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Why cutting tuition fees bizarrely risks hurting not helping most students watch

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    (Original post by TimmonaPortella)
    I'm sorry but I can't approach that with a 'meh' attitude. The result of this is that the people who actually put their degrees to profitable use end up paying full whack for their education, at a price that you clearly consider too high. Meanwhile, those who squandered their education pay little to nothing. They are rewarded, for some reason, for their inability to turn their education into monetary gain. This is the perversity I was talking about above.

    That it is veering too close to a graduate tax system is the problem. The first step the government should take in this regard should be very substantially to strengthen the repayment terms applicable to student loans. If you choose to take a degree, the presumption should be that you pay your bills afterwards.
    I would be in agreement if the cost people were having to pay back was reflective of what they borrowed, i.e £27k plus inflation. But people will end up paying about 3 times that at least back if they do manage to pay it off.
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    (Original post by jsk1)
    If your university degree does nothing else for you, learn how to spell 'practise' as a verb!
    Fair point.

    I have already completed my university degree, as it goes, but that was a howler.
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    (Original post by TimmonaPortella)
    Your 'strategy' is to make sure you never earn enough money to pay off your debts?

    Pretty much sums up the perversity of the present tuition fees system tbqh.
    No. Not a strategy. As a teacher I will probably top out the pay scale on around £37k. Not particularly excited at the prospect of going for promotion. I am over worked as it is. Even so, if I went back into software dev I would be look at a salary of around £45k which still wouldn't be sufficient to pay back the capital sum. And at £45k, I would be making repayments of around £230 a month. You could say there is a disincentive to earn more.

    But why is it perverse. It is sold as a loan when in reality it is a tax. The amount you borrow is irrelevant.
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    (Original post by generallee)
    So you are going to get someone else to pay your debts?

    The ideology of the political left, in a nutshell.
    No. I am simply adhering to the system put in place by our right wing government. I have taken out a loan which will be repaid at 9% of any earnings I make over £25k. After 30 years it will be written off. They are the terms offered and the terms I will adhere to.

    Are you saying that a right winger would see the moral light and go out of their way to pay it back early?

    Of course like many right wing ideas e.g. PPI, privatised healthcare, privatised railways and other privatised public services, this is going to come back and bite the country royally in the arse when all of that money the government has managed to clear from its balance sheets comes back in the form of a bottomless hole. But that is another debate entirely.
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    (Original post by DeBruyne18)
    How much income tax do you pay per year? Go on, given that you're rather judgemental about others using public services...
    That is too personal a question to answer in detail on a public website such as this, but I am a higher rate taxpayer and I always pay back my debts. Thanks for asking.

    It is very disappointing, but not surprising, sadly, that so many students seem to feel that it will be quite OK morally not to.

    Even (like the poster I quoted) boasting about it, almost.

    Leaving aside the lack of basic morality, the absence of ambition, of wanting to better yourself, financially, is in itself a sad indictment, both of this cohort of students, and the broken funding system they are emerging from.

    Look at me, how clever I am! I am going to waste my expensive education to live in comparative penury for the rest of my life, whoopy do!
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    Why do people end up paying way more than just the fees? I thought the loan had only some interest to make up for inflation.
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    (Original post by ByEeek)
    No. I am simply adhering to the system put in place by our right wing government.
    The Student Loan system was originally introduced by the Labour Party!
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    (Original post by generallee)
    The Student Loan system was originally introduced by the Labour Party!
    It was indeed. They bought in a system of loans (I took my first in 1996) pegged at inflationary interest rates. When you earned more than £19k, you started paying them back. When they were payed back that was it. Done and dusted. I managed to pay mine off in around 5 years. My wife is still paying hers back 16 years later.

    The Tories then changed the loan system to a tax system but continued to call them loans. The only thing that is like a loan is that there is a value next to your name on how much you have borrowed. But unlike Labour who had inflationary interest rates, the Tories have pegged their interest rates at 6%. The reason for this is that in order to look like a government that has reduced the deficit, showing a big pile of IOUs counts for a lot from an accounting perspective, even if most of those IOUs will never actually be paid. It is effectively an accounting fiddle.

    But in 25 - 30 years time when it is time to call in the debt, there will be a gigantic hole in government finances. A very Tory idea. Borrow now, pay when Labour are in power.
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    Not really relevant but I'm so glad to be in Scotland when I hear about the tuition fees.
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    (Original post by generallee)
    That is too personal a question to answer in detail on a public website such as this, but I am a higher rate taxpayer and I always pay back my debts. Thanks for asking.

    It is very disappointing, but not surprising, sadly, that so many students seem to feel that it will be quite OK morally not to.

    Even (like the poster I quoted) boasting about it, almost.

    Leaving aside the lack of basic morality, the absence of ambition, of wanting to better yourself, financially, is in itself a sad indictment, both of this cohort of students, and the broken funding system they are emerging from.

    Look at me, how clever I am! I am going to waste my expensive education to live in comparative penury for the rest of my life, whoopy do!
    There are plenty of worthy and important careers in which the salary is never likely to be enough to pay off student debts.

    Teaching and nursing are two.

    Martin Lewis has worked out that in order to pay the whole debt off you're going to have to have a starting salary of over £30,000 and receive above inflation pay rises each year.
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    It's funny how this kind of point was never seriously raised when St Jeremy was promising to abolish tuition fees. I always found it bizarre how that was applauded and yet was arguably the least progressive major policy put forward at the election. The 'dementia tax' was far more progressive but was widely pilloried...

