Student loan repayment rates an 'unsustainable burden'..
Discussion
BBC said:
More than 120 MPs and peers have asked the chancellor to carry out an "urgent review" of the student loan repayment system.
An open letter coordinated by the campaign group Rethink Repayment says the current set-up places an "unsustainable burden on the next generation of workers".
Link: https://www.bbc.co.uk/news/articles/c5yed780epqoAn open letter coordinated by the campaign group Rethink Repayment says the current set-up places an "unsustainable burden on the next generation of workers".
richhead said:
nobody forced them to borrow the money, and we could all see years ago that a degree was worthless for many.
badly advised maybe but nothing more.
Under 18s are not able to get any other credit, no other lender would be allowed to sell in the way student loans are sold and no other credit agreement can be changed at the whim of the lender. If it were a commercial lender the FCA would hammer them. badly advised maybe but nothing more.
DeadShed said:
Under 18s are not able to get any other credit, no other lender would be allowed to sell in the way student loans are sold and no other credit agreement can be changed at the whim of the lender. If it were a commercial lender the FCA would hammer them.
How were the agreements changed after they had commenced? I know that some rate caps were introduced to,protect students and limit repayments, but that’s hardly a bad thing for the students!.Edited by Sport_Turismo_GTS on Wednesday 5th August 22:48
Sport_Turismo_GTS said:
DeadShed said:
Under 18s are not able to get any other credit, no other lender would be allowed to sell in the way student loans are sold and no other credit agreement can be changed at the whim of the lender. If it were a commercial lender the FCA would hammer them.
How were the agreements changed after they had commenced? I know that some rate caps were introduced to,protect students and limit repayments, but that s hardly a bad thing for the students!.Edited by Sport_Turismo_GTS on Wednesday 5th August 22:48
My Daughter did not want to go to University. She wanted to start work without any debt. She has today been offered a job with a potential £35k package. She is not quite 20. She has her own car which she bought herself and £8k in her savings account. She is already started to invest in shares.
Far smarter than I was at her age….I did go to University because I was looking at being a Kid for as long as possible before I had to grow up.
Perhaps a sad upside of these awful loans and crap universities is that more sensible people will shun them for the charlatan’s that they are.
Far smarter than I was at her age….I did go to University because I was looking at being a Kid for as long as possible before I had to grow up.
Perhaps a sad upside of these awful loans and crap universities is that more sensible people will shun them for the charlatan’s that they are.
Foss62 said:
Sport_Turismo_GTS said:
DeadShed said:
Under 18s are not able to get any other credit, no other lender would be allowed to sell in the way student loans are sold and no other credit agreement can be changed at the whim of the lender. If it were a commercial lender the FCA would hammer them.
How were the agreements changed after they had commenced? I know that some rate caps were introduced to,protect students and limit repayments, but that s hardly a bad thing for the students!.Edited by Sport_Turismo_GTS on Wednesday 5th August 22:48
Interest rates.
Those particularly hit is the 2012-23 cohort. (Plan 2).
Earn below the threshold and the loan interest rate is capped at RPI (3%)
Earn above the threshold and the loan interest *increases* to RPI + 3%. At which point the loan’s value exceeds the repayments and starts growing. 6% per annum.
Now scale that forward over the 25-40 year term depending on plan.
You will have to repaying exorbitant amounts to get ahead of the schedule. I could get the calculator out to show the numbers but effectively if you exceed the threshold and get hit by the RPI + 3% on say the £55-70k of the loan value you will probably never pain the loan off despite a decent salary. Or at least at the cost of saving for a house. You just hope it will be wiped out once you hit 65 years old…
I can quite understand the rage.
They changed the system to effectively make it a graduate tax, but just didn't call it that. In that it was intended most would never pay it off and so would be paying an additional tax on income over the threshold.
If the rates were explained to students then it was something they signed up for.
What would have been preferable in my view is to end the obsession with sending so many to university.
If the rates were explained to students then it was something they signed up for.
What would have been preferable in my view is to end the obsession with sending so many to university.
Ridgemont said:
Foss62 said:
Sport_Turismo_GTS said:
DeadShed said:
Under 18s are not able to get any other credit, no other lender would be allowed to sell in the way student loans are sold and no other credit agreement can be changed at the whim of the lender. If it were a commercial lender the FCA would hammer them.
How were the agreements changed after they had commenced? I know that some rate caps were introduced to,protect students and limit repayments, but that s hardly a bad thing for the students!.Edited by Sport_Turismo_GTS on Wednesday 5th August 22:48
Interest rates.
Those particularly hit is the 2012-23 cohort. (Plan 2).
Earn below the threshold and the loan interest rate is capped at RPI (3%)
Earn above the threshold and the loan interest *increases* to RPI + 3%. At which point the loan s value exceeds the repayments and starts growing. 6% per annum.
Now scale that forward over the 25-40 year term depending on plan.
You will have to repaying exorbitant amounts to get ahead of the schedule. I could get the calculator out to show the numbers but effectively if you exceed the threshold and get hit by the RPI + 3% on say the £55-70k of the loan value you will probably never pain the loan off despite a decent salary. Or at least at the cost of saving for a house. You just hope it will be wiped out once you hit 65 years old
I can quite understand the rage.
