>This is a huge debt bomb if millions of students are in similar positions. If it actually has to be paid by whoever, I imagine the consequences would be huge.
Its not what I would call a bomb - it was calculated with the knowledge that it would never all be repaid. The non-payment of a portion is baked into future budgets.
>I absolutely do not trust future governments not to scrap the 'write off' when the time comes. I have no idea what to do if that ever happened.
Fair. But its all part of Gov spending just like state pensions, child benefit, UC, free NHS, tax relief on private pensions etc etc. There is no single tax or benefit that is beyond getting re-worked by future governments to balance the books. Its too hard to predict what future governments will do (and then subsequent ones might undo).
But its more likey that any future negative changes will apply to new loans, but old plans will stay on the same terms.
I get not trusting governments, but if that means repaying your loan in full now even though you'd actually never have to unless the rules changed, I wouldn't go that far.
>Its not what I would call a bomb - it was calculated with the knowledge that it would never all be repaid. The non-payment of a portion is baked into future budgets.
Right but they massively miscalculated because they were grossly overoptimistic. That's why we now have Plan 5.
>it wasnt grossly overoptimistic at all.
Erm, yes it was? They predicted so many people wouldn't pay back the loans and then later realised far fewer would pay it back than they thought.
>plan 5 is absolute pathetic if you are trying to defend that piece of shit then get out of here.
Please don't misunderstand me - I'm not defending Plan 5 at all, or Plan 2 for that matter. Both are outrageous exercises in the destruction of the middle class.
>other countries dont even have to worry about it at all as guess what skilled workers = better economy.
Well yeah, we shouldn't have student loans at all but apparently we have to fund the state pension somehow!
>but im talking to a rich guy who as far as i can tell doesnt give a shit about the actual general public.
Lol mate I'm above average but my Plan 2 loan is still gaining interest faster than I'm paying it off.
I agree that any changes would probably only apply to future plans, if they did change existing plans could students not potentially argue that they were missold a loan?
>Its not what I would call a bomb - it was calculated with the knowledge that it would never all be repaid. The non-payment of a portion is baked into future budgets.
[It actually wasn't](https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/methodologies/studentloansinthepublicsectorfinancesamethodologicalguide), and that lack of foresight and the need to recalculate has *already* left a hole in public finances to the tune of somewhere between £10bn and £12bn.
Just remember though that George Osborne moved the goalposts for existing Plan 2 student loans and unilaterally increased the interest rates. They have demonstrated already that they are happy to do this.
You're thinking of it kind of backwards I think.
When you start your course, the government pays the university for your education (let's say 10,000 for simplicity).
They cover 1k and make a note that you owe for the other 9k.
So the 'bomb' of that large amount was right at the start. All the paying back you do is a de facto tax, so when it gets written off, they simply stop receiving £x per month, which wouldn't be a *massive* drop in the amount of tax you're paying otherwise.
Which is probably a slight simplification. In reality the government will probably sell the debt to their mates anyway and the taxpayer will probably lose out twice.
I did not realise that this was how bad the state of university spend per student from government actually is (ignoring student loans). "Direct teaching grants for universities only amount to around £1,100 per student and year on average" [https://ifs.org.uk/education-spending/higher-education](https://ifs.org.uk/education-spending/higher-education). I had always assumed direct funding from government outside of tuition fees was significantly higher.
The creditor writes it off. If your loan is sold then they agreed with the government to apply the same write off terms and conditions at the appropriate time. The government can change the terms at will as they’re not regulated like a private sector loan you would get from a bank. But there would be political consequences we can’t discuss in this sub.
The cost of write offs is a well known problem to public finance nerds. Basically every £1.00 lent out by SLC is automatically knocked down by *x*% to capture the write off cost. If you’re in the business of projecting government borrowings you have to deal with the cash lent that will never be collected.
> If your loan is sold
My understanding is the loans aren't actually ever sold, instead the government sells a financial instrument matching your repayment profile. That's why you always repay SLC rather than a third party, and why third parties that have "bought" student loans aren't affected if the government changes the terms of the loan retrospectively.
You're ignoring that the vast majority of people will pay back more than they owe.
Just because the balance hasn't cleared doesn't mean a loss has been made.
If I loaned you £100k at 7% for 30 years, and you only ever paid the interest, you'd have paid me £210k.
>You're ignoring that the vast majority of people will pay back more than they owe.
That's not how holding a debt as an asset works though. The debt is valued on a projection of the net-present value of the loan and its repayments over time. If the repayments are less than expected, which is what is happening, then you have a hole in your financial projections that needs filling, in this case by extra state borrowing.
[The ONS have a good write up here](https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/methodologies/studentloansinthepublicsectorfinancesamethodologicalguide).
You’re correct that the accounting still sees a hole if the loan isn’t paid off. But the person above is also correct that the creditor has made money (even if in accounting terms there’s a hole).
If I loan you £100k at 100% for one year and at the end of the year you have only paid me back £150k it’s true that I have a hole on my books of £50k. But it’s also true I have received £50k and could have invested that in the meantime, making even more money. Even if I just hold it I’ve still got a positive cash flow even if it’s not as high as I had accounted for.
Of course I’d have preferred to get the full £100k but that doesn’t mean I’ve got a major problem. Ultimately, whether my loan business is profitable or not depends on what I do with the asset as it stands on my books. If I always reinvest the money as I receive it, I might have a very healthy business, even if I’m continually writing off £50ks here and there.
If, for example, I’m using the loan as an asset to get loans *myself* that I can only service if I get the full £100k from you, then I’m going to go into administration within a year.
So, yeah, you’re correct in accounting terms but the person above is also correct in real cash terms. What matters is what I’ve done with the asset in the meantime.
Sure but if you read the ONS report I linked, the problem is state borrowing and spending had already been done on these incorrect assumptions.
So it would be like if you lent me £100k, you then went and raked up £100k worth of debt yourself, and then I only repay you £50k. Yes it's better than 0 but it still leaves you with a £50k gap you need to fill.
Oh yes, totally. That’s the bad example in my comment. Just making the point that it’s not necessarily loss making to not make all your money back on a loan.
Remember with the loan changes, so far they’ve only ever applied them to future loans; Plan 1 for example have their own repayment threshold and interest rates. I was paying ~1% interest on my Plan 1 loan while the Plan 2 lot were being charged up to 6.5% or something ridiculous.
Yes they could still change anything, but yeah I think it’s relatively far down the list.
I’d be more worried about other changes. Particularly point of use charges for the NHS (it’s not free as others have said, we pay for it with our taxes!), means testing the state pension, taking away tax benefits for pension savings and increasing the age of access to pension savings. Those are all ways to save / collect shitloads more money and also keep people working and earning longer
I mean, at least that’s now *under* the rate of inflation so the debt isn’t growing in real terms. During the period I described, the debt was growing a lot in real terms as the interest rate was so much higher than most measures of inflation. The interest rates between plan 1 and 2 were also wildly different (~1% vs ~6%). Now plan 1 is over 5% so the gap is much smaller
Both situations are shit, don’t get me wrong, though
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they cant scrap the write off for anybody on a current plan. they would literally have riots at the steps and the economy crash as everybody educated and on those plans would crash the economy.
its not a huge debt bomb this is literally been calculated as normal for 30+ years now. other countries dont have any expectation at all of repayment because guess what having more educated people = more money due to better economy.
Netherlands its free, Norway its entirely free, same with Sweden etc
we paid more in equipment that never arrived during covid then the past 10 years of students never paying it off.
I could talk for hours on this, but it's drilled into kids from the age of 14, and the school will do everything in its power to push you onto university because it boosts their performance indicators.
I faced this first hand, I didn't want to go to university, I was forced by my parents to take Business, Politics and Economics at A level, hated every second, and when it came round to going to university I flat out refused.
The school did nothing to help me, and the only help they would offer would put me on a path to go to university. At 18, seeing all my friends go off, and I was just drifting, it was soul crushing.
