Hey there! Sign in to join this conversationNew here? Join for free

Something the coalition hasn't told uni student... Watch

    Offline

    2
    ReputationRep:
    (Original post by yawn)
    Whilst they strive to defend their intention to raise uni fees to £9,000 as a starting point for further hugh increases by repeating that the fees aren't payable upfront, nor until the student is working and in receipt of £21,000 pa, what they haven't said is how this debt is going to impact on the future of the student.

    As you know, to be able to obtain loans to buy homes, furniture, cars etc. one has to be able to demonstrate that one has sufficient means to cover the loan plus interest payments from one's salary.

    If one is encumbered by tens of thousands of pounds worth of debt already (uni fees) which will take decades to repay (for all those except for those from wealthy families who can pay off the debt for them) how will banks and credit agencies view the existing debt when considering whether to load the former student with additional, crippling debts?

    I think we're going to see this generation being denied the wherewithal to buy their own homes, new furniture, cars and related costs...in fact, many commodities that our parents take for granted.

    We should be challenging the coalition on whether they are going to change credit and bank loan laws to accommodate a debt-burdened generation.
    No, this is entirely the reason the student loan is paid back through the tax system rather than as a commercial loan. (Despite the bluster about the evils of a graduate tax, what we have is really a graduate tax.)
    Offline

    17
    ReputationRep:
    (Original post by WelshBluebird)
    I also remember that the fees pretty quickly were increased upto the £3k max in those cases.
    Yes because you said in the last 5 years.
    Offline

    2
    ReputationRep:
    (Original post by Quady)
    Yes because you said in the last 5 years.
    They don't anymore though. For whatever reason they have increased their fees to the maximum level within 4 years of the fees coming into force. Plus thats just 2 universities out of 100+ in the UK. Hardly a "free market".

    Honestly, I really do not see many universities charging less than the maximum. Why wouldn't they try to get the most money possible? Plus, by charging less they automatically appear to be "worse" than the unis charging more. I think some will choose to charge £6k, and some will decide to do the extra work to be able to charge £9k, but thats the only "market" we will see IMO.
    Offline

    17
    ReputationRep:
    (Original post by WelshBluebird)
    They don't anymore though. For whatever reason they have increased their fees to the maximum level within 4 years of the fees coming into force. Plus thats just 2 universities out of 100+ in the UK. Hardly a "free market".

    Honestly, I really do not see many universities charging less than the maximum. Why wouldn't they try to get the most money possible? Plus, by charging less they automatically appear to be "worse" than the unis charging more. I think some will choose to charge £6k, and some will decide to do the extra work to be able to charge £9k, but thats the only "market" we will see IMO.
    Who said I disagree with you on any of that?

    You asked a question, I gave an answer.
    • Thread Starter
    Offline

    1
    (Original post by specialk_698)
    Considering the lending decisions for these commodities are normally based on your credit score; I don't see how the student loan will affect it seeing as:

    1. its not listed on your credit score.
    2. its taken from your payslip before you even receive any money so you cant default.
    The point is, one has less money in one's paypacket to be able to take on hefty loans such as mortgages (let alone save up enough for a deposit) and other types of credit.

    Banks are interested in residuals, not gross pay.

    Before a Mortgage Lender applies it’s lending income multiple to your earnings to calculate how much you can borrow it will ask about your financial commitments. Typically any regular credit commitments which have 6 months or more to run will be deducted as an annual payment from your gross income before the mortgage lender uses their income multiples to calculate how much you can borrow.

    Remember that these loan repayment commitments span 30 years...just as long as a mortgage normally takes to repay.
    Offline

    17
    ReputationRep:
    (Original post by yawn)
    Whilst they strive to defend their intention to raise uni fees to £9,000 as a starting point for further hugh increases by repeating that the fees aren't payable upfront, nor until the student is working and in receipt of £21,000 pa, what they haven't said is how this debt is going to impact on the future of the student.

    As you know, to be able to obtain loans to buy homes, furniture, cars etc. one has to be able to demonstrate that one has sufficient means to cover the loan plus interest payments from one's salary.

    If one is encumbered by tens of thousands of pounds worth of debt already (uni fees) which will take decades to repay (for all those except for those from wealthy families who can pay off the debt for them) how will banks and credit agencies view the existing debt when considering whether to load the former student with additional, crippling debts?

    I think we're going to see this generation being denied the wherewithal to buy their own homes, new furniture, cars and related costs...in fact, many commodities that our parents take for granted.

    We should be challenging the coalition on whether they are going to change credit and bank loan laws to accommodate a debt-burdened generation.
    OK, I've commented on other peoples comments but not directly so here goes.

    I'm surprised so few people have considered this and actually your argument would have perhaps been stronger if you'd just said 'don't people realise the more the Uk spends on student loan repayments the less it has to spend 'other stuff' which will lower house prices and consumer spending'.

    For mortgages you're right, it will hurt peoples income which is a key factor., Many will say not by much, but its probably by around £5-7k on a typical mortgage (3.5 x 28k as opposed to £30k). But meh, so what, house prices will fall to the level at which people can buy them.

    White goods/furniture don't need income assessment, but a credit score, so they aren't impact by a student loan, neither should they be particularly, the cost of repaying such loans is low enough that if you're paying meaningful amount of your salary in loan you'd still have enough money to pay the personal loan easily.

    What worries me is that this increases the 'tax rate' on graduates by around 5% whilst they are paying it off during which time they can'y spend that 5% on 'other stuff'.

    However, if more people go to uni, it improves their earnings potential then it should net off as the UK winning.

    So all in all you're right, but I can't see a point at which it matters.
    Offline

    17
    ReputationRep:
    (Original post by yawn)
    The point is, one has less money in one's paypacket to be able to take on hefty loans such as mortgages (let alone save up enough for a deposit) and other types of credit.

    Banks are interested in residuals, not gross pay.

    Before a Mortgage Lender applies it’s lending income multiple to your earnings to calculate how much you can borrow it will ask about your financial commitments. Typically any regular credit commitments which have 6 months or more to run will be deducted as an annual payment from your gross income before the mortgage lender uses their income multiples to calculate how much you can borrow.

    Remember that these loan repayment commitments span 30 years...just as long as a mortgage normally takes to repay.
    Your point isn't about banks or credit at all - its a general disposable income point. But if university was funded only through general taxation, that would also mean less money to pay mortgages. You need to address this or your argument completely falls - university is never free, the question is who pays for it.

    RE: the 30 year payments, student loans would only last that long if people were paying a tiny amount towards it each month - if it lasts 30 years, the effect is very small.
    Offline

    17
    ReputationRep:
    (Original post by jacketpotato)
    Your point isn't about banks or credit at all - its a general disposable income point. But if university was funded only through general taxation, that would also mean less money to pay mortgages. You need to address this or your argument completely falls - university is never free, the question is who pays for it.

    RE: the 30 year payments, student loans would only last that long if people were paying a tiny amount towards it each month - if it lasts 30 years, the effect is very small.
    The difference is that the current Govt would have to pay for it out of todays money so they'd lower spending elsewhere, rather than keeping spending as high but create an additional charge three years later.

    Thats true, but if you were to pay on the 30th year cut point you'd have lost 4% of your wage (assuming 45k loan under new system, 0% interest, repayments at 9% of earnings over 21k)

    4% is a decent amount of money.
    Offline

    0
    ReputationRep:
    (Original post by yawn)
    The point is, one has less money in one's paypacket to be able to take on hefty loans such as mortgages (let alone save up enough for a deposit) and other types of credit.

    Banks are interested in residuals, not gross pay.

    Before a Mortgage Lender applies it’s lending income multiple to your earnings to calculate how much you can borrow it will ask about your financial commitments. Typically any regular credit commitments which have 6 months or more to run will be deducted as an annual payment from your gross income before the mortgage lender uses their income multiples to calculate how much you can borrow.

    Remember that these loan repayment commitments span 30 years...just as long as a mortgage normally takes to repay.
    You are wrong. Repayments will be 9% over £21K rather tan 9% over £15K. How will people have less in one's paypacket?

    Furthermore, your whole analysis was and is wrong: http://www.adamsmith.org/blog/educat...tgage-chances/
    Offline

    2
    ReputationRep:
    (Original post by Quady)
    So banks don't ask for proof of earnings?
    My father is a mortgage advisor. Student Debt doesn't count.
    Offline

    0
    ReputationRep:
    Exactly. And all this from a government which claims debt is such a terrible thing and how we need to pay off this country's debt now so that the younger generation aren't burdened with it. The fact is they are doing the complete opposite, they're just passing the governments debt onto us. They cut the HE budget by 40%, so students have to make up the shortfall.
    Offline

    12
    ReputationRep:
    Not to mention the affect it'll have on the future economy - mass debt of thousands of people who will therefore not be willing to spend much money, ergo less aggregate demand and a lower GDP.

    Stupid Tories.
    Offline

    0
    ReputationRep:
    (Original post by The Next Left)
    Exactly. And all this from a government which claims debt is such a terrible thing and how we need to pay off this country's debt now so that the younger generation aren't burdened with it. The fact is they are doing the complete opposite, they're just passing the governments debt onto us. They cut the HE budget by 40%, so students have to make up the shortfall.
    I know what your saying but the fact of the matter is that theirs to many students going to uni. Not everybody deserves to go to uni and not everybody should go to uni. The old system was much better where only a special few could get in because if u made it you knew that you had cracked it and u were a pretty clever and privilidged person. IF you cant afford it you can't go, if u cant afford to go on a round the world cruise you can't go its just part of life. Also if all of these people are going to uni whos going to take up the apprenticeships, wheres all of the future builders, electricians and plumbers going to come from which is alot more important then some media studies degree.
    Offline