Additionally it uses RPI, when most other things changed to the lower CPI years ago. If the government want to treat it like a tax then they have to take the good with the bad. If they want to treat it as a loan then they need to be fairer. At the moment they want the best of both worlds.
richhead said:
nobody forced them to borrow the money, and we could all see years ago that a degree was worthless for many.
badly advised maybe but nothing more.
Everybody in my cohort, with an IQ of more than about 85, was told by every adult they trusted/respected to go to university, and that the loan repayments would be small to the point of negligible. No other post-school options were presented, suggested or explored. badly advised maybe but nothing more.
In terms of miss-selling, it ticks about every box on the form: add in that those with wealthy parents can opt-out the tax: either through private borrowing or drawing on assets, and the situation becomes even more outrageous.
Now, anyone with a plan 2 loan has to be well into the higher rate tax bracket before they begin to cover the interest - and you think this is fair?
To simplify: Schools sold an additional 9% tax for your working life to poor 16 year olds on the premise that you wouldn't be able to secure a half decent wage without it. They did not suggest other paths forward, or present _real world_ examples of the total cost of the loan.
Since then, the interest rates have mooned, the repayment threshold has not increased with inflation (despite the fact that the interest has insured the value of the loan has remained "with inflation").
But sure, blame the 16 year old: after all, they should have _known_ that their teachers were, in effect, lying to them.
Edited by Matthen on Thursday 6th August 14:52
richhead said:
nobody forced them to borrow the money, and we could all see years ago that a degree was worthless for many.
badly advised maybe but nothing more.
I'm amazed by this reply. I can only assume you've not done an ounce of research on the subject as I think students have been royally screwed over. badly advised maybe but nothing more.
As others say, they're an easy target and are now facing decades of paying it off.
Many are finding the interest rate and their level of earnings, means they actually owe more despite paying thousands per yeAr
The government also use RPI to calculate the payments which is a higher payment than CPI (which they use for their usual calculations)
Here in Australia, we have a friend who is part of the student loan problem.
She went to university (Brunel I think) in the early 2000s, graduated but then decided to do something else so became a veterinary nurse. She earned just about enough to trigger repayments but after a few years her and her husband decided to move to Australia.
Due to the difference in pay (england Vs. Australia) for his line of work, she's not worked a day since. She's not obliged to make another repayment since she's now not earning at all, and is outside the UK.
She can't be the only one in that position.
She went to university (Brunel I think) in the early 2000s, graduated but then decided to do something else so became a veterinary nurse. She earned just about enough to trigger repayments but after a few years her and her husband decided to move to Australia.
Due to the difference in pay (england Vs. Australia) for his line of work, she's not worked a day since. She's not obliged to make another repayment since she's now not earning at all, and is outside the UK.
She can't be the only one in that position.
redrabbit29 said:
richhead said:
nobody forced them to borrow the money, and we could all see years ago that a degree was worthless for many.
badly advised maybe but nothing more.
I'm amazed by this reply. I can only assume you've not done an ounce of research on the subject as I think students have been royally screwed over. badly advised maybe but nothing more.
As others say, they're an easy target and are now facing decades of paying it off.
Many are finding the interest rate and their level of earnings, means they actually owe more despite paying thousands per yeAr
The government also use RPI to calculate the payments which is a higher payment than CPI (which they use for their usual calculations)
Dynion Araf Uchaf said:
I quite like Rory Sutherlands view on this.
Instead of mandating that the loan is used for university tuition, an 18 year old can access the same finance and spend it on what they want - like starting a business or buying a house (deposit) or university if you want to.
I didn't know that was Sutherland's view, but it's something I've thought of for a long time (speaking as someone who did have access to student loans in the relatively early days of tuition fees). Instead of mandating that the loan is used for university tuition, an 18 year old can access the same finance and spend it on what they want - like starting a business or buying a house (deposit) or university if you want to.
If university tuition must have fees which require loans or a graduate tax, and for which purposes neither the loans nor the tax bear any real resemblance to their 'real' equivalents - my student loan isn't classed as debt or credit like a business loan, mortgage or credit cards, then why not make that available as a one-off thing for everyone to start their adult life with?
HenryV1415 said:
My Daughter did not want to go to University. She wanted to start work without any debt. She has today been offered a job with a potential £35k package. She is not quite 20. She has her own car which she bought herself and £8k in her savings account. She is already started to invest in shares.
Far smarter than I was at her age .I did go to University because I was looking at being a Kid for as long as possible before I had to grow up.
Perhaps a sad upside of these awful loans and crap universities is that more sensible people will shun them for the charlatan s that they are.
Pleased for your daughter, but don’t forget that some professions require degrees. Next time you need a doctor, accountant or lawyer be grateful that other youngsters (and their parents in many cases) still see the value of a university education and degree. Far smarter than I was at her age .I did go to University because I was looking at being a Kid for as long as possible before I had to grow up.
Perhaps a sad upside of these awful loans and crap universities is that more sensible people will shun them for the charlatan s that they are.
S600BSB said:
Pleased for your daughter, but don t forget that some professions require degrees. Next time you need a doctor, accountant or lawyer be grateful that other youngsters (and their parents in many cases) still see the value of a university education and degree.
Accountancy is a great example of a profession that offers entry via an apprenticeship at 18. A number choosing the AAT route now. Law could probably do something similar. Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff