Labour to cut Tuition Fees...

[Du1point8]

Smiler. said:

Not entirely unrelated, this made an interesting listen the other day.

BBC Face the Facts said:

MPs are furious that for-profit, private higher education colleges have had access to hundreds of millions of pounds of public funding with too few checks on how the money is being spent. The Government wanted the new sector to flourish in competition with State provision and since the new system was put in place in 2012, it has. But later there were reports that some students were being registered just to get access to student loan money, then that colleges were recruiting en masse and then that the standard of academic work being produced was inadequate.

By private you mean places like London Metropolitan University?

http://www.theguardian.com/education/2012/oct/05/s...

[Derek Smith]

KingNothing said:

If you earn £21k, you pay back £30 a month. £30 a month on a debt in the five figures! £360 a year, I pay more than that in one month to pay back a bank loan, and my car payment, twice over. It's fk all in the grand scheme of things, as has been said, if they're too stupid to realise that the debt their "lumbering themselves with" is one of the best possible ways to borrow money, then that's their fault.

And so what anyways, what's wrong with the idea of actually having to pay back for the education and training that has enabled them to be earning enough to have to repay it back in the first place?

You miss the point.

But first, it's a loan. They are borrowing money. On top of that for many of the poorer, the total cost is far beyond the £28k. Further, many people struggle to make ends meet without having to pay back five figure sums. The interest rate is low. Wow! That's what was, many suggest, the cause of the recession. Here's lots of money at a cheap interest rate. Borrow, borrow, borrow. Forget good economic husbandry, just take the money.

However, the present system costs more than the one it replaces. So taxpayers are paying out money to fund a system that is inefficient and ineffective. Why should kids, who want to further their education, be charged money which, had they been charged one third less, would have cost me less? It's a pathetically stupid change. Even I could work out that it would cost more.

Having lots of graduates in STEM is good for the UK. I don't mind paying taxes to ensure that this country has sufficient STEM graduates to satisfy the future needs. I resent paying more money than I have to, as I am sure most sensible people would. This present system costs more. It should be binned. Or rather, it should never have been imposed.

My daughter, the quickest and most intelligent of my brood, decided against a university education after 6th form college. She did some calculations, weighing up the costs against likely benefits and even in those £3k pa days, she calculated that it wasn't worth it. She joined a big international company and within five years was head of a department and in charge of the south of England in her speciality.

Now let's look at her time in university. The first thing to consider was on-costs. There's living away from home, there's paying for her own upkeep, there's books, lots in her speciality, to buy. So living costs to be added. Then there was the year placement - those who came to her when she was in charge of her unit. So four years out of earning other than the jobs to pay her way through uni.

Then there's the money she would have earned in those four years. Let's say £20k as a (low) average - her potential was recognised early on and she was pushed forwards. Then there was the fact that those who came into her speciality straight from uni started at a low salary and remained under instruction virtually for two years, with an incremental increase halfway through. Some would drop out but those who stuck it would then come through to her unit, and the other three in the British mainland - I assume you see where this is going, but stick with me as my point seems to be missed by most.

She, by now, is earning a decent amount of money. She also gets share options, a car - every two years - and other benefits. First class travel on trains and occasionally aircraft, although she's not a big fan of internal flights.

So when a uni grad, from the same background as her so without massive subsidies from mum and dad, comes to the firm at the age of 22, they will be overseen by someone of 24 who is paid much more than them, has a clear career route, has connections - probably the most important aspect for her - and has savings, enough to buy a flat with <50% mortgage.

To get to her eventual position - she left and set up her own business - she was put in for a number of vocational course, some residential with expenses, travel and all costs paid. Most were hard work, especially those she had to complete at home, but she ended up much better qualified that any person coming out from uni.

She ignored my advice to opt for a university degree. I'm sure she would have ignored yours if you said that she could get a loan at very low rates. She has no debts other than her mortgage. She does not live on credit and she pays off her credit card before the end of the month. Oddly enough, she has a low credit rating. Not that it bothers her.

She admits to being disappointed that she did not go to uni but, as she said (at £3kpa) the benefits got nowhere near the costs.

Image that, not paying £350pcm for a bank loan. Instead using savings, which are paid back.

[fido]

Another Labour bribe obviously but an interesting anecdote I'd like to share. I've just sold about £300 (when new) worth of university text books (IT stuff) for a whole measly quid. That's right 1 f*g quid for almost new books - after advertising in the locals, Gumtree etc. So I just put in on eBay for £1. Nigerian chap just picked them up this morning - completely over the moon because he exports text books (which he often picks up for free) to Nigeria where there is a huge shortage and he can probably get a decent price for them. Leave the tuition at £9k - education is too cheap here - if you really want a degree then pay for it.

