[Quady]

(Original post by denislaw)
All you critics of the US university system and its costs might like to consider the below, which shows the average US undergraduate has $20000 of student debt on graduation. Less than a UK student!
http://www.visualeconomics.com/a-lif...ncial-journey/

Sucks to be them, it doesn't mean the UK system is 'good' though.

[Abir Ishtiaq]

(Original post by Indian_Prince)
I dont want to pay weekly for 30 years of my life :/

So don't go to University.
You'll be earning more with a degree than someone who doesn't have a degree.

[Indian_Prince]

(Original post by Abir Ishtiaq)
So don't go to University.
You'll be earning more with a degree than someone who doesn't have a degree.

actually im earning more than people straight out of uni get right now

oh and the whole dont go to uni thing is abit stupid, i think you dont understand what i meant by the statement, i will just be paying off what i owe quick rather than paying over 30 years

oh and well done for opening a dead thread which had its last post 4 weeks ago and mine was ages ago, really

[Quady]

(Original post by Abir Ishtiaq)
So don't go to University.
You'll be earning more with a degree than someone who doesn't have a degree.

Evidence?

ie comparing slaries of people with the same grades at A Level with and without a degree.

I don't have access to that, just average salaries with and without a degree - where multiple variables are different not just the degree element.

[Chrissyy]

these days a lot of people are looking to do apprenticeships or internships because they would get a job straight away and could even be paid more than people who have just come out of university with a degree, as they would be starting from scratch! plus they wouldn't have such a big debt. looking at the current economy, the graduate jobs market is really weak, so many graduates cant find jobs. in the news they say its going to be like a 'lost generation'. so i think this student loan really is a big deal.

[Abir Ishtiaq]

(Original post by Quady)
Evidence?

ie comparing slaries of people with the same grades at A Level with and without a degree.

I don't have access to that, just average salaries with and without a degree - where multiple variables are different not just the degree element.

(Original post by Indian_Prince)
actually im earning more than people straight out of uni get right now

oh and the whole dont go to uni thing is abit stupid, i think you dont understand what i meant by the statement, i will just be paying off what i owe quick rather than paying over 30 years

oh and well done for opening a dead thread which had its last post 4 weeks ago and mine was ages ago, really

Okay, having a degree doesn't garauntee more success, but it does increase the chances. Statistically people with degrees are more likely to earn more. But that's not always the case, it's still possible to be successful without a degree (Sir Alan Sugar, Richard Branson and so on..)

[Quady]

(Original post by Abir Ishtiaq)
Statistically people with degrees are more likely to earn more.

As I asked before, where are the like-for-like comparisons?

Unless you think everyone coming out of A-Levels would earn the same if uni wasn't an option...

[folksie]

The tread is a little old now but just wanted to reply to a couple of posts, for the sake of posterity. ^_^

(Original post by denislaw)
All you critics of the US university system and its costs might like to consider the below, which shows the average US undergraduate has $20000 of student debt on graduation. Less than a UK student!
http://www.visualeconomics.com/a-lif...ncial-journey/

The source on this is not particularly clear but I can only assume the figure of $20,000 appears lower because it includes students receiving considerable financial support from parents (as is quite common in the US). If you look at fees for undergraduate courses in the US you'll see they're far higher on average than the current UK rates.

(Original post by Chrissyy)
these days a lot of people are looking to do apprenticeships or internships because they would get a job straight away and could even be paid more than people who have just come out of university with a degree, as they would be starting from scratch! plus they wouldn't have such a big debt. looking at the current economy, the graduate jobs market is really weak, so many graduates cant find jobs. in the news they say its going to be like a 'lost generation'. so i think this student loan really is a big deal.

This is completely reasonable BUT I think it's important to bear in mind that your career is - if you're (un)lucky - going to span several decades. In this time, the economy will go up, down, and shake it all around. People do opt for 'safer' routes when the economy is struggling, but in my view this makes little sense, as within one or two years of graduating chances are things will have picked up again. Why commit yourself to a certain career path based on the current economy when for 95% of your working life the circumstances are going to be completely different?

