[cmas123]

According to various sources, the tuition fee loan is wiped out after 25 years - anything you haven't yet paid back is written off.

You are taxed 9% per year on everything you earn over £21,000

If you earn £30,000 per year, you will be taxed 9% of £9,000, which is £810.

Theoretically, if you walked straight into a £30,000 a year job straight after graduation (obviously in reality, your starting earnings will be lower than this) then you will pay back £810 a year for 25 years, which according to my maths is £20250 in total. Seen as tuition fees are £27000, hardly anybody will pay the full amount back?

Have I made a massive error here, or is this totally correct?

[Forum User]

You made the mistake of assuming that people are still earning £30k a year 25 years later when they're in your 40's despite being a graduate. If this is the case for anyone then I would suggest that they have completely and utterly wasted their time going to university.

[Tommyjw]

Well i believe it is 30 years , makes a difference i guess, that coupled with we expect people to have better salaries than that at some point.

[joannem]

Inflation?

I would imagine someone earning £30,000 per year now would be earning a lot more in 25years time even in the same job. Could be very wrong though.

[StacFace]

Yes, except it's 30 years until the debt it wiped off not 25.

This is why people are saying it's not really a loan, more like an extra tax.

Edit: To those saying the salary will go up because of inflation it's worth bearing in mind that the amount you have to earn before you start making repayments (the £21k) will also rise with inflation. So in this sense it won't make them pay the money back, getting promotions however could but you'd still have to be earning quite a lot to pay back not only the tuition fee loan but also living cost loans. Adding them on could make the total loan over £36k.

[pinda.college]

(Original post by Forum User)
You made the mistake of assuming that people are still earning £30k a year 25 years later when they're in your 40's despite being a graduate. If this is the case for anyone then I would suggest that they have completely and utterly wasted their time going to university.

£30k is a decent wage for a comfortable lifestyle, so how would your time going to university be wasted?

[Apeiron]

(Original post by cmas123)
According to various sources, the tuition fee loan is wiped out after 25 years - anything you haven't yet paid back is written off.

You are taxed 9% per year on everything you earn over £21,000

If you earn £30,000 per year, you will be taxed 9% of £9,000, which is £810.

Theoretically, if you walked straight into a £30,000 a year job straight after graduation (obviously in reality, your starting earnings will be lower than this) then you will pay back £810 a year for 25 years, which according to my maths is £20250 in total. Seen as tuition fees are £27000, hardly anybody will pay the full amount back?

Have I made a massive error here, or is this totally correct?

The repayment period is 30 years. Basically you are correct in a non-inflation scenario, but that is extremely unlikely. Most students will pay off most or all of the loan, but a sizeable minority probably won't.

[Shani]

Given your example, you are in a way correct. However, you've failed to factor in the fact that someone earning £30k now is unlikely to still be earning £30k in 30 years time. Inflation needs to be factored in.

[Shani]

(Original post by pinda.college)
£30k is a decent wage for a comfortable lifestyle, so how would your time going to university be wasted?

That would depend on your definition of comfortable.

Also, if a graduate only earned £30k in 30 years time (into their 40's and 50's) then factoring in inflation, this would be way less than the average salary in the UK at the time.

[Forum User]

(Original post by pinda.college)
£30k is a decent wage for a comfotable lifestyle, so how would your time going to university be wasted?

Because you can easily get a random office job without a degree and move up 'through the ranks' sufficiently quickly to be on much more than £30k a year at age 46 or whatever (I'm assuming that 25 years post graduation was correct)

You might think that £30k sounds like a lot of money from your perspective as a current student (if you are), but it is not. I don't have a single friend who went to university who earns less than this, and my friends are all in their early/mid 30s. My girlfriend who got a perfectly average degree from a moderate university is on £50k aged 28 and she is hardly setting the world on fire in her chosen career.

IMO if you have any kind of ability at all, are in a graduate career, and you are still on £30k after 10-20 years of employment you are doing something very wrong.

[pinda.college]

(Original post by Forum User)
Because you can easily get a random office job without a degree and move up 'through the ranks' sufficiently quickly to be on much more than £30k a year at age 46 or whatever (I'm assuming that 25 years post graduation was correct)

You might think that £30k sounds like a lot of money from your perspective as a current student (if you are), but it is not. I don't have a single friend who went to university who earns less than this, and my friends are all in their early/mid 30s. My girlfriend who got a perfectly average degree from a moderate university is on £50k aged 28 and she is hardly setting the world on fire in her chosen career.