[IroningMan]

Derek Smith said:

You miss the point.

But first, it's a loan. They are borrowing money. On top of that for many of the poorer, the total cost is far beyond the £28k. Further, many people struggle to make ends meet without having to pay back five figure sums. The interest rate is low. Wow! That's what was, many suggest, the cause of the recession. Here's lots of money at a cheap interest rate. Borrow, borrow, borrow. Forget good economic husbandry, just take the money.

However, the present system costs more than the one it replaces. So taxpayers are paying out money to fund a system that is inefficient and ineffective. Why should kids, who want to further their education, be charged money which, had they been charged one third less, would have cost me less? It's a pathetically stupid change. Even I could work out that it would cost more.

Having lots of graduates in STEM is good for the UK. I don't mind paying taxes to ensure that this country has sufficient STEM graduates to satisfy the future needs. I resent paying more money than I have to, as I am sure most sensible people would. This present system costs more. It should be binned. Or rather, it should never have been imposed.

My daughter, the quickest and most intelligent of my brood, decided against a university education after 6th form college. She did some calculations, weighing up the costs against likely benefits and even in those £3k pa days, she calculated that it wasn't worth it. She joined a big international company and within five years was head of a department and in charge of the south of England in her speciality.

Now let's look at her time in university. The first thing to consider was on-costs. There's living away from home, there's paying for her own upkeep, there's books, lots in her speciality, to buy. So living costs to be added. Then there was the year placement - those who came to her when she was in charge of her unit. So four years out of earning other than the jobs to pay her way through uni.

Then there's the money she would have earned in those four years. Let's say £20k as a (low) average - her potential was recognised early on and she was pushed forwards. Then there was the fact that those who came into her speciality straight from uni started at a low salary and remained under instruction virtually for two years, with an incremental increase halfway through. Some would drop out but those who stuck it would then come through to her unit, and the other three in the British mainland - I assume you see where this is going, but stick with me as my point seems to be missed by most.

She, by now, is earning a decent amount of money. She also gets share options, a car - every two years - and other benefits. First class travel on trains and occasionally aircraft, although she's not a big fan of internal flights.

So when a uni grad, from the same background as her so without massive subsidies from mum and dad, comes to the firm at the age of 22, they will be overseen by someone of 24 who is paid much more than them, has a clear career route, has connections - probably the most important aspect for her - and has savings, enough to buy a flat with <50% mortgage.

To get to her eventual position - she left and set up her own business - she was put in for a number of vocational course, some residential with expenses, travel and all costs paid. Most were hard work, especially those she had to complete at home, but she ended up much better qualified that any person coming out from uni.

She ignored my advice to opt for a university degree. I'm sure she would have ignored yours if you said that she could get a loan at very low rates. She has no debts other than her mortgage. She does not live on credit and she pays off her credit card before the end of the month. Oddly enough, she has a low credit rating. Not that it bothers her.

She admits to being disappointed that she did not go to uni but, as she said (at £3kpa) the benefits got nowhere near the costs.

Image that, not paying £350pcm for a bank loan. Instead using savings, which are paid back.

All well and good, but Milliband isn't proposing to change the inefficient system, is he. He's just proposing to lower the effective cap.

[Crafty_]

IroningMan said:

All well and good, but Milliband isn't proposing to change the inefficient system, is he. He's just proposing to lower the effective cap.

Its worse than that. Those who earn lower incomes after university will never see any difference. Lets say they owe 30k coming out of uni currently, lets keep it simple and say they will owe 20k under Ed's scheme. It doesn't matter what the debt is as they will never repay all of it.

Now take the example of someone who earns well after coming out of uni, they will pay off the full amount owed, so instead of paying back 30k, they now only pay 20k. Allegedly they will receive the same level of education, the missing 10k being funded by a raid on your pension.

The middle earners after uni get saddled with a increased rate when paying back their loans too.

And what'll happen in future ? They could remove the extra subsidies to put the money in to some other scheme or plan, the universities get told that they won't get the extra funding and would have to continue what they do on less money. Maybe they'll up the rate on the loans across the board.. any number of things could happen once they start meddling.

Derek, I'm not quite sure what your point is - in your daughter's case has she ever been held back professionally due to a lack of a degree ? It would appear she has accomplished much in her career - would a degree make any difference ?

I chose not to go to university for a couple of reasons, but I've never felt I've been held back. I work with lots of people with PhDs/degrees in their field, but everyone is treated equally and skills/knowledge are appreciated regardless of background.

I think uni/a degree is more about the "life experience" than the bit of paper and funny hat you get at the end.