[~carly~]

(Original post by folksie)
Hi all,

Edit: Additional note on mortgages
The question of 'how does the student debt affect my chance of a mortgage?' has come up a number of times in this thread with a number of people making false claims about it's effect. As some have correctly pointed out, the total debt is not an important factor for banks deciding to offer you a mortgage, what they care about is 'what is this person's disposable income going to be and hence how able are they to keep up with the mortgage repayments?'. If you have have an income of £35,000 with a student loan, that means you're paying £1,260 in fees a year and hence you are identical in the eyes of the bank to someone who has an income of £33,740 and no student loan. It doesn't matter whether the total debt owed is £15,000, £45,000 or £150,000, what matters is your monthly income after tax/loans.

I'm someone who's recently been through university, without any parental support, graduated with debt and am starting to repay it. I've also been working as a teacher and have therefore been seeing first-hand the impact of the fee changes on current A-level students. I think this gives me a better feel than most on how fees actually affect one's life - before, during and after uni.

I am getting very frustrated with news reports that combine inaccurate reporting and misleading comments that make tuition fees seem far more harmful than they really are. The irony is that most of the statements come from anti-fees people who want to 'protect' those from lower income groups but in fact their effect is to put people off going to uni which is doing FAR more harm than the loans themselves.

Based on my own experience I wanted to share a couple of my conclusions:

1) There is no reason for fees to prevent or put off anyone going to uni.
2) In almost all cases, the bonus to your earnings from uni will vastly outweigh any future repayments you have to make.
3) No matter what your post-uni earnings, repayments are never high enough to have a noticeable effect on your living standards, or affect things like mortgage payments.
4) Yes fees have gone up, but to be honest the size of your total debt actually isn’t that crucial, far more important is the terms under which you have to repay it (see below).

Anyway, I think it's helpful to explain my conclusions with a couple illustrations. First, a table that shows how student repayments work according to different levels of post-uni income. Second, a few examples of different types of student/graduate and how fees and debt would play out for them.

Here’s the chart, I hope it’s quite straight-forward it let’s you check ‘say I get a job paying x amount after uni, how will my repayments look’:



Here’s the different ‘case studies’:

Joe goes to university, finishes with £45k debt, ends up getting a job in his dad’s garage – earning a salary of £24k over the next 30 years.
Stats:
Starting debt: £45k
Weekly wage: £462
Weekly loan payment: £5
Total amount paid over 30 years: £8100

Betty goes to university, finishes with £45k debt, gets a job as a teacher – given her qualifications it’s not the best pay in the world, but hell, she’s helping out society and feels better for it, she earns an average of £32k over the next 30 years.
Stats:
Starting debt: £45k
Weekly wage: £615
Weekly payment: £19
Total amount paid over 30 years: £29,700

Sam goes to university, finishes with £45k debt, uses his degree to land a well-paid job in the city, earns an average of £90k over the next 30 years, then has a heart-attack because of stress and dies (but that’s another story).
Stats:
Starting debt: £45k
Weekly wage: £1731
Weekly payment: £119
Total amount paid over 30 years: All of it (taking account of the 3% interest, this would mean paying roughly £49,500 which would take Sam about 8 years).

I hope the above is useful. My intent with it is to allow people to actually get a feel of how uni fees and the corresponding debt actually affect the lives of those who go to uni. They aren't going to put an anchor round your neck after you graduate, they aren't going to make you live in poverty or have bailiffs at the door if you lose your job, they aren't going to stop you saving for a home or going on holidays. At the end of the day, that’s far more important than a bunch of bamboozling facts and figures about interest rates and fee levels that in my view give a very misleading view about how these loans work.

Addendum:
These are a couple small notes on how I’ve done the above calculations. They aren’t necessary to read unless you had a particular interest in how the calculations have been done.
1) I haven’t included inflation. This is because although loan interest is index-linked to RPI and this will make debt grow faster, it is reasonable to expect this is (at least) cancelled out by inflation in wages (e.g. teachers get paid an average of maybe £32k now but in 30 years time inflation will have increased this to maybe £58k. There is arguably an effect of ‘fiscal drag’ due to the fact as your wage is increased by inflation the % of your wage paid towards loans will increase but this will only happen if the government doesn’t increase the point at which repayments start in line with inflation.
2) The figures for annual/weekly salary are gross (i.e. before tax has been deducted). This also applies for the calculations of proportion of salary paid towards loan. So for example, Betty pays £19 out of a gross salary of £615, which translates to an after-tax salary of £463 (this still works out as 1/25th of her after-tax salary, so I don’t think it impacts the significance of the figures.

Well done, this is great. Shows people not to be so scared of applying now the fees have gone up...university is still worth it

[Miss Sweet]

(Original post by folksie)
Hi all,

Edit: Additional note on mortgages
The question of 'how does the student debt affect my chance of a mortgage?' has come up a number of times in this thread with a number of people making false claims about it's effect. As some have correctly pointed out, the total debt is not an important factor for banks deciding to offer you a mortgage, what they care about is 'what is this person's disposable income going to be and hence how able are they to keep up with the mortgage repayments?'. If you have have an income of £35,000 with a student loan, that means you're paying £1,260 in fees a year and hence you are identical in the eyes of the bank to someone who has an income of £33,740 and no student loan. It doesn't matter whether the total debt owed is £15,000, £45,000 or £150,000, what matters is your monthly income after tax/loans.

I'm someone who's recently been through university, without any parental support, graduated with debt and am starting to repay it. I've also been working as a teacher and have therefore been seeing first-hand the impact of the fee changes on current A-level students. I think this gives me a better feel than most on how fees actually affect one's life - before, during and after uni.

I am getting very frustrated with news reports that combine inaccurate reporting and misleading comments that make tuition fees seem far more harmful than they really are. The irony is that most of the statements come from anti-fees people who want to 'protect' those from lower income groups but in fact their effect is to put people off going to uni which is doing FAR more harm than the loans themselves.

Based on my own experience I wanted to share a couple of my conclusions:

1) There is no reason for fees to prevent or put off anyone going to uni.
2) In almost all cases, the bonus to your earnings from uni will vastly outweigh any future repayments you have to make.
3) No matter what your post-uni earnings, repayments are never high enough to have a noticeable effect on your living standards, or affect things like mortgage payments.
4) Yes fees have gone up, but to be honest the size of your total debt actually isn’t that crucial, far more important is the terms under which you have to repay it (see below).

Anyway, I think it's helpful to explain my conclusions with a couple illustrations. First, a table that shows how student repayments work according to different levels of post-uni income. Second, a few examples of different types of student/graduate and how fees and debt would play out for them.

Here’s the chart, I hope it’s quite straight-forward it let’s you check ‘say I get a job paying x amount after uni, how will my repayments look’:



Here’s the different ‘case studies’:

Joe goes to university, finishes with £45k debt, ends up getting a job in his dad’s garage – earning a salary of £24k over the next 30 years.
Stats:
Starting debt: £45k
Weekly wage: £462
Weekly loan payment: £5
Total amount paid over 30 years: £8100

Betty goes to university, finishes with £45k debt, gets a job as a teacher – given her qualifications it’s not the best pay in the world, but hell, she’s helping out society and feels better for it, she earns an average of £32k over the next 30 years.
Stats:
Starting debt: £45k
Weekly wage: £615
Weekly payment: £19
Total amount paid over 30 years: £29,700

Sam goes to university, finishes with £45k debt, uses his degree to land a well-paid job in the city, earns an average of £90k over the next 30 years, then has a heart-attack because of stress and dies (but that’s another story).
Stats:
Starting debt: £45k
Weekly wage: £1731
Weekly payment: £119
Total amount paid over 30 years: All of it (taking account of the 3% interest, this would mean paying roughly £49,500 which would take Sam about 8 years).

I hope the above is useful. My intent with it is to allow people to actually get a feel of how uni fees and the corresponding debt actually affect the lives of those who go to uni. They aren't going to put an anchor round your neck after you graduate, they aren't going to make you live in poverty or have bailiffs at the door if you lose your job, they aren't going to stop you saving for a home or going on holidays. At the end of the day, that’s far more important than a bunch of bamboozling facts and figures about interest rates and fee levels that in my view give a very misleading view about how these loans work.

