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).

It's hard to save up on £15 an hour unfortunately.

Inequality continues. If parents can't or won't top up even the maximum loan these days many students can't go to Uni anymore.

There's definitely a squeezed middle. But that's why the new Government want to make the system "fairer". Just don't expect something for nothing. And while they've said that those with the "broadest shoulders" will need to pay more, the fact is that they already do. So the budget is unlikely to go as far as some people on the far left would like it to - punitive redistribution would be bad for the economy because there has to be some incentive for people to build wealth.

It's not about redistribution. It's about a fair chance for all. Everyone should have the chance to go to Uni - like when I went and got a full grant. I couldn't do my job without a degree as I'm a teacher. So if I hadn't been given the money I'd not be me.

Not asking for something for nothing as it needs to be paid for. So all graduates, not their mummies and daddies, should pay for own their education. All pay the same rate. That way everyone who deserves it can go.

The alternative is back to a system that means only the wealthy can access privilege, but maybe that's what the wealthy want.

@mumsneedwine your children are privileged too. They are privileged to have an educated parent, with teaching skills. They are well placed to do well. If you can't afford to top up their loans, and the new government doesn't change the system in time to help, then they will still have options - they could apply for apprenticeships; they could work part-time while studying, they could take a gap year to earn some money; they could live at home while studying; or they could do a part-time degree online while working full or part time. All of these options are available to them, so if they really want a degree they have a fair chance to get one.

Also ... if you are a home-owner, they have a fair chance of inheriting from you in future.

If you are suggesting that inheritance should be banned, then that is a whole different ballgame to reforming higher education funding. Is that what you want?

@asabug I think some of those options are available to some students but definitely not all. Living at home? Some of us live a long way from a suitable uni. What if you want to be a vet? Or study MFLs? They aren’t available everywhere. Or should young people just study what the local college of HE offers - oops! University! Degree apprenticeships are over hyped. It’s mostly adult employees who get them. Not 18 year olds. That’s why they still flock to uni. I would prefer to see more dc working at 18 and doing relevant degrees a bit later. In fact doing a masters.

Getting some degrees from some unis simply is not a good use of taxpayer money. It’s taxpayers who fund the loans in the first place. We do know what degrees lead to poor employment outcomes. IFS crunched the numbers a few years ago. Some courses at some unis have outcomes that are worse than not going to uni at all. With the 40 year loan I think dc do need to think about this.

Before this current loan plan. around 50.% of students did not pay off the loans and they were wiped at 30 years I think. The ifs study also found the best degree for return on investment was medicine. They make the most. They might compare themselves to other jobs but often the other job holders are a fraction of the total number applying for those jobs. Doctors tend to be more successful at getting grad level work than any other degree.

Those who want to keep unis as big as they are need to think who’s paying. It’s not as if the squeezed middle can pay more. My idea is to change some unis back to HE colleges and greatly enhance work and study. The dc who cannot afford uni might not be disadvantaged at all as they will be earning.That gives them choices because they will have their own money. I think apprenticeships can be over complicated. Work and study worked for many over the years and it should be maximized now.

"I think some of those options are available to some students but definitely not"

Maybe, maybe not, but everyone should at least think about those options before claiming their kids don't have a "fair chance". They may not be able to do the exact degree they want at the exact uni, but they can do a degree, and, if chosen wisely, it can be one that will get them a good job.

"Some of us live a long way from a suitable uni"

There are some good remote learning options like the University of London Worldwide (https://www.london.ac.uk/about/what-makes-us-unique) and the Open University (https://www.open.ac.uk/).

"Degree apprenticeships are over hyped. It’s mostly adult employees who get them. Not 18 year olds."

My kids' school barely mentioned apprenticeships, and certainly doesn't provide as much support for applications as they do for UCAS. Yes, the level 6 apprenticeships can be competitive, but many overlook the level 4 apprenticeships. Level 4 apprentices are often the "adult employees" who get the Level 6 apprenticeships.