Edited by Crafty_ on Saturday 28th February 18:04

[Croutons]

I guess Miliband is basically a bit fked this time- can't hang his hat on a"better economy" when various bodies keep saying Osborne is actually doing OK, his solution to the NHS is just chuck (non existent) cash at it (largely accepted as not being the cure), Scotland has gone for him so what's he got left?

Well at least it is A policy, rather than a soundbite, and students who don't care about their pensions yet might buy it.

Quite why when we all know the state pension is in effect, time bound now, he wants to make saving in to any pension less attractive I still cant work out.

[wolves_wanderer]

Politicians in "bribing client vote" shocker. Whether it is the Tories paying too much for Pensioner Bonds or Labour cutting student fees, they are all lining up to give away the money we dont have.

[mjb1]

It's just another can kicking exercise, and also including an attempt to buy votes. The whole loan system is messed up because so many people never earn enough to pay it back, so a lot of it gets written off anyway. It's just coming home to roost from the early years of tuition fees, where the govt are slowly realising just how much is going to be written off. And that was when tuition fees were 1k/year. It's going to get a lot worse.

What are we teaching young people about financial management in all of this? Basically you need to get yourself into a mountain of debt or you've got no decent employment prospects. If everyone has a degree, then the value of it becomes pretty meaningless (over simplification, of course subject and institution have a baring).

I was lucky enough to go to university just before tuition fees came in. I worked through all the holidays (temping, anything I could get, often manual labour jobs). I lived frugally (as used to be the norm for student living), but I graduated with zero debts. These days students are conditioned to expect so much more, and to obtain it by borrowing money. I recently saw some new student accommodation that was just about to open - up market en suite halls basically. The cost - £250 per week!

In answer to Reverend Lovejoy's (sorry, Ed's) reduction to 6k, that's utterly pointless. It just means people will graduate with 40k of debt instead of 50k - a bloody great millstone either way. I suppose the govt will end up writing off a bit less in the long term though...

[brickwall]

mjb1 said:

In answer to Reverend Lovejoy's (sorry, Ed's) reduction to 6k, that's utterly pointless. It just means people will graduate with 40k of debt instead of 50k - a bloody great millstone either way. I suppose the govt will end up writing off a bit less in the long term though...

The maths is crazily complex. Under the Labour scheme:
- Graduates will continue to pay off their loan with repayments of 9% of gross income above £21k. (I.e. If you earn £22k, you pay £90 a year, or £7.50 a month)
- The change in the debt graduates leave university with therefore only affects how long a graduate makes repayments for, not the monthly amount of those repayments
- However, like the current scheme, any remaining debt is wiped off after 30 years. At present, the government expects only 60% of male graduates and 20% of female graduates will pay off their full debt within the 30-year window. Overall, the government expects to wipe off some ~45% of the total student debt.
- When you lower the debt per student, this means more students will pay of their debt within the 30 years. But a lot still won't - they don't benefit under this scheme.
- The government will face a lower debt write-off cost, but a much higher cost in providing lump sums to universities.

In short - who benefits: High-earning graduates.
Who faces no change: Lower-earning graduates. Lots of women (very few of those who take a career break or go part time repay their loan within the 30 year window).
Who loses: The taxpayer funding this (see pensions discussion above).

Edited by brickwall on Saturday 28th February 15:52

[Welshbeef]

brickwall said:

The maths is crazily complex. Under the Labour scheme:
- Graduates will continue to pay off their loan with repayments of 9% of gross income above £21k. (I.e. If you earn £22k, you pay £90 a year, or £7.50 a month)
- The change in the debt graduates leave university with therefore only affects how long a graduate makes repayments for, not the monthly amount of those repayments
- However, like the current scheme, any remaining debt is wiped off after 30 years. At present, the government expects only 60% of male graduates and 20% of female graduates will pay off their full debt within the 30-year window. Overall, the government expects to wipe off some ~45% of the total student debt.
- When you lower the debt per student, this means more students will pay of their debt within the 30 years. But a lot still won't - they don't benefit under this scheme.
- The government will face a lower debt write-off cost, but a much higher cost in providing lump sums to universities.

In short - who benefits: High-earning graduates.
Who faces no change: Lower-earning graduates. Lots of women (very few of those who take a career break or go part time repay their loan within the 30 year window).
Who loses: The taxpayer funding this (see pensions discussion above).

Edited by brickwall on Saturday 28th February 15:52

Firstly I totally disagree with the labour solution.

However I would say currently or under the labour solution the tax payer will be taking on the burden of the debt.

My solution no fees at all - but you have to pass a proper entry exam-- and have only courses like "Star Treck" or Klingon etc not funded/student pays and has to fund that themselves no with no Govt help.

We need to invest in the countries future infrastructure and also our children's future.