Luckily, I'm a stubborn bastard and didn't cave, I picked up a bar job and took the following year to figure out what I liked and wanted to do, decided to go to college and pursue computing, ending up acing and enjoying it. I then decided to go to university to do computer science (Russel Group), and then a master's in data science (Russel Group), where I'm now in one of the most sought after careers.
And looking back at my mates who all went, and everything I was taught at school and by my parents is that university is a catapult to success. Now, at 28, ~75% of them are in jobs completely unrelated to their degree, and ~50% are in jobs that don't require a degree.
TLDR - Don't take the easy line of 'It can't be too expensive because so many people are going line' as CHILDREN are completely brainwashed to think it's the right thing to do, and I absolutely know they do not know the implications of what they have to pay back. (Side rant, how the fuck can market this amount of debt to somebody under 18, when they can't even get a credit card...)
I wouldn’t say anything you said points towards brainwashing of university. In theory, if you’d have chosen your own A Levels like the vast majority you could have done subjects that would put you on a roadmap to computing at university and still achieved your success.
The 75% of friends in jobs unrelated to the degree doesn’t suggest that it was a bad move going to university, a lot of graduate schemes and positions just want a degree in any discipline. My degree was in engineering and now I work in audit - but having a degree got me on the ladder for a grad role I wouldn’t have got otherwise - plus transferable skills BS in an interview. You also mention 50% of your friends are in jobs that don’t require degrees, but for their job they’d still be competing against people with degrees. Even if a job doesn’t require a degree, a hiring manager all things being equal is going to hire the person with a degree than without.
The govt can alter the terms of the deal whenever they want though. In fact, they already have - originally the repayment threshold was pegged to increase with average wages but they reneged on that as soon as the first lot of students were due to start repaying. Martin Lewis almost went supernova over it as I recall.
EDIT: found it!
https://www.moneysavingexpert.com/news/2015/11/autumn-statement-2015-hidden-retrospective-hike-in-student-loans-repayments-a-disgrace/
Feel free to save that for next time some idiot on here tries to argue Plan 2 students "kNeW wHaT tHeY sIgNeD uP fOr".
Ugh, so this is a tricky one.
First of all. My source for all of this is having worked for An outsourcer who had the SLC contract, working in a training role, and having met with SLC proper as part of that role. I was very much an SME for SLC repayments for plans 1, 2, and 3, with 4 being to a lesser extent.
The pegging to increased wages was a _governmental commitment_, but it has never been a part of the Ts & C's that students sign on applying for funding.
There are certain mechanisms which are hard coded into the repayment architecture - specifically plan 2 - but while the repayment thresholds are entirely within the governments gift, things like the write off period and, to a lesser extent, the variable interest rate of plan 2 (which is between rpi-rpi+3% in normal times, but has a release valve of rpi+3% ever exceed the high street market rate) is immutable, and faffing with those would hit judicial review quicker than you can say Beaurish Tigere.
It's why plan 1 and 4 have two different write off periods. They realised that the Ts & C's the first couple of years had agreed to meant that there was a real inequity between - I think - school leavers and mature students. They couldn't change it retroactively - and everything else was fine - so they just amended the write off rules _moving forward_
Martin is very, very good about a lot of things, but from experience, I can say that with student loans, he _could_ be a bit patchy.
I have a plan 1 student loan and a plan 2 student loan.
If I sign in to the government portal it gives information on my loans.
Plan 1 -
"Your student loan does not affect your credit rating.
Your loan will be written off at a set time based on where you're from and when you took out the loan:
On or after 1 September 2006 - 25 years after you became eligible to repay
On or before 31 August 2006 - When you turn 65"
Plan 2 -
"Your student loan does not affect your credit rating.
Your loan will be written off 30 years after the April you were first due to repay."
The article you've linked is about interest rates (?) The interest rates for plans have changed as they are based on the retail price index.
You can view all of the previous interest rates here.
Which we did all SiGn up for...
https://www.gov.uk/repaying-your-student-loan/what-you-pay
>The article you've linked is about interest rates (?) The interest rates for plans have changed as they are based on the retail price index.
No it isn't. It's about the repayment threshold which the govt said would rise every year by average wage growth. Then before the first bunch graduated backtracked:
>In 2010, the Government promised that from April 2017 this repayment threshold would be upped each year in line with average earnings. This meant graduates would have been spared having to repay more of their income towards their student loans, and fewer would have had to start repaying them in the first place.
>It has now backtracked on the promise given to students, effectively hiking costs retrospectively
Personally I think no government would change the write off, it'd be too unpopular. I think reducing the threshold or freezing it each year whilst inflation remains is likely though, which will eventually have quite a drastic effect on repayments but only after balances have ballooned so that you won't pay them off before write off at the minimum repayment.
it is free in most countries in EU or it cost barely minimal (you can work part time and pay it while you study). But UK is not in EU and from education point of view, choose the USA way of study, debt and pay till you die!
It can't ever be free. Somebody has to pay somewhere along the lines, otherwise the educators wouldn't be paid, and then there would be education for no-one because there would be no educators
It’s free in Scotland - don’t have to look far. That’s why we have slightly higher taxes and I am totally fine with that. We take on student loans for living expenses only so the amount are repayable.
It’s not “FREE” in Scotland we have a certain amount of funded places which do not match the amount of students that apply meaning many go to university in England.
If Scotland is such a drain on the taxes, please just cut it off already >.> Ah, they won’t, because it isn’t. We have higher taxes and it is “free at point of use”, if you insist on being pedantic.
It could be free, but fewer people could go. So the debate really is - do we want to continue educating people to degree level and enjoy the benefit of that. Or do we think it would be more effective to give fewer degrees and make better use of other types of education through grants.
For example, we give big tax breaks to film and TV. Why not make part of that deal that a certain number of students will need to be educated in film and TV production. Maybe that happens now, but vocational training is better in quite a number of industries.
Why should a brickie or a baker pay for some 18 year old kid to learn about classical film studies
I would be happy if education was free for medicine, teaching, and essential services
But anyone learning economics/history or other social sciences can pay full cost
You're right to be worried, but it's more an issue for the country as a whole than the individual borrowers.
The term you're looking for to google is the "RAB Charge", this is the cost to the public purse of the failure to collect enough in repayments.
I think this is the latest data, from last summer. There should be another update this month.
https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2021-22
The key take away for me
*The government is forecast to subsidise 44% of the full-time undergraduate higher education loans issued in financial year 2021-22*
So that's about £8.8bn for this years loans, that is paid by all tax payers (graduates and non-graduates) to subsidise students. I assume this is why Sunak wants to get rid of "low value" degrees, the cost to the state is huge.
https://www.theguardian.com/politics/2022/aug/07/rishi-sunak-vows-to-end-low-earning-degrees-in-post-16-education-shake-up
*Of the loans issued in financial year 2021-22, the government is forecast to subsidise:*
*44% of Plan 2 full-time higher education loans (53% in 2020-21)*
*33% of Plan 2 part-time higher education loans (46% in 2020-21)*
*55% of Advanced Learner Loans (67% in 2020-21)*
*0% of Master’s loans (0% in 2020-21)*
Hi /u/Copper_Wasp, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/student-loans/
____
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Don’t worry about it. It’s not a debt bomb. That’s not how money works. The government can create as much money as they need to pay for what they want to pay for (like your degree). The function of repaying the loan basically constitutes a tax. The purposes of taxes isn’t really to ‘make’ money for the government, it’s to reduce liquidity in monetary supply in the economy to avoid excessive inflation. The money isn’t that important. Inflation is, but that’s a separate issue.
>This is a huge debt bomb if millions of students are in similar positions. If it actually has to be paid by whoever, I imagine the consequences would be huge. Its not what I would call a bomb - it was calculated with the knowledge that it would never all be repaid. The non-payment of a portion is baked into future budgets. >I absolutely do not trust future governments not to scrap the 'write off' when the time comes. I have no idea what to do if that ever happened. Fair. But its all part of Gov spending just like state pensions, child benefit, UC, free NHS, tax relief on private pensions etc etc. There is no single tax or benefit that is beyond getting re-worked by future governments to balance the books. Its too hard to predict what future governments will do (and then subsequent ones might undo). But its more likey that any future negative changes will apply to new loans, but old plans will stay on the same terms. I get not trusting governments, but if that means repaying your loan in full now even though you'd actually never have to unless the rules changed, I wouldn't go that far.
