The graduates who will never pay off their student loan

[Tonty]

The graduates who will never pay off a student loan

The White Paper released on 20th October introduced some major shifts.
I think the introduction of V'Levels is a positive move, offering vocational qualifications alongside A'levels giving young people a chance to diversify their skillset beyond purely academic routes.

My question, particularly to those working in higher education is this: How will universities realistically enforce clearer minimum entry standards, given that 'minimums' often flex when seats need filling?

I also disagree with the assumption that low A'level attainment inevitably leads to a lifetime of low paying jobs. Personally, I had a rough time with A'levels but eventually found my way into IB. I know others who started with poor results, went to university, and now earn very well, though not immediately after graduating. Yes, it’s anecdotal, but it’s not rare.
As for the proposed reforms targeting higher earners: Accelerated repayment, no cap on total repayment, and a shorter repayment window, I find them excessive.
They risk discouraging people from pursuing high paying careers, or even university at all. Does anyone know if these changes will be applied retrospectively?

Why would I though? There's literally no incentive to do so and it not even make a dent in the interest, it'll be written off eventually anyway. I keep my payments as low as I possibly can (e.g. salary sacrifice) as there is absolutely no benefit to me paying more back, it's just less money in my pocket.

Yes that right avoid clearing your debt so the rest of us can pick up the bill

the incentive is you borrow money you pay it back

But you’ve said there are no jobs in your area. What difference would a placement year make? There’d still be no jobs.

Whilst I sympathise with the struggle that single parents have trying to improve their lives whilst being geographically restricted, I do think you have to take a bit of responsibility, particularly as you were a mature student with some life experience - you should have done some basic research into the local jobs market before you picked your degree.

And to all those saying the tax payer is supporting those that don’t repay in full - that’s a feature not a bug. Before students had to pay fees the entire cost was paid by Gov grants. Loan repayments is the way Gov gets some of what they used to pay in full back.

No one’s paying off my ‘debt’. It’s a glorified graduate tax, not a GoFundMe. The government literally plans for most people not to pay it back.

If you think 'the rest of you' are personally covering my student loan, please tell me where to send the thank-you card, because HMRC hasn’t mentioned your contribution.

My son's will probably go to uni in a few years and then you can pay their debt back too 😉.

I agree it’s a feature. But the question that no one in govt seems to ask is: is this a good use of taxpayers money. Before student fees and the expansion of the sector, graduates on average earned considerably more than non graduates so it could be argued that over time they paid more tax and therefore paid indirectly for their education.

Now the taxpayer still subsidises university education, but is it a good use of taxpayers money? And that comes back to my question, of what is the aim?

The govt is actually paying a lot more towards the university sector than it used to because participation is so much higher and 20/30/40% do not pay back there loans. So that’s not really an answer to the conundrum.

I mean I am not convinced I am going to pay off my student loan and I am in the top 10% of earners!

I have been paying 9% of my salary over 25k for a decade now. When I graduated I owed £46,250. At my last statement date I owed £50,000. The interest rate was 7.8% on my last statement, so I will pay off more than the interest this year. You have to earn over 71k just to pay the interest off.

So I think the vast majority of graduates won't end up repaying their loans.

(Editing to add that in cash terms I have paid over half what I originally owed I reckon. It's just made no dent on what I owe the government.)

Indeed - the purpose of HE is key to whether it should be (partly) tax payer funded. And that’s something that can be debated for hours with no agreed conclusions. Without doubt the benefits of HE are far wider than most people would think, on a societal level anyway.

UUK argue each £1 invested returns £14 - even at a fraction of that return it’s difficult to argue it isn’t worth it: https://www.universitiesuk.ac.uk/what-we-do/policy-and-research/publications/economic-impact-higher-education#:~:text=of%20university%20spending.-,Overall%20economic%20impact,or%20equivalent%20as%20highest%20qualification

At the end of the day it comes out of the public purse IE the government who in turn get there income for taxing the rest of us

lest just hope your sone has the brain to work out what he wants to do and get a relevant degree and build a decent career which then he will be a in a position to pay it back

rather than just go to uni because it’s a lifestyle choice rather than anything useful waste his degree by not using it and get a job on the same level as the rest of us without a degree
i unfortunately suspect the later

out of interest where do you think the HmRC get there money from I presume your degree wasn’t in economics

My career path required a specific masters but also doesn’t pay well enough to for me to have any expectation of fully paying off the loan. Which is a bit mad really!

Yes exactly, not every graduate is going to enter a high paying role, just off the top of my head: teachers, nurses, physio - all careers that require degrees that don't pay enough to ever pay off our loans fully.

The graduate market is so much more competitive than in previous years (x10 times more than in my day) that it is believable that 3Bs at A level would lead to lower graduate prospects.

Employers have to sift CVs and A-level grades are a filter. It's easy to see why they might discard Bs when they have 100s of applicants with As or Astars.

I'm not sure the issue is career assistance and think it's simply less jobs and more graduates (are these grads in boom years?)

There are careers that don't require degrees so no loans and can be very well paid, accountancy as usually sponsored by employers, mechanics, all the trades, military, health care..however they don't appear to be popular.

@TartanMammy They probably will now the loans are over 40 years! It’s changed the landscape quite a lot and teachers become heads. Nurses become senior nurses. They are paying tax at the higher rate and will pay off the loans from now on. The part timers won’t.

Careers in health care do require degrees though Pleasealexa
Radiotherapy, Physiotherapy, Paramedicine, Nursing to name a few.

Of course, but not all. Apprenticeships might be a better way to go.