[liam1994]

(Original post by py0alb)
Read the above post. You are all confused about how the system works. This is a progressive tax, it is not a debt by any meaningful sense of the word.

Could you explain how the interest works then please, because it isn't making much sense.

[Derfel]

(Original post by py0alb)
But £75 a month is considerably less than graduates on that salary have to pay back on their loans under the current system. You appear to be complaining about a decrease in repayments.

Or are you saying that all universities should be completely free? But then in the next sentence you complain about the burden to the tax payer because of people not paying the money...

I'm not sure I see your point at all, you seem to be contradicting yourself.

Your monthly repayment amount will be £ 75.00 from 01-APR-12 to 30-APR-28 a total of 193 months.
The last month of this repayment schedule being a final repayment of £ 17.65
The total amount estimated to be repaid is £ 14417.65

According to the Student Finance website, the payment remain the same.

Seems I'll have to repeat myself, you're saying that eveyrone should take the loan and go to uni, no need to think about it, just do it. I'm saying that people should think about it carefully now, more so than usual due to the fee icnrease.

[xmarilynx]

(Original post by TitanicTeutonicPhil)
... oooor you could learn a language, study in continental Europe, broaden your horizon, enjoy higher quality of life, and pay absolutely nothing for your higher education

This, I have no idea why more people don't

[Wick3d]

This is a great post, thanks for clearing things up.

[nuodai]

(Original post by py0alb)
I don't understand the reasoning here. If they couldn't afford to pay for uni up-front in the first place, how would not being allowed to pay it all off a few years later affect them at all, unless they won the lottery in the mean time.

Suppose student R comes from a rich background and student P comes from a poor background. R gets £45k from his parents to go to university and student P borrows £45k from Student Finance. Students R and P both get lucky, graduating with starting salaries of £50k/year.

Student R pays back the £45k to his parents, and has paid £45k. [I should note, a few of my friends' parents pay their fees at the moment, and none of them are expected to pay it back.]

Student P either (i) pays back £45k+interest in monthly installments for the next 30 years, or (ii) pays back £45k+penalty early (say 5 years after graduation).

So despite going into jobs with the same salary, the student from the poor background either has to pay 30 years' worth of interest (above inflation), or an early repayment penalty, on top of the amount that the student from the rich background has to pay back (in the unlikely event that they have to pay it back at all).

Is this fair? (Or, if we remove the concept of fairness -- is this left-wing?)

Suppose instead there is a progressive graduate tax. All graduates have to pay a specific amount of money for a specific amount of time from their salary (details irrelevant since they have the same salary). Then student P perhaps borrows some money for living costs from his parents and student R needs a maintenance loan (or grant/bursary if they're lucky), but they pay exactly the same for their tuition fees.

The differences in the systems should be clear.

The tuition fee increases aren't crippling, and it's certainly true that some people will pay back less per-month than they would now; but the fee increase enforces a system where a student from a poor background will be tens of thousands of pounds worse-off than a student from a rich background, compared with the current system (which I also don't think is particularly fair). And that would go towards a nice pension, or a few nice holidays, or a house deposit -- it's a significant chunk of money. My objections are primarily towards funding cuts to universities, but the tuition fee hike sort of adds salt to the wound considering that there are fairer ways of charging students more.

(Original post by py0alb)
They have their best interests at heart - and their best interests are in making the most accurate assessment of your financial situation and acting accordingly. Hence even if you are worried about this supposed "debt" you think you are in, they won't be, because they will understand the system better.

I'm not trying to argue with you for the sake of arguing with you, you know. Like I say, if this is the case, then great.

[Indian_Prince]

(Original post by NGC773)
Dont get a degree then

thats the dumbest advice anyone could ever give from you..... id rather pay it all off within 5 years, rather than through out my life, its common sense.....

[py0alb]

(Original post by liam1994)
Could you explain how the interest works then please, because it isn't making much sense.

The interest increases the overall size of the debt. But unless you're going to be earning such huge amounts of money that all this is basically irrelevent, you will never come close to paying off the original sum anyway, so that extra debt will never affect you.

(Original post by Derfel)
According to the Student Finance website, the payment remain the same.

Seems I'll have to repeat myself, you're saying that eveyrone should take the loan and go to uni, no need to think about it, just do it. I'm saying that people should think about it carefully now, more so than usual due to the fee icnrease.

No, I'm simply saying its nothing to be irrationally scared of, because its not a real debt; and in 99% of cases, if you were planning on doing a degree under the old system, then you will be better off under this system.

You still need to make the same calculation: figure out how much better your life will be and how much more money you will make if you get the job you want to do and need a degree for, then ask yourself, is that worth paying £x a week for for the next 30 years.

So lets say I want a £40,000 job, for which I need a degree. My non degree option pays me £30,000.

Every year I earn an extra £10,000, but lose £1,600 in fees. So my net profit from having gone to uni is £8,400 a year. To say nothing of my increased life satisfaction from doing this more interesting job. In this situation, you would be an abject fool to decide not to go to uni because of the fees.

Basically, if having a degree is going to increase your expected annual salary by just 10%, then its the correct investment decision.

[Phil1541]

Some comments on this thread are just...

The Student loan is not seen as 'real' debt by banks so does not affect your credit rating in any shape or form.

You will still be just as liable to take out a loan as if you did not have the debt

You only pay back once you earn above £21,000 a year and the proportion you pay back is so small that it is 100% affordable... to think otherwise is just stupid...

The majority of people protesting against the fee rise have no idea how it works/ how little it will affect your future life... surely you can afford to pay back a tiny proportion of your income to the goverment for getting you a good degree which will ultimately lead you to a decent paying job if you're paying back the fee's?

py0alb has got it 100% correct when he says it should be seen as a progressive tax because that what it is essentially... you're paying back the goverment a small proportion of your income for financing your education.

[py0alb]

(Original post by nuodai)
Suppose student R comes from a rich background and student P comes from a poor background. R gets £45k from his parents to go to university and student P borrows £45k from Student Finance. Students R and P both get lucky, graduating with starting salaries of £50k/year.

Student R pays back the £45k to his parents, and has paid £45k. [I should note, a few of my friends' parents pay their fees at the moment, and none of them are expected to pay it back.]

Student P either (i) pays back £45k+interest in monthly installments for the next 30 years, or (ii) pays back £45k+penalty early (say 5 years after graduation).

So despite going into jobs with the same salary, the student from the poor background either has to pay 30 years' worth of interest (above inflation), or an early repayment penalty, on top of the amount that the student from the rich background has to pay back (in the unlikely event that they have to pay it back at all).

Is this fair? (Or, if we remove the concept of fairness -- is this left-wing?)

Suppose instead there is a progressive graduate tax. All graduates have to pay a specific amount of money for a specific amount of time from their salary (details irrelevant since they have the same salary). Then student P perhaps borrows some money for living costs from his parents and student R needs a maintenance loan (or grant/bursary if they're lucky), but they pay exactly the same for their tuition fees.

The differences in the systems should be clear.
.

Ah, I see your confusion. You're not allowed to pay for uni upfront under the new scheme, so student R simply paying back his parents is not an option. He would still owe the money to the government.

The very situation you are complaining about is the situation this rule is in place to prevent happening.

[steve2005]

(Original post by Derfel)
Your "question" was why I was saying it's a burden when you only need to pay it back when you earn more than £21,000, I retorted that the aim of University was to achieve a degree in order to earn MORE than £21,000 ergo you have to pay it back.

I am puzzled, why you think a "Student loan is a huge pain. " and although you have posted two replies you have not answered the point.

[folksie]

(Original post by Derfel)
Let's say your graduate from University in 2015 and somehow find a job that pays you £25,000 a year and you have a student loan of £45,000.

According to this website your student loan repayment is £75 a month. According to the Student finance website the monthly payments will be £75, you can check this here. (note this is for courses starting in 2012)

It may not seem as much, but not only will you NOT be able to pay back the FULL amount (a burden on other tax payers) but it's £75 a month written off, it may not seem as much, but throw in everything else and it's a nice little amount which would be better off in your bank account.

The figures above are based on the *old* repayment threshold of £15,000 and as such are out of date and will not apply. The new repayment threshold is £21,000 which means you start paying 9% towards student loans not on total income, but rather on the portion of your income that is above £21,000. e.g. If you earn £25,000 you pay 9% of £4,000 which is £360 a year or £30 a month!

My intention with the original post was to lay it out as plainly and informatively as possible, so I'm loathe to go into a ton of detail of the mechanics - I must say py0alb's posts relieve that burden as they are very accurate and respond to and correct some of the more misleading replies very well. I would like to reiterate a couple of points which I feel are crucial.

A rose is a rose is a rose, but debt is not debt is not debt. - In precise terms, when you borrow for uni you are getting a loan with income-contingent repayments. Debts such as credit cards, overdrafts, mortgages should, correctly, be treated with caution, but student loans are a whole world apart. This is because:

• You never have to pay more than a small fraction of your current income.
• If you are unemployed, or on low to medium income, you don't have to pay anything until you find work again.
• The loan is written off after 30 years.
• Following from the three points above, you can never have a situation where it becomes difficult to repay the loan, or where loan repayments prevent you from achieving something you could otherwise achieve with your current income (e.g. getting a mortgage, taking a break from work, have kids, showering yourself with nice treats etc. etc.
  

In light of the above, it makes no sense to talk about student loan debt as you would any other debt. Yes other types of debt do 'hang over your head' but student loan does not.

I think py0alb made a good point: can anyone provide a case study where the decision to get a student loan has any sort of noticeable impact on a persons quality of life?

[Sagacious]

Great post! I laugh when people say that their not going to university because of the debt they would get into.