Degree apprenticeships are over hyped. It’s mostly adult employees who get them. Not 18 year olds."
My kids' school barely mentioned apprenticeships, and certainly doesn't provide as much support for applications as they do for UCAS. Yes, the level 6 apprenticeships can be competitive, but many overlook the level 4 apprenticeships. Level 4 apprentices are often the "adult employees" who get the Level 6 apprenticeships.'

I so agree with this post about schools barely mentioning Apprenticeship applications, especially if the student is academically bright.

You can actually apply via Ucas to Degree Apprenticeships at the same time as to Uni's (you get full choices each route, one doesn't affect the other) and covered in the same fee. The only downside is the tests and interviews are in the run up to final exams.

Most probably hard to get, but I do know of a number of school kids awarded engineering degree apprenticeships (mainly niche areas eg naval engineering - they knew of them and pushed for them because of Naval Cadets, not school. But also Rolls Royce, admittedly applying age 19) - excellent if you can get it and don't mind missing out on Uni experience (which can cost £££££, instead of earning ££ - unfortunately not always top of an 18 yo's mind when the cost is disguised by a loan, which is disguised by the false promise that you may never actually pay it off in full - when in fact you will most probably pay it off a number of times over if paying it off slowly, you just may never get to the end of interest).

It's not, it's entirely the point and is a real middle income trap. You'll pay off far less if you earn poorly or earn very well. Earn somewhere in the middle and you'll pay off far more.

My DC were at a state grammar and in the two years between them the school's attitude to degree apprentices changed with the school much more positive, definitely not a poor relation any more. In DC2's year several high performers took the degree apprenticeship route, law, investment banking, chartered surveyor. I didn't hear of any in DC1's year taking that option.

These are young people who having not got a top uni offer, and knowing what they wanted to do for a career, chose the degree apprenticeship route rather than going to a lower ranked uni. Admittedly those successful getting apprenticeships all achieved AAA or above. While you miss out on the traditional uni experience you gain lots of other opportunities plus no debt and a job.

My DC are/were at Private school.
3 years ago when DD was in her GCSE year all the advice from school was Uni or bust. Now DS is in Y11 and its very different, the DC are being encouraged to look at a variety of options - for example for the first time ever the local tech college was included in the open days school took them to instead of just the 2 well regarded 6th form colleges.
And these are families that probably CAN afford Uni!

@Juja and @Hoppinggreen that's great to hear. Thanks

Interest is linked to inflation though so the debt doesn't grow in real terms.

@asabug I totally disagree about substitute degrees! Absolutely not on. If you need an academic degree or a top class uni in your field, they are not everywhere! My local uni is Oxford or a former college of HE! No public transport to either, What should students do where we live? OU for 18 year olds?! Absolutely not. My DD did MFL degree. How’s that meant to work at the OU or on line? She’s a barrister. Would a low or no tariff degree lead to that career? It absolutely would not. My DH went to a top class uni for civil engineering. In your world he should have done the building degree at the local uni! What good would that have been? I’m afraid you are not being reasonable at all.

School leavers getting degree apprenticeships is a tiny fraction of those going to uni. Of course they should be mentioned but the notion they have similar numbers doing apprenticeships is way off the mark. Hence over hyping of opportunities by commentators, journalists and MN! They don’t exist in vast numbers. Roughly 1:20 higher apprenticeships go to 18 year olds, only 70,000 under 19s start apprenticeships of any kind. Starts for level 6 & 7 are: 21/22: 5840, 22/23: 7860, 23/24: 8310. So big increase but uni starts were 316,850 for 18 year olds. Obviously apprenticeships should be mentioned but they aren’t a viable alternative for many,

She didn't need an MFL degree to be a barrister. She could have done an LLB with the University of London Worldwide.

Either way, I didn't mean that there is an answer that will suit every potential student with a fixed idea of where they want to be - I was addressing a poster who suggested her children did not have a "fair chance" of getting a degree, and suggested some alternative options to the traditional uni route. There are many different paths that can lead to a successful future career if a bit of flexibility can be tolerated.