[Stevanos]

It is the same old Labour party.
Tax and spend!


They don't seem to get that the UK does not need all these "graduates".

It is just a vote buying exercise

[Mr Happy]

Not all loans will be written off - a lot of them could be around for a lot of years depending on the individual's circumstances.

Any students in England who first took a loan from the SLC up to and including the 2005/06 academic year will be repaying until either it is paid in full, or they hit 65 years old. Only then will it be cancelled.

Any students in England who first took a loan from the SLC within or after the 2006/07 academic year will repay for 25 years, upon which any existing balance will be cancelled.

http://www.studentloanrepayment.co.uk/portal/page?...

[MentalSarcasm]

Let's also not forget that a bunch of earlier loans were then sold off to Erudio. Judging by a lot of the posts on the MSE forums, there is some confusion over whether they're sticking to the original T&C's properly.

[Welshbeef]

But for ladies generally they will never come close to paying it off. And once at a point where they could recommence a career full time it would be far too late to ever pay it off and would have to be a consideration for the individual as to if its worth earning more to pay it off.

[mjb1]

Mr Happy said:

Not all loans will be written off - a lot of them could be around for a lot of years depending on the individual's circumstances.

Any students in England who first took a loan from the SLC up to and including the 2005/06 academic year will be repaying until either it is paid in full, or they hit 65 years old. Only then will it be cancelled.

Any students in England who first took a loan from the SLC within or after the 2006/07 academic year will repay for 25 years, upon which any existing balance will be cancelled.

http://www.studentloanrepayment.co.uk/portal/page?...

Exactly, that's a ticking time bomb. Back in 2005/6 tuition fees were capped at £3k, and ex students could be repaying up until 65. Now students are borrowing 3x that just for the fees, so a bigger amount, and it will be written off sooner (mid forties for most people).

[Derek Smith]

IroningMan said:

All well and good, but Milliband isn't proposing to change the inefficient system, is he. He's just proposing to lower the effective cap.

That's hardly relevant. I'm not being party political. They all make political decisions, with my money. The decision to up the charge was pathetic. Idiotic. I resent my money being wasted on silly posturing.

[anonymous-user]

I thought this piece: http://www.bbc.co.uk/news/education-31028467

hit the nail squarely on the head in explaining why Miliband's announcement was a complete airshot in terms of doing anything useful or helpful.

[Murph7355]

Derek Smith said:

....
She ignored my advice to opt for a university degree. I'm sure she would have ignored yours if you said that she could get a loan at very low rates. She has no debts other than her mortgage. She does not live on credit and she pays off her credit card before the end of the month. Oddly enough, she has a low credit rating. Not that it bothers her.

She admits to being disappointed that she did not go to uni but, as she said (at £3kpa) the benefits got nowhere near the costs.

I would argue a charging system has therefore done its job. And that ramping up the fees until more people address their choices properly would be sensible.

University is not for everyone. It's not even for all the bright people out there as your daughter clearly demonstrates.

Young adults MUST weigh up the costs against the benefits. And if they cannot see a positive outcome then they shouldn't go. Politicians trying to force %ages down the university route is stupid (but then what do we expect from politicians?).

The benefits to the tax payer in your daughter's situation are enormous. The proverbial "double whammy".

Of course this might not suit everyone. And your daughter may find limitations to the approach she has taken later in her career should, say, she want to (or be forced to) change jobs. But only time will tell on that front. As long as she remains pragmatic and accepts the choices as her own then everyone wins. And if 9k per year encourages more people to make adult decisions then the policy should be regarded a massive success. (If 12k per year would encourage even more, then turn the dial!).

[gregf40]

Makes me laugh how the headline is 'Labour To Cut Tuition Fees'.

No mention of the increased tax and costs - just the benefit that will be received by those who (generally) are not paying tax.

Same old Labour...

[Derek Smith]

Murph7355 said:

I would argue a charging system has therefore done its job. And that ramping up the fees until more people address their choices properly would be sensible.

My daughter's decision predated Cameron's trebling of fees. The point being that people like her, intelligent, thoughtful and with potential, are put off because they don't have daddy's income to support them. She took all costs into consideration (something sadly lacking in some of the posts here.) So poor people, with enough sense not to get into massive debt, don't go for a degree.

As we can see from the result of this move, kids are not put off because, as we have seen, they don't pay it back.

It costs more. It costs me more as my taxes pay for the shortfall. If that is the job that it was designed to do, then that's what it has done to perfection.

If you want to look back into the original thread, I predicted that it was cost more, and put in an explanation. I was largely derided, the suggestion being I was some lefty because I wanted STEM degrees funded. The only place where I was wrong was in predicting the amount of the shortfall.