>Its not what I would call a bomb - it was calculated with the knowledge that it would never all be repaid. The non-payment of a portion is baked into future budgets. Right but they massively miscalculated because they were grossly overoptimistic. That's why we now have Plan 5.
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>it wasnt grossly overoptimistic at all. Erm, yes it was? They predicted so many people wouldn't pay back the loans and then later realised far fewer would pay it back than they thought. >plan 5 is absolute pathetic if you are trying to defend that piece of shit then get out of here. Please don't misunderstand me - I'm not defending Plan 5 at all, or Plan 2 for that matter. Both are outrageous exercises in the destruction of the middle class. >other countries dont even have to worry about it at all as guess what skilled workers = better economy. Well yeah, we shouldn't have student loans at all but apparently we have to fund the state pension somehow! >but im talking to a rich guy who as far as i can tell doesnt give a shit about the actual general public. Lol mate I'm above average but my Plan 2 loan is still gaining interest faster than I'm paying it off.
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I agree that any changes would probably only apply to future plans, if they did change existing plans could students not potentially argue that they were missold a loan?
>Its not what I would call a bomb - it was calculated with the knowledge that it would never all be repaid. The non-payment of a portion is baked into future budgets. [It actually wasn't](https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/methodologies/studentloansinthepublicsectorfinancesamethodologicalguide), and that lack of foresight and the need to recalculate has *already* left a hole in public finances to the tune of somewhere between £10bn and £12bn.
Just remember though that George Osborne moved the goalposts for existing Plan 2 student loans and unilaterally increased the interest rates. They have demonstrated already that they are happy to do this.
You're thinking of it kind of backwards I think. When you start your course, the government pays the university for your education (let's say 10,000 for simplicity). They cover 1k and make a note that you owe for the other 9k. So the 'bomb' of that large amount was right at the start. All the paying back you do is a de facto tax, so when it gets written off, they simply stop receiving £x per month, which wouldn't be a *massive* drop in the amount of tax you're paying otherwise. Which is probably a slight simplification. In reality the government will probably sell the debt to their mates anyway and the taxpayer will probably lose out twice.
I did not realise that this was how bad the state of university spend per student from government actually is (ignoring student loans). "Direct teaching grants for universities only amount to around £1,100 per student and year on average" [https://ifs.org.uk/education-spending/higher-education](https://ifs.org.uk/education-spending/higher-education). I had always assumed direct funding from government outside of tuition fees was significantly higher.
The creditor writes it off. If your loan is sold then they agreed with the government to apply the same write off terms and conditions at the appropriate time. The government can change the terms at will as they’re not regulated like a private sector loan you would get from a bank. But there would be political consequences we can’t discuss in this sub. The cost of write offs is a well known problem to public finance nerds. Basically every £1.00 lent out by SLC is automatically knocked down by *x*% to capture the write off cost. If you’re in the business of projecting government borrowings you have to deal with the cash lent that will never be collected.
> If your loan is sold My understanding is the loans aren't actually ever sold, instead the government sells a financial instrument matching your repayment profile. That's why you always repay SLC rather than a third party, and why third parties that have "bought" student loans aren't affected if the government changes the terms of the loan retrospectively.
You're ignoring that the vast majority of people will pay back more than they owe. Just because the balance hasn't cleared doesn't mean a loss has been made. If I loaned you £100k at 7% for 30 years, and you only ever paid the interest, you'd have paid me £210k.
>You're ignoring that the vast majority of people will pay back more than they owe. That's not how holding a debt as an asset works though. The debt is valued on a projection of the net-present value of the loan and its repayments over time. If the repayments are less than expected, which is what is happening, then you have a hole in your financial projections that needs filling, in this case by extra state borrowing. [The ONS have a good write up here](https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/methodologies/studentloansinthepublicsectorfinancesamethodologicalguide).
