Student debt in the UK

[noddyholder]

it just gets worse

Yes, but people who do 'graduate' jobs like teachers will never pay it all back, so it is effectively a graduate tax. Many women will never pay it back as they will have children and have career breaks or work part time. They will pay alot, but not as much as they borrowed.

But it means that 2 people could meet with about 60k plus of debt and this is taken into account when you want to get credit eg a mortgage. It is just another way of causing a divide from where I'm standing

Student loans are not taken into account when applying for mortgages and other loans.
This is a good guide which explains the new system:
www.moneysavingexpert.com/students/student-loans-tuition-fees-changes

A friend who is an IFA says he has noticed them cropping up on some application forms now Maybe you just have to declare it but it doesn't reduce what you can borrow

Both DH and I have student loans, they have not been taken into consideration for ANYTHING - our mortage, life insurance, home insurance, business loans etc..

I have never started paying mine back as the one job I had that was over the threshold I was only there for 3 months so over the year I did not earn enough. DH has just started paying his back £44/month which although not seemingly a lot is enough to make a difference to our tight budget! Considering our parent's generation went to university for free on the back of grants, it just seems like a very backwards way of giving grants that if you do eventually end up earning over the threshold, you pay back at a rate of 9% on whatever you earn above the threshold..

"Considering our parent's generation went to university for free on the back of grants"

Just a small correction as this crops up a lot. There may have been grants but university was never 'for free'. A full grant was £2,265/year maximum in 1989, very few qualified for this, and most had to borrow heavily to finance the costs associated with a degree course. Whilst not at the levels of today's undergraduates, anything they did borrow was at full market rates with no option of payment holidays if they weren't in a well-paid job.

Personally I hate the idea of having to pay for education. It's one of the few things I think should be fully state funded, along with heavy subsidies for transport but I digress.

But given we are unable to afford much nowadays and student loans now are fact, rather than theoretical. It's important to look at what a student WILL repay rather than the headline figure.

Noddy, since you quote MSE then you should also note that Martin says the following:

"In the April following graduation, it's confirmed that students from England and Wales will have to repay 9% of everything earned above £21,000 a year. So earn £22,000 and you'll repay £90 a year; earn £36,000 and it's £1,350 a year." source

So put it into monthly figures as that's how most people will get paid, £22k is £1450 net per month (approx) and a student will repay £7.50 a month. Should their take home pay rise to £2250 per month (£36k p.a.) then they will repay £112 per month.

The latter is obviously a lot more but then still easily affordable. I agree it is all but a graduate tax in name only but on balance given the alternative was increased taxes for all then I think it's probably the lesser of the two evils.

why should adults get free education?
we already get free education up to 19.

With the interest on the loan the total cost of a degree will be £129,000.

The Tory party has already indicated they plan to transfer all student loan debt to banks and 3rd parties with the freedom to change repayments as they like

Which means - while students currently pay 8% of gross earnings over £15,000 - this will be REFORMED in the future - and banks will decide how much should be repaid - and it will not be 8% of earnings over £15,000

Yes every "fair" system gets REFORMED - once we are gullible enough to believe the empty assurances by the MPs who forced an unfair system on us

Beingamum, have you got a link to what you posted? It's not something I've heard of.

2shoes, I guess because having a highly educated, flexible workforce is essential in the world economy nowadays. So making it free/nearly free encourages people to continue learning. Learning/training should not stop at 16. It should be a lifelong thing. So many people leave school with crappy qualifications. We should be encouraging those to better themselves.

the bizarre thing is that the people who do the most valuable degrees for the country will have to pay most; whilst the people who do totally useless irrelevant ones with no value will pay least. a great generalisation i know...but if you earn less than 21k whats the point of having a degree - you are unlikely to need it for your job and hence its no value to the country either, and weve had to pay for it.

We are currently paying hundreds every month for my dh's student loan. It is crippling us, along with high rent and travelcard into London ( his job is London based, we moved out to save money). We are trying (painfully slowly) to save for a house deposit, and have no means left to save for a pension.

So I think it's a bit simplistic when people say you only have to pay high amounts back when you are a high earner and that it's affordable. The cost of everything else is so high, especially if like us you are too young to have got into the housing market early, that it is a real drain. And I have NO IDEA how we will support ourselves in our old age, since we probably won't get a pension until we are in our 70s.

I dread to think what it'll be like for my dd, with an even bigger debt and probably higher living costs. I will be telling her in no uncertain terms that there is no point in her going to university unless she has concrete plans to get a high paying job afterwards. Which is terrible.

We've worked out that mine starting this year will be racking up 10K per annum. The course is 6 yrs and student finance will fund 5 yrs the last year is funded. So a whacking 50K debt.

This is made up of 6k tuition fees, 3k will be knocked off due to me being poor. £4k maintenance loan, approx. £3k approx plus £1.5k will be by way of grants and bursaries and hopefully with a few hours work, which might only be possible in the first couple of years, it is enough to live on.

It still breaks my heart when I think about it. It's such a shame that if she had been born a year earlier the debt would have been approx 18K.

Nothing like the current amount of people should be going to university. The majority of school leavers should be doing vocational courses. That is how it is in Germany, Scandinavia and most of the succesful countries of Europe. And it is how it used to be here. If we did that, we could make it cheaper/free for the people that did go to University.

Fruitsalad, I completely agree with you that the cost of living is ridiculously high nowadays and I have a teenage daughter who will also be going to uni in a few years.

Unfortunately it's almost inevitable that this next generation and probably the one after that will have a lower standard of living than we and our parents have enjoyed.

