! Usually us folk in the rural areas. The ones who often earn less!

@UpUpUpU

I'm getting at that you have chosen to change jobs and do another degree. You were not obliged to do it but chose to do it. The associated loans and costs go with the choices. Thats all.

I obviously didn’t mean for everyone but for those who can, it’s a way of saving money. It’s common in many other countries eg Australia

And Scotland (or at least it was 30 years ago)

In fact going back to 1979 when I went it was in a sense a similar system. Children of middle class professionals (i was one) got a really tiny minimum grant. Parents had no obligation to make it up to full grant and many did not but mine did. Children of the poor get a huge maximum full grant so had more money than children of the rich - same then, same today (other than today there are the fees as well as loans but the fees are the same for the rich and poor rather than the maintenance element which has always been large for the poor and small for those who have richer parents even if those parents choose not to pay a single penny of help). When I went 85% of people did not go to university and most people in my class at school did not go (and that was even in a small private school never mind a state school).