Addendum:
These are a couple small notes on how I’ve done the above calculations. They aren’t necessary to read unless you had a particular interest in how the calculations have been done.
1) I haven’t included inflation. This is because although loan interest is index-linked to RPI and this will make debt grow faster, it is reasonable to expect this is (at least) cancelled out by inflation in wages (e.g. teachers get paid an average of maybe £32k now but in 30 years time inflation will have increased this to maybe £58k. There is arguably an effect of ‘fiscal drag’ due to the fact as your wage is increased by inflation the % of your wage paid towards loans will increase but this will only happen if the government doesn’t increase the point at which repayments start in line with inflation.
2) The figures for annual/weekly salary are gross (i.e. before tax has been deducted). This also applies for the calculations of proportion of salary paid towards loan. So for example, Betty pays £19 out of a gross salary of £615, which translates to an after-tax salary of £463 (this still works out as 1/25th of her after-tax salary, so I don’t think it impacts the significance of the figures.

Cheeers mate!
well said...

[Ree69]

Does anyone know the interest rates that will take place from this September?!

It's inflation plus 3%, per year, starting from the year when the loan is taken out.

So, let's say inflation will average around 4% over the next few years. That's an interest rate of 7%. (per annum)

£9k tuition fees, plus around £3.5 maintenance loan. That's £12.5 a year (for four years, in my case).

So 1.07(12.5 + 25 + 37.5 + 50) - 125 = £8.75k of interest immediately after graduation.

Suppose I get a job after graduation, of a starting salary of around £24k. So I'll be paying an annual amount of £270 with still 7% interest rate on what's left of the loan. This will continue to be the case for everyone providing graduates get an income of £21k+ immediately upon graduation (perhaps on unfair assumption, given the current economic climate).

So, let's say over the next 10 years the average debt left will be about £45k (obviously this will depend on the rate of the income increase, and this is where extrapolating so far down the line could become somewhat inaccurate).

(10 x 1.07 x £45k) - £450k = £31.5k of interest

So this means, roughly speaking, I could encounter a total of £40.25k of interest (and growing) within the next 14 years that needs to be paid off.

How can people not be completely pissed off about this?!

[Intriguing Alias]

(Original post by Ree69)
Does anyone know the interest rates that will take place from this September?!

It's inflation plus 3%, per year, starting from the year when the loan is taken out.

So, let's say inflation will average around 4% over the next few years. That's an interest rate of 7%. (per annum)

£9k tuition fees, plus around £3.5 maintenance loan. That's £12.5 a year (for four years, in my case).

So 1.07(12.5 + 25 + 37.5 + 50) - 125 = £8.75k of interest immediately after graduation.

Suppose I get a job after graduation, of a starting salary of around £24k. So I'll be paying an annual amount of £270 with still 7% interest rate on what's left of the loan. This will continue to be the case for everyone providing graduates get an income of £21k+ immediately upon graduation (perhaps on unfair assumption, given the current economic climate).

So, let's say over the next 10 years the average debt left will be about £45k (obviously this will depend on the rate of the income increase, and this is where extrapolating so far down the line could become somewhat inaccurate).

(10 x 1.07 x £45k) - £450k = £31.5k of interest

So this means, roughly speaking, I could encounter a total of £40.25k of interest (and growing) within the next 14 years that needs to be paid off.

How can people not be completely pissed off about this?!

You can't really count inflation in my opinion. It just makes the number bigger but doesn't change the value. My point being that it is not 40k or whatever in today's money and the value of gbp currently.

[Ree69]

(Original post by hassi94)
You can't really count inflation in my opinion. It just makes the number bigger but doesn't change the value. My point being that it is not 40k or whatever in today's money and the value of gbp currently.

Compare here (prior to this year) and here. (from this year onwards)

The interest rate is (was, I should say) 1.5% (someone told me it was a bit higher, but anyway ) with no additional consideration for inflation.

Do you not think the jump in interest rate from 1.5% to 7% is ridiculously unjustified? Considering the fact we're paying about 3 times as much through the course of our lives anyway.

[CurlyBen]

(Original post by Ree69)
Compare here (prior to this year) and here. (from this year onwards)

The interest rate is (was, I should say) 1.5% (someone told me it was a bit higher, but anyway ) with no additional consideration for inflation.

Do you not think the jump in interest rate from 1.5% to 7% is ridiculously unjustified? Considering the fact we're paying about 3 times as much through the course of our lives anyway.