For me this is because they not only have to support more of us living longer, they also have to pay off the debts we've racked up in their name.

dreamingofsun Mon 30-Apr-12 16:31:09

"but if you earn less than 21k whats the point of having a degree - you are unlikely to need it for your job and hence its no value to the country either, and weve had to pay for it."

Plenty of academics start out on less than this, as do many actors, musicians, archaeologists, museum people and many others that I can't think of at the moment- they all need their degrees; some of them will end up earning reasonable money in the end (but you don't know which ones).

Cogito Just going from experience... Neither of my parents had to pay tuition fees as these were paid by grants, however both had to work p/t to fund their accommodation and food! My dad graduated in '76 and my mum in '92 so as far as I was aware it was a long standing thing that grants were provided!

Adamschic So the 1.5k by way of grants and bursaries won't need to be re-paid! Also, I worked part time the whole way through my degree as I wouldn't have been able to afford to eat/pay rent otherwise as my maintenance loan didn't cover the costs of my rent each year let alone anything else! It wasn't that tough and actually gave me a great excuse to not go out drinking with my peers each evening and most of the time I got finished early enough to do an hour or so's work/revision/essay writing before bed! I didn't have the luxury of giving up my job during exam time, but generally employers understand you won't be available as much and mine swapped shift the night before exams etc...

Dreamingofsun Most graduate jobs that I applied for came in at under the threshold so having a degree is no guarantee that you will be earning over this! DH was lucky enough to get a job £700 above the threshold, but the majority of my friends and acquaintances have started off at the 15k-18k mark which considering we have degrees is pitiful but competition for graduate jobs is so high, if we get a job - we take it! Obviously the potential for earning in the future is greater but I wouldn't say it sets us apart from the off - my brother is an electrician and only 6 months after completing his apprenticeship, for which he was earning for all 3 years he is earning 28k and has no student loans to pay back, he is significantly better off than DH and I and I imagine he will be for the next few years, but unless he starts up his own company, his earnings potential for the future is capped, if DH and I both work up the ladder in our respective fields, within 10--15 years I imagine we will both surpass and maybe even considerably overtake that figure depending on how far we take our careers - in DH's field the upper end of middle management can earn upwards of 60k, in my field it's more like 35k but still high... Many people choose university over apprenticeships because they know their future earning potential is much greater and will not plateau!!

sorry didn't make myself very clear. If you are only ever going to earn under 21k in a job i can't see why you would need a degree and hence those people who don't need them get them for free. a generalisation i know. obviously lots of graduate jobs start under 21k, but one would expect the salary to rise above this after the person becomes more experienced.

so the country provides free degrees for people doing jobs that don't need them and for more complex roles (we are told our country needs these to be competitive internationally) they don't pay.

dreaming - cory made it quite clear - there are some occupations where a degree is necessary and the salary likely to be below £21k.

Don't forget the £21k is total annual salary - so if your full time salary is £25k but you work part time your actual salary may well be below the threshold.

Beingamum - where did you hear the bit about loans being sold off to bank? No banks will touch them with a barge-pole! That's why the SLC was created in the first place. The loans system is also now written in law - the repayments etc have to go back to parliament if the terms were to ever change.

With regard to mortgages and other loans - the annual repayments would be taken off the amount available to borrow, in the same way that credit card debt recues the mortgage amount by the minimum amount repayable. The total loan woudln't be taken off.

I am incredibly grateful that the degree I am starting in September is funded so I will only have to pay back the maintenance loan of £2.4k. The salary I am likely to earn after my degree is unlikely to be more than £22k for several years, and I will almost certainly never earn more than £30k.

blondie, yes I believe it will be a non repayable bursary, given by the uni themselves which is means tested. Mine will be able to work in the first couple of years but by nature of the course will be at a disadvantage working and studying, compared to other students who's parents can help them. The means tested element is what it is. I work full-time, lowish income and as a single parent/or parent with a grown up child at uni I won't be able to help out in any way shape of form.

Don't forget under the new system coming in this year, most students will be racking up debt of 10-14K for each year of their course. I think a £1,250 non repayable bursary, for the poorest of students is the small change.

As for loans being sold to banks, this would be illegal, surely? You sign the forms to the student finance company. I cannot imagine any bank taking on debt that might never, legally, be repaid.

It's true some people will be getting free degrees, and some will be paying heavily for theirs. The whole thing was rushed through without enough thought which is typical of this government.

Adamschic Working put me at a great disadvantage to many of my peers who not working could pick and choose which days they studied, my parents couldn't support me financially and thus I had to work 3/4 days a week for the entirety of my degree, and full time in the holidays. I believe what set me apart was the fact that I was motivated, I wanted to do the work and I wanted to do well! My bursary was £500 in the first year and £275 each subsequent year. I amassed between 7-8k each year in loans, this being before tuition fees significantly increased.

I think that saying 'by the nature of the course will be at a disadvantage' is a slightly warped view. Surely anybody studying ANY course at University level who has to work is at a disadvantage? Just because they are studying something prestigious such as medicine for example doesn't put them at any more or less of a disadvantage! I studied Triple Honours MFL, with equal weighting in each French, Italian and Spanish - I worked the whole way through, even when studying abroad in each country I had jobs, I had to pay for my flights to and from each country as well as my accommodation whilst out there yet I still managed to graduate second in my class Cum Laude, my best friend who's parents funded her whole degree (not a penny from the SLC), didn't work a day the entire time and spent her summers in Thailand/Australia/South America graduated with a 2:2 IMO purely because she didn't put in the hours that I did!

blondie, It's not a warped view, they have been told it would be very difficult. Also if your parent/s were on a low income your university would have had fairly generous bursaries on offer, this has always been the case, before the fees hike.

Why do you begrudge a student a small top up bursary of £1,250 just because you didn't get it?