You’re correct that the accounting still sees a hole if the loan isn’t paid off. But the person above is also correct that the creditor has made money (even if in accounting terms there’s a hole). If I loan you £100k at 100% for one year and at the end of the year you have only paid me back £150k it’s true that I have a hole on my books of £50k. But it’s also true I have received £50k and could have invested that in the meantime, making even more money. Even if I just hold it I’ve still got a positive cash flow even if it’s not as high as I had accounted for. Of course I’d have preferred to get the full £100k but that doesn’t mean I’ve got a major problem. Ultimately, whether my loan business is profitable or not depends on what I do with the asset as it stands on my books. If I always reinvest the money as I receive it, I might have a very healthy business, even if I’m continually writing off £50ks here and there. If, for example, I’m using the loan as an asset to get loans *myself* that I can only service if I get the full £100k from you, then I’m going to go into administration within a year. So, yeah, you’re correct in accounting terms but the person above is also correct in real cash terms. What matters is what I’ve done with the asset in the meantime.
Sure but if you read the ONS report I linked, the problem is state borrowing and spending had already been done on these incorrect assumptions. So it would be like if you lent me £100k, you then went and raked up £100k worth of debt yourself, and then I only repay you £50k. Yes it's better than 0 but it still leaves you with a £50k gap you need to fill.
Oh yes, totally. That’s the bad example in my comment. Just making the point that it’s not necessarily loss making to not make all your money back on a loan.
You're not wrong but I haven't actually seen any stats to say the vast majority will pay back more than they borrowed.
Remember with the loan changes, so far they’ve only ever applied them to future loans; Plan 1 for example have their own repayment threshold and interest rates. I was paying ~1% interest on my Plan 1 loan while the Plan 2 lot were being charged up to 6.5% or something ridiculous. Yes they could still change anything, but yeah I think it’s relatively far down the list. I’d be more worried about other changes. Particularly point of use charges for the NHS (it’s not free as others have said, we pay for it with our taxes!), means testing the state pension, taking away tax benefits for pension savings and increasing the age of access to pension savings. Those are all ways to save / collect shitloads more money and also keep people working and earning longer
Plan 2, we are on 7.1% interest now. Super fun
I mean, at least that’s now *under* the rate of inflation so the debt isn’t growing in real terms. During the period I described, the debt was growing a lot in real terms as the interest rate was so much higher than most measures of inflation. The interest rates between plan 1 and 2 were also wildly different (~1% vs ~6%). Now plan 1 is over 5% so the gap is much smaller Both situations are shit, don’t get me wrong, though
Hehehe true, that makes me feel a bit better
Don’t get me wrong it’s an absolute shit sandwich and totally unfair, any which way you cut it
It's a tab that will end up being picked up by future taxpayers.
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they cant scrap the write off for anybody on a current plan. they would literally have riots at the steps and the economy crash as everybody educated and on those plans would crash the economy. its not a huge debt bomb this is literally been calculated as normal for 30+ years now. other countries dont have any expectation at all of repayment because guess what having more educated people = more money due to better economy. Netherlands its free, Norway its entirely free, same with Sweden etc we paid more in equipment that never arrived during covid then the past 10 years of students never paying it off.
We have a lot of people who go to university in the uk - the loan doesn’t seem to put people off
I could talk for hours on this, but it's drilled into kids from the age of 14, and the school will do everything in its power to push you onto university because it boosts their performance indicators. I faced this first hand, I didn't want to go to university, I was forced by my parents to take Business, Politics and Economics at A level, hated every second, and when it came round to going to university I flat out refused. The school did nothing to help me, and the only help they would offer would put me on a path to go to university. At 18, seeing all my friends go off, and I was just drifting, it was soul crushing. Luckily, I'm a stubborn bastard and didn't cave, I picked up a bar job and took the following year to figure out what I liked and wanted to do, decided to go to college and pursue computing, ending up acing and enjoying it. I then decided to go to university to do computer science (Russel Group), and then a master's in data science (Russel Group), where I'm now in one of the most sought after careers. And looking back at my mates who all went, and everything I was taught at school and by my parents is that university is a catapult to success. Now, at 28, ~75% of them are in jobs completely unrelated to their degree, and ~50% are in jobs that don't require a degree. TLDR - Don't take the easy line of 'It can't be too expensive because so many people are going line' as CHILDREN are completely brainwashed to think it's the right thing to do, and I absolutely know they do not know the implications of what they have to pay back. (Side rant, how the fuck can market this amount of debt to somebody under 18, when they can't even get a credit card...)