The problem is there are now far more university students (and universities) and they have to be funded somehow, and the additional degrees awarded don't bring in enough revenue to fund themselves. Would you feel better if you thought of it not as a loan, but a graduate tax, levied for 30 years? That's what it will effectively be for most.
Oh and you seem to have misunderstood the new interest scheme - you'd only be paying 7% if you're earning over £41k. If you're earning less than £21k it's inflation only - better than the current system. In fact, most will be better off under the new system than the old, until they're into their 40s at least.

[italienmoose]

(Original post by folksie)
Hi all,
Sam goes to university, finishes with £45k debt, uses his degree to land a well-paid job in the city, earns an average of £90k over the next 30 years, then has a heart-attack because of stress and dies (but that’s another story).
Stats:
Starting debt: £45k
Weekly wage: £1731
Weekly payment: £119
Total amount paid over 30 years: All of it (taking account of the 3% interest, this would mean paying roughly £49,500 which would take Sam about 8 years).

I'm afraid your model doesn't work for this scenario. In fact, because you only take into account average earnings over a lifetime and not salary progression you will underestimate debt due to interest; therefore, if you earn enough to repay your loan then you will pay back rather a bit more than you borrowed, and probably a lot more than this suggests.

[Valentas]

Well, I did similar calculations as Ree69 and it is really terrifying. You know what you all truly don't see?

The interest is guaranteed for you 100% while salary progression is not.

[CurlyBen]

(Original post by Valentas)
Well, I did similar calculations as Ree69 and it is really terrifying. You know what you all truly don't see?

The interest is guaranteed for you 100% while salary progression is not.

But if your salary doesn't increase, neither do your payments...

[Valentas]

No, but still my loan grows. Government can propose whatever they want about repayment - 30 years and you are free but it is easy to change.... I don't say that this must put off people from uni. Also people should not put a lot of hopes into some degrees like photography and expect to be satisfied with what they receive in-exchange.

However, I cannot comprehend one thing: why all degrees are on the same cost. How can you compare the price needed to educate medical student with another student who studies English Literature? :O I don't think that books costs 9k a year lol. This fee system is quite illogical. Also in my country one can study medicine for 2.5 k a year and we produce good doctors. I understand that standard of living is different but hell fee system in the UK is still dumb...

Engineers, scientists, doctors may need that equipment but how business student can compare with them? I mean the course costs...

[TheSelfAcknowleged]

What happens to the surplus of my maintenance loan?
e.g. if I'm entitled to £X and I only need £X-£300

What happens to the £300?
Should I use it for eating/food or if I have the opportunity to get it from relatives, would it be wise to accept any money provided to me? What's more financially better? It's a low interest (hopefully) on the £300 if I spend it, or it's taken from others? What's a better choice, if you get what I mean?

If I don't spend it, what happens to the £300...does it get charged or anything?

[CurlyBen]

(Original post by Valentas)
No, but still my loan grows. Government can propose whatever they want about repayment - 30 years and you are free but it is easy to change....

Not retrospectively they can't.

I don't say that this must put off people from uni. Also people should not put a lot of hopes into some degrees like photography and expect to be satisfied with what they receive in-exchange.

It's maybe not a bad thing to make people think a little about what they expect to get from a degree. If you want to study something simply for the love of the subject that's fine, but you should have to contribute something to the cost. If you're doing it to increase your earning potential, then you have to decide if the investment is worth the return.

However, I cannot comprehend one thing: why all degrees are on the same cost. How can you compare the price needed to educate medical student with another student who studies English Literature? :O I don't think that books costs 9k a year lol. This fee system is quite illogical. Also in my country one can study medicine for 2.5 k a year and we produce good doctors. I understand that standard of living is different but hell fee system in the UK is still dumb...

Engineers, scientists, doctors may need that equipment but how business student can compare with them? I mean the course costs...

They're not the same cost to international students - more resource hungry courses do cost more. I think the level of government funding varies as well, it's simply the student contributions that are at the same level. You've not said which country you're from, but I'm highly sceptical that it only costs £2.5k a year to educate a doctor there. That may be the cost the student pays, but the government will be subsidising the full costs. 15 years ago you could study to be a doctor at no cost in the UK, but that doesn't mean the education didn't cost anything.