    (Original post by ByEeek)
    A very Tory idea. Borrow now, pay when Labour are in power.
    Yeah, Tories are known for their lavish spending on public services and Labour their austerity....
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    (Original post by ByEeek)
    It was indeed. They bought in a system of loans (I took my first in 1996) pegged at inflationary interest rates. When you earned more than £19k, you started paying them back. When they were payed back that was it. Done and dusted. I managed to pay mine off in around 5 years. My wife is still paying hers back 16 years later.

    The Tories then changed the loan system to a tax system but continued to call them loans. The only thing that is like a loan is that there is a value next to your name on how much you have borrowed. But unlike Labour who had inflationary interest rates, the Tories have pegged their interest rates at 6%. The reason for this is that in order to look like a government that has reduced the deficit, showing a big pile of IOUs counts for a lot from an accounting perspective, even if most of those IOUs will never actually be paid. It is effectively an accounting fiddle.

    But in 25 - 30 years time when it is time to call in the debt, there will be a gigantic hole in government finances. A very Tory idea. Borrow now, pay when Labour are in power.
    I am a little confused. I thought you said you would never repay your debt, now you are claiming it has been paid off, "done and dusted"??

    The whole system is a pig's ear (started by Labour as I say, another one of their clever little wheezes with utterly disastrous long term consequences, like invading Iraq, and opening the immigration floodgates when Eastern Europe joined the EU) on that we agree.
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    I go to Uni in NI so our tuition fees are still £3,700 per year so this won’t really affect me, bar the higher threshold which will be nice! On a whole though I have no issues with the current system. There is no other loan out there offering what a student loan does. Keep the system the way it is and focus on sorting graduate pay scales!
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    (Original post by DeBruyne18)
    There are plenty of worthy and important careers in which the salary is never likely to be enough to pay off student debts.

    Teaching and nursing are two.

    Martin Lewis has worked out that in order to pay the whole debt off you're going to have to have a starting salary of over £30,000 and receive above inflation pay rises each year.
    Teachers, although by no means well paid start off at almost £30,000 in London. And a senior teacher earns £60,000 even in the provinces, more in London.

    ByEek is a teacher I believe.

    Nurses are a different case. A special case I would argue. They don't earn enough to pay back their degree fees, it is true. On the other hand, it was ridiculous to turn it into a graduate profession in the first place. It didn't used to be and doesn't need to be.
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    (Original post by generallee)
    Teachers, although by no means well paid start off at almost £30,000 in London. And a senior teacher earns £60,000 even in the provinces, more in London.

    ByEek is a teacher I believe.

    Nurses are a different case. A special case I would argue. They don't earn enough to pay back their degree fees, it is true. On the other hand, it was ridiculous to turn it into a graduate profession in the first place. It didn't used to be and doesn't need to be.

    You're going to have to provide a citation for teacher's salaries. They don't start at £30k, not even in London. Graduate teaching programmes like Teach First have a starting salary in the low £20k region. Then consider all those outside London.

    The vast majority of teachers are never going to have a salary which means they can pay the loan off. That's not unambitious, that's a reflection of the salaries offered by the profession.

    Again, to pay off the whole thing you need a starting salary of around £30,000 and above inflation pay rises each year. Hardly any of the most lucrative graduate schemes start off on £30k.

    The problem is that we're not simply asking graduate to pay back what they borrowed (i.e £27k plus inflation). We are asking them to pay back around three times that number. Interest on the loans as Byeek says, is an accounting trick and entirely unfair.

    I agree with you re nursing, shouldn't have been turned into a graduate profession.
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    (Original post by DeBruyne18)
    The problem is that we're not simply asking graduate to pay back what they borrowed (i.e £27k plus inflation). We are asking them to pay back around three times that number. Interest on the loans as Byeek says, is an accounting trick and entirely unfair.
    I assume that boosted interest rate is to take into account the fact that most loans will never be fully repaid, i.e. those who earn the most subsidise those who earn the least. If no one paid back more than they effectively borrowed but many didn't fully repay, the whole system would collapse.
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    I like the idea of the loans (aka graduate tax) and how the repayment schedule has been designed. My only issue is with the interest: it almost feels punitive. There is no logical reason the interest on these loans should be above inflation outside of wanting to be sure most people never have the chance to clear out the loans completely.
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    (Original post by DeBruyne18)
    You're going to have to provide a citation for teacher's salaries. They don't start at £30k, not even in London.
    https://getintoteaching.education.go...acher-salaries
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    (Original post by CurlyBen)
    I assume that boosted interest rate is to take into account the fact that most loans will never be fully repaid, i.e. those who earn the most subsidise those who earn the least. If no one paid back more than they effectively borrowed but many didn't fully repay, the whole system would collapse.
    That's one justification for it. But then it's rather unfair to criticise people for not paying back what they borrowed when they are infact being asked to pay back several times the amount that they borrowed.
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    So starting salary of £22k to £28k in London.

    The average teacher's starting salary isn't even going to be enough to trigger the threshold for paying the loan back, which is £25k.

    Even earning 60k, you are only paying back just over £3,000 a year.

    The vast majority of teachers are never going to earn enough to pay the fees back plus interest. That doesn't mean they aren't ambitious or are lazy. That's the nature of their profession.

    Especially when you consider the fact that a great deal of them are subject to a public sector pay freeze.
 
 
 
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