@asabug Her strength was MFL. She needed to do MFL at an academic uni and did not want law for 3 years. I don’t think you know much about being a barrister! How do MFL students do the year abroad and what about debating societies and leadership roles in societies and social events? Never mind precise career advice and careers events attended by people who deliver training. Not to mention networking etc. You are really a long way from understanding why some need a first class uni and why they choose a certain degree to facilitate a career.

My point was that she didn't need an MFL degree ... I don't dispute that she wanted one. If you had not been able to fund her MFL degree, or top up her loan, and if she didn't feel able to top it up herself with a part time job, then the door to being a barrister would not have been completely closed to her. It may have been more difficult, and she might have decided to do something else instead, but she could still have fulfilled her potential doing something positive with her life.

I'm.not convinced that all uni courses have to be 3 years. DD has just started last month, and is doing a creative subject and she says she'll be done for year 1 in April! I had (maybe foolishly) assumed she'd probably finish in June.
We are paying for weeks (months!) of accomodation that she probably won't be using.

@asabug She wanted to do MFLs because they were her best subjects. If you live in London and can easily get to UCL or you live in Bristol and can access Bristol, great. DC have strengths and law at undergrad was not likely to be DDs. She probably would have been less successful had she done law. You need to be be the best you can be. Pretending alternatives are best is frankly rubbish. The door to being a barrister would almost certainly be closed. Try looking at the stats.

@Exhausteddog Is she sure? My DD2 did a creative subject and she didn’t stop on 1 April. Is there a project to be done? Having said that I do believe some practical arts subjects don’t need to be degrees. DD has changed career and done a 1 year full time Diploma. Seems to be what employers want!

Yep, this is our experience too, of a numerate degree at a top uni. Lectures finish before the Easter break, then exams straight after the break, then done for the year. Oh, and 4 weeks of at Christmas, Easter, and two reading weeks.

If you want your children to be taught by the top academics at the top unis then that, by definition, means research instututions and academics carrying out research. Therefore, they need the time to be doing their research. You can't have it both ways.

Oh, for sure, though it's a shame some of them aren't good teachers either. That seems to be par for the course at research unis.

But, getting back to the thread, there is plenty of time to earn money between the exams finishing in May and term starting in late September.

They are facilitators. It’s not school. Students need to be self starters and learn how to research and learn around the topics. To do this effectively takes time. Plus it’s a bonus to have time to work!

The government can change any part of the contract because the contract itself states in article 2:

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.

All the government has to do is change the RPI regulation, and yes they can change it up or down.

even the bit about interest for Plan 5 says
The interest rate will normally be set at RPI only.

The “normally” in there grants the government contractual flexibility to change the interest rate above or below RPI.

“They can’t arbitrarily change them to your detriment but they can make them better for you.”

ha ha ha de ha. The Government have already changed the student loan terms and conditions to the detriment of graduates by freezing the repayment thresholds on earlier plans, eg the freeze on Plan 2 & Plan 3 in 2022 causing most graduates to pay around £4,500 more towards their loans than they would have paid if the original contract terms had been adhered to.

They’ve done it before and they can do it again.

it is accumulating interest from day 1 but you don’t pay it back until after you’ve finished the degree and are working (with income over a certain threshold)

From 1 September 2024, the interest rates for most student loans have also changed. Plan 2 loans and Postgraduate loans (Plan 3) will have the highest rates, capped at 7.3% (RPI + 3%), while Plans 1, 4, and 5 will have rates of 4.3%.

You start paying your student loan back a year after you graduate.

The earliest you’ll start repaying is:

• the April after you leave your course

So more interest is being accumulated/charged from July-April after graduation (when many are on low wages or traveling after university). Your loan gets cleared 31 years after graduating. The government gets an extra repayment in year 31 at 9% of (probably) your highest income.