Aslong as you don't take a silly course at University, then you're guarenteed to get a better job than most of the people who don't go.

Also, if your that passionate about your course/studies you wouldn't let a small debt put you off doing it.

For me, they could raise the debt to £30,000 a year and I would still go.

[anonstudent1]

(Original post by nuodai)
Also the penalties for early repayment are unforgivable.

Could you explain what the penalties for early repayment are please?

[Derfel]

(Original post by py0alb)
No, I'm simply saying its nothing to be irrationally scared of, because its not a real debt; and in 99% of cases, if you were planning on doing a degree under the old system, then you will be better off under this system.

According to your thread title, the loan shouldn't "worry you one little bit", you're implying that people should take the loan and forget about it. It may not be like other debts, but it's still a debt nonetheless, At £25,000 the monthly repayments will be £75, not the £30 that your table shows. At £40,000 the monthly repayments are £188, not the £142.50 your table shows. Once again, this is taken directly from the Student Finance website which can be located here.

Scratch the above, seems the calculator is based off pre-2012 fees.

(Original post by py0alb)
You still need to make the same calculation: figure out how much better your life will be and how much more money you will make if you get the job you want to do and need a degree for, then ask yourself, is that worth paying £x a week for for the next 30 years.

So lets say I want a £40,000 job, for which I need a degree. My non degree option pays me £30,000.

Every year I earn an extra £10,000, but lose £1,600 in fees. So my net profit from having gone to uni is £8,400 a year. To say nothing of my increased life satisfaction from doing this more interesting job. In this situation, you would be an abject fool to decide not to go to uni because of the fees.

Basically, if having a degree is going to increase your expected annual salary by just 10%, then its the correct investment decision.

While I agree that the odds of getting a higher paying job increase with a degree, going straight into Uni and coming out with a degree is not the best idea. It's best to take 2-3 years (or more) off, find a job in the sector in which you wish to take your degree, finding an apprenticeship is even better, not only would you have a company sponsor you through Uni, but you'll gain experience.

This will put you a cut above the rest of the people who graduate with you, sure you may be 2-3 years older than everyone else, but when you finish the course you'll have a degree AS WELL as 2-3 years experience opposed to someone with just a degree, who's a company going to hire? Not only that, but you'll have been earning an income over the years before going into a course, so you student loan will be smaller.

Telling people to take the loan and not worry about it is what I'm arguing against in this thread.

[dsmtrst]

You can work the statistics any way you want but most students will pay back the full loan over the 30 years. £45000 / 30 = £1500 a year on average which according to your table is a salary of about £37000 and most graduates should average this salary over the 30 years hence they'll pay it all back.

[al45ta1r]

(Original post by Aisha~~)
Well yes, for courses available in English that's fine. But the way he worded it implied the course would be taken in native language, which for someone like me who never did a bit of language past GCSE, is tricky business

That is why he said learn another one. Which is useful to do anyway, whether you want to study abroad or not. If you don't bother, don't complain about not being able to study elsewhere - you makes your choices. Perhaps in future it might motivate people to learn languages so they can avoid the fees

[Tenbinza]

I'm just gonna throw this out there - while this is great for everyone as we don't have to pay too much per week, it's gonna leave the government in a sorry state if most people only pay back less than half of their loan.

[RosyAurora]

Our school brought in some special finance man to tell us all of this, but I'm glad you have illustrated it I never quite understood the 'OMG IT'S £9000 A YEAR' panic, since most people won't even pay that off over 30 years, and after that the government lets you off the debt. Honestly, when people get proper loans in the future, they'll wish they had another student loan... Money will never come so easy.

[py0alb]

(Original post by Tenbinza)
I'm just gonna throw this out there - while this is great for everyone as we don't have to pay too much per week, it's gonna leave the government in a sorry state if most people only pay back less than half of their loan.

They accounted for that in their calculations - hence the reason the total sum is so high. The people who become bankers on £100,000 effectively pay for their degree and for the degree of someone who did nursing or something low paid.

[Arekkusu]

(Original post by nuodai)
Your post is very informative, thanks for that. But it doesn't show why the debt shouldn't worry you; at least, my objections are not based on the size of the monthly repayments -- my main issue with this is that it is debt. The repayments aren't horrendous, as you say, but the repayments are essentially like a tax, despite the debt being a debt. What kind of impact will this have on people seeking a mortgage? Or a loan to start a business? (And this is without mentioning the principles of it -- it works on the idea that people go to university solely so that they can get a graduate job.)

Also the penalties for early repayment are unforgivable.

The reason the debt is managed like a graduate tax is so graduates can get mortgages and loans nevertheless... what are you on about?

Also, whoever says the debt gets bigger every year you don't pay it off, who cares, because the rate never goes up and you stop paying after 30 years. Even for those on low incomes, the new fees are a lot better because of the high threshold.

The new fee system is much, much, much better than the old one.