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Surely we'll never pay back our Tuition Fees. Have I made an error here?

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    (Original post by MagicNMedicine)
    Nobody assumed this. The government knows the jobs situation and what graduates are likely to be earning. They know that a lot of graduates will end up not repaying the full costs of their tuition fee loan, for those students their education is largely government subsidised. Back in the day of grants, the government subsidised the full costs of everyone's education.

    The new system brings a market for HE, on the one hand government is paying more in terms of loans for these higher fees, but the fees are higher because the government's direct grant to universities has been cut so the government saves money that way. Now universities will end up making more money the more students they recruit so it's supposed to force them to taking a more student-focused approach to get students through the doors, rather than just complacently taking the government's direct grants every year and treating undergrads as a necessary burden.
    I just get the feeling it'll be the minority actually managing to pay it back...
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    (Original post by Forum User)
    It was Buckinghamshire, I don't think that has a particularly good reputation.
    Is she an accountant near Buckinghamshire? If she is, it explains her high wage
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    (Original post by redferry)
    I just get the feeling it'll be the minority actually managing to pay it back...
    There is also this argument that was noticed in the Financial Times.

    Under the government accounting rules, when the government spends money on a student loan now it is balanced by the student's obligation to repay the money in the future (whether they actually do or not it counts as a future cash inflow on the books). So it is a way of breaking even on the accounts even if in reality it's far from breaking even.
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    (Original post by MagicNMedicine)
    There is also this argument that was noticed in the Financial Times.

    Under the government accounting rules, when the government spends money on a student loan now it is balanced by the student's obligation to repay the money in the future (whether they actually do or not it counts as a future cash inflow on the books). So it is a way of breaking even on the accounts even if in reality it's far from breaking even.
    Thanks for that thats a really interesting article
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    (Original post by NuclearFusion)
    Well I guess mortgages wasn't such a good example, but certainly having parents with lots of liquid assets will probably help with your credit rating when taking out secured loans against your parent's assets and will likely mean a lower interest rate on that loan.
    Sorry, I'm confused... why would I take out a loan secured against my parents liquid assets? Is this normal! I've never even considered such a thing.
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    (Original post by NuclearFusion)
    Though your model assumes that they wouldn't be receiving any interest on their savings that they would otherwise have. And the interest rate on their savings might well be higher than 3%, so they would infact have been better off not paying it off.
    Also, by having their savings, they might be able to help with a deposit on their children's house, whereas not having a student loan won't really help. If for some unfortunate reason, their children lost their job and needed help, not having a student loan won't help, since you don't need to pay it if you earn under £21,000. But having savings will certainly help with financial support in emergency situations.
    So really, even if you do have the money lying around, it isn't a very smart plan to pay it off, since you could probably make more money by putting it into a nice little savings account.

    Also, I forgot to say that the student loan is quite cheap debt, by which I mean the interest rate is comparatively low. Therefore, it would make much more sense to pay off much more expensive forms of debt (Putting down a bigger deposit on their children's mortgages) rather than paying off the student loan.
    What about savings tax?

    Edit: scrub that, it's not that much. You're right it would end up cheaper using a savings account and paying for higher interest loans first.
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    (Original post by catoswyn)
    Sorry, I'm confused... why would I take out a loan secured against my parents liquid assets? Is this normal! I've never even considered such a thing.
    It would allow you to borrow more at a lower interest rate, as there would be less risk to the lender in the event that you default on the loan. Since the loan would be secured against parental assets, they would be able to take your parent's money if you defaulted. So as long as you don't default, it should give you a better deal.
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    (Original post by Sbapu)
    What makes you think that?
    I assume you now know seeing as you have removed your post

    "You are taxed 9% of what ever you earn over 21000, not of 9000."
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    (Original post by Mr Dangermouse)
    It's not that simple, but as with all taxes and tax like payments, there are loopholes which can be exploited legally.
    What loopholes? I'm fairly certain there aren't any "loopholes" - just that it's not particularly hard to lie to the SLC and tell them you aren't earning enough to pay it back or just ignore them. In which case it isn't "exploiting a loop-hole" but fraud or (presumably illegal) defaulting.

    Unless I've completely missed something?
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    (Original post by pinda.college)
    £30k is a decent wage for a comfortable lifestyle, so how would your time going to university be wasted?
    It's all relative. I'm hoping to be on about 40k when I graduate and then around 60k once fully qualified as a soliciter at 24. I know I will have to work very hard though...But, this shows to many that earning 30k after 30 years in the industry is not great. I'd hope to be on a six figure salary by then.
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    (Original post by Tsunami2011)
    It's all relative. I'm hoping to be on about 40k when I graduate and then around 60k once fully qualified as a soliciter at 24. I know I will have to work very hard though...But, this shows to many that earning 30k after 30 years in the industry is not great. I'd hope to be on a six figure salary by then.
    Seems high after graduation.. is £40k the norm for law graduates? I seem to remember my friend starting on £25k with her London law firm though that was some time ago.
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    (Original post by redferry)
    I just get the feeling it'll be the minority actually managing to pay it back...
    I read somewhere that the whole scheme will not start 'paying down the loans' until it has been running 35 years when, at that point, the loan book with be at 191billion or so. I think the fact that most people will not pay back the loans has been factored in.
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    (Original post by catoswyn)
    Seems high after graduation.. is £40k the norm for law graduates? I seem to remember my friend starting on £25k with her London law firm though that was some time ago.
    In an ideal way, I would get my training contract with one of the leading firms which do offer 40k ish.. I know that these contracts are insanely competitive, but I'm on track at the moment. I would personally be happy with 25k after graduation, but if its possible to earn more, why not?

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Updated: February 24, 2012
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