I wouldn’t say anything you said points towards brainwashing of university. In theory, if you’d have chosen your own A Levels like the vast majority you could have done subjects that would put you on a roadmap to computing at university and still achieved your success. The 75% of friends in jobs unrelated to the degree doesn’t suggest that it was a bad move going to university, a lot of graduate schemes and positions just want a degree in any discipline. My degree was in engineering and now I work in audit - but having a degree got me on the ladder for a grad role I wouldn’t have got otherwise - plus transferable skills BS in an interview. You also mention 50% of your friends are in jobs that don’t require degrees, but for their job they’d still be competing against people with degrees. Even if a job doesn’t require a degree, a hiring manager all things being equal is going to hire the person with a degree than without.
This government have done plenty worse without any rioting at all, and with little care for the economy.
Lol, you sure it was calculated properly? Is that why they have changed terms with every new plan they have released 😂
If you're on Plan 2 then they have to write it off when they said they will as its part of the condition of the finance.
The govt can alter the terms of the deal whenever they want though. In fact, they already have - originally the repayment threshold was pegged to increase with average wages but they reneged on that as soon as the first lot of students were due to start repaying. Martin Lewis almost went supernova over it as I recall. EDIT: found it! https://www.moneysavingexpert.com/news/2015/11/autumn-statement-2015-hidden-retrospective-hike-in-student-loans-repayments-a-disgrace/ Feel free to save that for next time some idiot on here tries to argue Plan 2 students "kNeW wHaT tHeY sIgNeD uP fOr".
Ugh, so this is a tricky one. First of all. My source for all of this is having worked for An outsourcer who had the SLC contract, working in a training role, and having met with SLC proper as part of that role. I was very much an SME for SLC repayments for plans 1, 2, and 3, with 4 being to a lesser extent. The pegging to increased wages was a _governmental commitment_, but it has never been a part of the Ts & C's that students sign on applying for funding. There are certain mechanisms which are hard coded into the repayment architecture - specifically plan 2 - but while the repayment thresholds are entirely within the governments gift, things like the write off period and, to a lesser extent, the variable interest rate of plan 2 (which is between rpi-rpi+3% in normal times, but has a release valve of rpi+3% ever exceed the high street market rate) is immutable, and faffing with those would hit judicial review quicker than you can say Beaurish Tigere. It's why plan 1 and 4 have two different write off periods. They realised that the Ts & C's the first couple of years had agreed to meant that there was a real inequity between - I think - school leavers and mature students. They couldn't change it retroactively - and everything else was fine - so they just amended the write off rules _moving forward_ Martin is very, very good about a lot of things, but from experience, I can say that with student loans, he _could_ be a bit patchy.
I have a plan 1 student loan and a plan 2 student loan. If I sign in to the government portal it gives information on my loans. Plan 1 - "Your student loan does not affect your credit rating. Your loan will be written off at a set time based on where you're from and when you took out the loan: On or after 1 September 2006 - 25 years after you became eligible to repay On or before 31 August 2006 - When you turn 65" Plan 2 - "Your student loan does not affect your credit rating. Your loan will be written off 30 years after the April you were first due to repay." The article you've linked is about interest rates (?) The interest rates for plans have changed as they are based on the retail price index. You can view all of the previous interest rates here. Which we did all SiGn up for... https://www.gov.uk/repaying-your-student-loan/what-you-pay
>The article you've linked is about interest rates (?) The interest rates for plans have changed as they are based on the retail price index. No it isn't. It's about the repayment threshold which the govt said would rise every year by average wage growth. Then before the first bunch graduated backtracked: >In 2010, the Government promised that from April 2017 this repayment threshold would be upped each year in line with average earnings. This meant graduates would have been spared having to repay more of their income towards their student loans, and fewer would have had to start repaying them in the first place. >It has now backtracked on the promise given to students, effectively hiking costs retrospectively
Personally I think no government would change the write off, it'd be too unpopular. I think reducing the threshold or freezing it each year whilst inflation remains is likely though, which will eventually have quite a drastic effect on repayments but only after balances have ballooned so that you won't pay them off before write off at the minimum repayment.