IMO if you have any kind of ability at all, are in a graduate career, and you are still on £30k after 10-20 years of employment you are doing something very wrong.

What degree did she do and what field of work is she in, just out of curiosity...

[faber niger]

Yeah, that's good, right?

(Original post by Shani)
That would depend on your definition of comfortable.

Also, if a graduate only earned £30k in 30 years time (into their 40's and 50's) then factoring in inflation, this would be way less than the average salary in the UK at the time.

Yes, but the payback threshold is also increased in line with inflation every year, so the threshold will also well be above £21k by that time. (However, the interest on the loans will be increasing at the higher RPI, while the threshold will be uprated at the lower CPI rate, which slightly skews things.)

(Original post by pinda.college)
£30k is a decent wage for a comfortable lifestyle, so how would your time going to university be wasted?

Indeed, and, god forbid, you might just have spent your time at university doing something other than calculating future net gains and opportunity costs.

[Forum User]

(Original post by pinda.college)
What degree did she do and what field of work is she in, just out of curiosity...

She's an accountant, and her degree is in 'business and music' (think that was it, it might have been 'business and media' or similar).

What graduate career were you considering where you consider it reasonable that you will still be on £30k a year in your 40s? Genuine question as I am almost certain this is incredibly low (but perhaps there are a few areas where it will be the case).

[cmas123]

(Original post by Shani)
Given your example, you are in a way correct. However, you've failed to factor in the fact that someone earning £30k now is unlikely to still be earning £30k in 30 years time. Inflation needs to be factored in.

Obvious that I'm going to be studying English Literature, and not economics! Basically here, I'm trying to work out whether it'll be worth going to Edinburgh Uni, which is my best offer, with all the extra costs that'll come with studying for an extra year...

[Tommyjw]

(Original post by Forum User)
B My girlfriend who got a perfectly average degree from a moderate university is on £50k aged 28 and she is hardly setting the world on fire in her chosen career

Be right back, giving a **** about what your girlfriend is doing and pretending like it means sweet **** all to the discussion.

[CLS94]

But with inflation, the amount you have borrowed increases too - you are charged annual interest of between RPI% and RPI+3% depending on your earnings, so most graduates will not pay back all the money. I think the official estimate is that 75% of graduates will not pay back all they have borrowed. In the long term though, most graduates will still pay back a sizeable amount more than they would have under the old system. To be honest, the government have done very badly in a political sense by branding it as £9,000 a year fees, they could easily have called it a graduate tax whilst 'scrapping' tuition fees, implemented the same policy and it would have been much less controversial and off-putting for prospective students.

[pinda.college]

(Original post by Forum User)
She's an accountant, and her degree is in 'business and music' (think that was it, it might have been 'business and media' or similar).

Surely she didn't graduate from a 'moderate' university

[cmas123]

(Original post by Forum User)
Because you can easily get a random office job without a degree and move up 'through the ranks' sufficiently quickly to be on much more than £30k a year at age 46 or whatever (I'm assuming that 25 years post graduation was correct)

You might think that £30k sounds like a lot of money from your perspective as a current student (if you are), but it is not. I don't have a single friend who went to university who earns less than this, and my friends are all in their early/mid 30s. My girlfriend who got a perfectly average degree from a moderate university is on £50k aged 28 and she is hardly setting the world on fire in her chosen career.

IMO if you have any kind of ability at all, are in a graduate career, and you are still on £30k after 10-20 years of employment you are doing something very wrong.

Pretty sure teaching doesn't lead to a salary of that much more than £30,000 - try telling most secondary school teachers that they wasted their time at university.

[Forum User]

(Original post by pinda.college)
Surely she didn't graduate from a 'moderate' university

It was Buckinghamshire, I don't think that has a particularly good reputation.

[Forum User]

(Original post by cmas123)
Pretty sure teaching doesn't lead to a salary of that much more than £30,000 - try telling most secondary school teachers that they wasted their time at university.

My brother is a secondary school teacher and he is on vastly more than £30k, living in Manchester so no 'london weighting'.