    0
    ReputationRep:
    (Original post by The_Great_One)
    I know what your saying but the fact of the matter is that theirs to many students going to uni. Not everybody deserves to go to uni and not everybody should go to uni. The old system was much better where only a special few could get in because if u made it you knew that you had cracked it and u were a pretty clever and privilidged person. IF you cant afford it you can't go, if u cant afford to go on a round the world cruise you can't go its just part of life. Also if all of these people are going to uni whos going to take up the apprenticeships, wheres all of the future builders, electricians and plumbers going to come from which is alot mroe important then some media studies degree.
    I agree some course should see a cut in funding. But your argument saying "If you cant afford it you can't go" is just ridiculous - entrance you Uni should be based on intelligence not how rich you are. It bears no resemblance at all to whether you can afford a luxury cruise! The apprenticeships are being taken up, there is huge demand for them and the government has had to double the number of apprenticeships in the spending review.
    Offline

    0
    ReputationRep:
    (Original post by The Next Left)
    I agree some course should see a cut in funding. But your argument saying "If you cant afford it you can't go" is just ridiculous - entrance you Uni should be based on intelligence not how rich you are. It bears no resemblance at all to whether you can afford a luxury cruise! The apprenticeships are being taken up, there is huge demand for them and the government has had to double the number of apprenticeships in the spending review.
    Yer but when i done my apprenticeship when labour were in and there was only 7 people in my class and no1 was doing them and all my mates were in uni and their now working in asda. But now the tories have made 50,000 new ones so that's good.
    Offline

    14
    ReputationRep:
    (Original post by yawn)
    The point is, one has less money in one's paypacket to be able to take on hefty loans such as mortgages (let alone save up enough for a deposit) and other types of credit.

    Banks are interested in residuals, not gross pay.

    Before a Mortgage Lender applies it’s lending income multiple to your earnings to calculate how much you can borrow it will ask about your financial commitments. Typically any regular credit commitments which have 6 months or more to run will be deducted as an annual payment from your gross income before the mortgage lender uses their income multiples to calculate how much you can borrow.

    Remember that these loan repayment commitments span 30 years...just as long as a mortgage normally takes to repay.
    People will have more in their pay packet with this system! The limit before payments start is £21k rather than £15k so they can save more immediately after starting uni, not less.
    Offline

    0
    ReputationRep:
    From what i've gathered so far, student debt doesn't really affect your credit scoring, however I still think leaving the next generation with a huge debt is immoral.
    • Thread Starter
    Offline

    1
    (Original post by ily_em)
    People will have more in their pay packet with this system! The limit before payments start is £21k rather than £15k so they can save more immediately after starting uni, not less.
    I think you meant to say that the £4k gross pay minus any repayments meant being able to save more immediately after granduation rather than after starting uni.

    Besides that, you reckon you can get a mortage with earnings that low? Unless
    lenders are going to calculate what they are prepared to loan you by multiplying your income ten times, you won't stand a chance. And it was such action by lenders in other countries that caused the massive deficits accrued. They won't lend anyway because there is a debt that requires regular repayments over a span of 30 years.

    We moan all the time about the presumed benefits that our parents and grandparents have enjoyed and how it has a deleterious knock-on effect on our ability to ultimately enjoy the fruits of our labour in later life, and yet here you are defending changes in uni funding that will add to those problems.

    Ask the questions that the politicians haven't had to answer as yet, because no one has thought to ask them.
    • Thread Starter
    Offline

    1
    Someone suggested that as there are students who are happy to pay £9,000 a year for their higher education, then maybe the fees should be raised to £30,000 a year...

    Many of those students will have had parents who were paying up to £30,000 a year for their secondary education, and who are prepared to pay their offspring's uni fees. It might be a good idea to raise the fees to that amount for those who come from independent schools with swingeing fees, since the parents can obviously afford to pay them. This would mean that those who come from less wealthy households where the students themselves will be repaying the fees would not have to pay nearly as much as £9K.
    • Thread Starter
    Offline

    1
    (Original post by simontinsley)
    You are wrong. Repayments will be 9% over £21K rather tan 9% over £15K. How will people have less in one's paypacket?
    The very fact of repaying university fees after graduation means that there will be less in their pay packets regardless of income than there would be if uni fees were paid upfront as they were until relatively recently.

    Furthermore, your whole analysis was and is wrong: http://www.adamsmith.org/blog/educat...tgage-chances/
    You believe their analysis? An organisation that is based on conservative principles? Of course they're going to distort the implications...they support the politics. You overlook the simple fact of income 'residuals' and their impact on long-term repayments of debts on obtaining mortgages. If you don't believe me, just look up any mortgage lender and see what they take into account and what they ignore when considering lending huge amounts of money.
 
 
 
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • Poll
    Will you be richer or poorer than your parents?
    Useful resources

    Groups associated with this forum:

    View associated groups
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Quick reply
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.