Student loan - do you worry about debt?

[Paraela]

Do you worry about how much debt are your children accumulating with the student loan?

@Halfemptyhalfling , sweeping assumptions or what. I’m a single parent who works hard in a stressful job to provide me and my kids with a reasonable lifestyle. Once uni for two is out of the way I will rethink my whole work/life balance.

Clubs and nightlife aren’t for everyone. DC1 is ND and commuting from home is what they wanted to do/felt like it suited them best.

At the moment it looks like we will be able to ensure both kids walk away without any debt from Uni and I will do because it’s 20 years since I graduated, I’ve paid the amount I borrowed and I still owe 75% of what I borrowed. I’ve got 20 years left to work during which time I’ll pay off the amount I borrowed again, and I’ll still owe about 8k when it’s written off.

So .. no I don’t worry about it, but I’ll do my best to make sure they don’t have the debt because that interest could be best spent elsewhere.

DH paid off his student loan 5 years ago and we have that extra money now.

It’s ridiculous @AllThePotatoesAreSingingJingleBells . I did the sums when I did my PhD. I put it on a 0% credit card with a 30 month repayment period and threw every spare penny at it, transferring the balance to a traditional bank loan at the end of it. I paid very little interest, definitely less than £1k.

Let’s hope the Labour government reform the system.

@Paraela If dc move abroad they should still pay because they have a contract. It’s also not an outcome for all grads that they earn more money. The best guide to help you decide is Martin Lewis via moneysavingexpert.com - you need to read it and see what applies to your DS and your family. The basic element is that it’s a graduate tax . Interest rate matters to some extent but what you earn matters more.

@grimupnorthnot You may well be right but I thought they wanted to see 80% plus. In fact just looked at IFS. They say 70%. The attached is from House of Commons Library. So I was a bit under on that.

I totally agree @Sailonsilverrgirl ( absolutely love the name , gives me waves of goosebumps)

Can't understand why this issue of student debt hasn't been picked up by the serious media. It's a ticking time bomb as you say.

In my view one of the worst things Labour did was open up academic higher Ed so widely, then of course tuition fees followed.

It is a very unfashionable view these days but not every child is suited to an academic style university education. Probably a minority, as was always the case.

Yet in order to squeeze the increasingly vast volume of fee paying 'clients' through the sausage machine, standards are lowered, grades inflated ( right back to secondary school) student demands raised, the once noble pursuit of academic learning for the greater good is trashed, and the end product is often laughably bad, and of little use to employers.

Meanwhile debt is accumulated that can never be repaid. That debt is held somewhere - it is not simply a puff of smoke. I do think there will be a big reckoning at some point. You read it here first.

What we DO desperately need is a huge cohort of skilled competent articulate tradespeople at all levels.

You still pay back if you move abroad. This is what one of my DC is doing.

Where do you get the information about the plans?

Yep. And add that to the fact that a student loan means £xhundred less added to that generation's pension each month. The increased cost of housing meaning less money month to month for savings. The falling birth rate meaning fewer tax payers having to pay for increased numbers of pensioners (NHS, care, benefits, state pension etc)

The economic future looks bleak for that generation

I don’t worry about my own student debt, and I won’t worry about DC’s either.

I wouldn’t pay it upfront.

It’s no more demotivating seeing it on your payslip than seeing your income tax, or national insurance, or pension contributions on there. Why would it be?

If your parents pay it, then perhaps you’d feel in debt to them, or guilty that you had deprived them of £30k and obliged to pay it back, or that you ought to take a job you don’t really want be because your parents had invested so much in your education.

Let young people have the freedom to own their own financial decisions.

Personally I think both the fees and loans should be higher, it’s ridiculous expecting a university education for 9k a year.

I graduated in the early 2000s, with £10k in student loans. A graduate tax of £2k was added which was frustrating, as it only affected my year and the year after. Then it was abolished. I've cleared my loan now, but the graduate tax added another year or two onto my loan repayment than if I had graduated earlier or later. I'm lucky I was able to pay it all back in full after 10 years or so - I would not like to pay 9% of my income above income tax rates in perpetuity, until it was written off. That's a huge amount and really impacts your ability to save towards other things ... house deposit, children, etc.

We have paid the first 2 years for dd1 and the first year for ds1. It hasn't been easy and not sure we will be able to do the whole thing but we will see how it goes. I hope we can. We have gone this way against all the advice from Martin Lewis and on here because my gut feeling was that I wanted to do this for them now and let them start their adult lives debt free.

I don't think there is a right answer though as I still worry we might not be able to do this entirely and that they won't have a house deposit from us...although they are saving from their uni jobs, so they will have something....definitely not 60k though....!

It is a a tax, yes, an additional tax for pretty much the rest of your working career, in addition to national insurance contributions, pension, taxes. Not a lot left.
DH and I didn’t have to pay anything (grew up in different countries) so it feels a bit sad for current young people already starting your career in debt.

For people who pay it early, how did they do it? Was it an easy process? Did they just save the money from salaries?

I agree to this. Something needs changing,

So many people going to university and lots of mediocre degrees and people who will never pay the loan but go to university for the 3 or 4 years of fun.

I also feel sorry for universities trying to survive on those fees.

I don't think it is irrelevant. I pay just under 300 a month back on student loans (earn under 50k) and I'll be doing that until I near retirement.
That's a chunk of money.

It’s a middle income trap and yes, we should be hugely concerned. Middle income earners will pay back many many more times than poor earners (won’t earn enough to pay it off over the 40 years) and high earners (will earn enough to make a dent in the capital).

How many people here could afford to lose £250 a month when paying nursery fees and a mortgage?

Parents are involved in the process by way of the system taking their income into account and the expectation that they’ll top up the maintenance loan @NotUnderMyUmbrella , so it’s not a case of backing off and letting my kids make a final decision that will affect them for decades, alone.

I’d love a new kitchen and bathrooms, but it’s more important to me that I help DC minimise student debt in the short term.

It really worries me. I’ve been a SAHM for 20 years and have returned to full time work to pay for the DC’s Uni costs. I can’t imagine my DC starting their working lives with a huge debt, paying an additional ‘tax’ and potentially having debt into their 60’s. I definitely don’t know enough about it, I’d like some sort of modelling spreadsheet where I can figure out how much they borrow from Day 1 projecting through to graduation. My understanding is you borrow £45k and graduate owing £65k over a 3 year course.

What concerns me is if it restricts their borrowing potential for a mortgage.

But hopefully they’ll be earning more because of the degree.

moving overseas in theory you’re supposed to keep paying but I guess much will depend on wether your want to return to the UK or Not

More than who or what job though? Academia, as an example, is traditionally poorly paid, you could definitely earn more as a plumber. But you can’t be an academic without the required qualifications and not everyone is cut out to be a plumber.

I earn about 45% less than I did in corporate land two decades ago because the sector that needs my PhD in is one that historically pays less.

Why not? We paid off DC1's loan by remortgage and are paying DC2's fees now.