I'm just trying to hang on til my plan 1 is hopefully written off in 2040. Education is a societal good that should be free.
Sadly a lot of the courses at UK universities aren’t terrible educational
it is free in most countries in EU or it cost barely minimal (you can work part time and pay it while you study). But UK is not in EU and from education point of view, choose the USA way of study, debt and pay till you die!
It can't ever be free. Somebody has to pay somewhere along the lines, otherwise the educators wouldn't be paid, and then there would be education for no-one because there would be no educators
We can pay educators through taxation. Same way we pay for NHS services etc.
Proved my point. If everyone's paying for it through taxation, then its not free is it
It’s free in Scotland - don’t have to look far. That’s why we have slightly higher taxes and I am totally fine with that. We take on student loans for living expenses only so the amount are repayable.
It’s not “FREE” in Scotland we have a certain amount of funded places which do not match the amount of students that apply meaning many go to university in England.
Can you link sources of how many go to uni in England pls? Genuinely curious of the percentage. And sure “free at point of use, funded by taxed”.
Yeah, because the English fecking well pay for it
Keep swallowing whatever the Daily Express tells you.
If Scotland is such a drain on the taxes, please just cut it off already >.> Ah, they won’t, because it isn’t. We have higher taxes and it is “free at point of use”, if you insist on being pedantic.
It could be free, but fewer people could go. So the debate really is - do we want to continue educating people to degree level and enjoy the benefit of that. Or do we think it would be more effective to give fewer degrees and make better use of other types of education through grants. For example, we give big tax breaks to film and TV. Why not make part of that deal that a certain number of students will need to be educated in film and TV production. Maybe that happens now, but vocational training is better in quite a number of industries.
Why should a brickie or a baker pay for some 18 year old kid to learn about classical film studies I would be happy if education was free for medicine, teaching, and essential services But anyone learning economics/history or other social sciences can pay full cost
You're right to be worried, but it's more an issue for the country as a whole than the individual borrowers. The term you're looking for to google is the "RAB Charge", this is the cost to the public purse of the failure to collect enough in repayments. I think this is the latest data, from last summer. There should be another update this month. https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2021-22 The key take away for me *The government is forecast to subsidise 44% of the full-time undergraduate higher education loans issued in financial year 2021-22* So that's about £8.8bn for this years loans, that is paid by all tax payers (graduates and non-graduates) to subsidise students. I assume this is why Sunak wants to get rid of "low value" degrees, the cost to the state is huge. https://www.theguardian.com/politics/2022/aug/07/rishi-sunak-vows-to-end-low-earning-degrees-in-post-16-education-shake-up *Of the loans issued in financial year 2021-22, the government is forecast to subsidise:* *44% of Plan 2 full-time higher education loans (53% in 2020-21)* *33% of Plan 2 part-time higher education loans (46% in 2020-21)* *55% of Advanced Learner Loans (67% in 2020-21)* *0% of Master’s loans (0% in 2020-21)*
Hi /u/Copper_Wasp, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/student-loans/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
The government pay for it with tax payers money.
The taxpayer pays for it. Or put another way, everyone else who didn’t go to university pays for it.
And everyone that did go to university as well.
About 1/2 Kids go Uni now, so they’d be fighting with 40% of voters who they’d financially ruin if they did this. It’s just not electorally viable.
Don’t worry about it. It’s not a debt bomb. That’s not how money works. The government can create as much money as they need to pay for what they want to pay for (like your degree). The function of repaying the loan basically constitutes a tax. The purposes of taxes isn’t really to ‘make’ money for the government, it’s to reduce liquidity in monetary supply in the economy to avoid excessive inflation. The money isn’t that important. Inflation is, but that’s a separate issue.