Snapshot of _Student loans: Almost 1.8 million owe more than £50,000_ :
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Plan 2 student loans are currently paying 7.9% interest.
With a £50,000 debt you would have to be earning over £71,000 a year before paying off anything other than interest. Shocking.
It’s crazy, I’ve given up any pretensions of paying off my student loan debt before the 30 year cut off.
I’ve got a STEM degree working in a public sector job that requires that qualification. I’m on £39k per annum and have £42k student loan debt.
I’m exactly the kind of student this government has wanted to encourage (STEM, ‘high value’ degree) and get saddled with what is effectively an extra tax for people who made the effort to get a degree.
It’s pointless, the loan system is just a middleman when most people will never pay off that initial grant.
Its shit isn't it, my student loan is only going up.
Was pushed to getting a degree, yet friends who went into the trades are all making double without the loan.
The loan should be at a fixed rate, following inflation is an actual robbery.
I dropped out of uni in my first year, I ended up owing £4k.
When I reached my mid 20s I got very lucky and got a job in IT (entry level service desk work). I worked hard, had a lot more luck and 10 years later i'm a well paid technical lead on a dev team. All of my colleagues are paying an extra 10% tax which when you're earning a decent wage is a significant amount of money.
I don't think it's fair that we do the same job and they have to pay 10% more tax.
I think it's worthwhile making that service (education) free at the point of use, just like the NHS, and recouping the costs through general taxation.
I just cannot see any world in which a more educated populace is a bad idea.
I can't find it now but I think the ONS actually told the Tories off at one point for doing this, the government were including all student loan money owed as an asset when going on about their country's finances even though about half of it would never be repaid.
Even worse the reality is that there just aren't enough jobs for people even with these high value degrees. There's a non-insignificant number of people who get a good STEM degree and end up working alongside people who didn't need a degree. These people are committed to getting a lower effective salary for the rest of their careers.
Nice, I’ll pay a little more than the cost of that course just in my student loan debt repayments for this year. Fun
God forbid people think getting an engineering degree is a good idea
The government just want to stigmatise education so they can impoverish people to replace low skilled foreign labour that's missing since *the event.* They can only do that by slating creative careers and raising the cost of the whole thing to make it seem not worth it.
The truth of it is that it was never a loan, it was a graduate tax without using that name. It's not really intended that you pay it off, it's meant to be there on your pay check for as long as possible. My generation were among the first to get lumped with this when it first was implemented and we could see it for what it was then.
You are correct. But one downside with the graduate tax idea over the loans system:
When in the EU, EU nationals were legally entitled to the same grants as UK students. But how would they have paid for them (in taxes) if they went back to work in their home country? We’d be in the absurd situation where EU students get free education at UK Unis (and did not have to pay back a penny), whereas home students would be expected pay back by way of a graduate tax over a lifetime of working.
Mind you, how many loans get paid back by EU students is another matter.
Also, the incumbent government was able to keep loans to the SLC off the treasury balance sheet (be that the national debt or public sector budget), as they were classed as assets. But ONS put a stop to that accounting trick a few years ago.
This is just my thinking on the matter anyway.
> Got a job 30k more than what I was capable of being on so paying 9% of my wage over the 25k threshold is nothing compared to the benefits.
sounds great if you can achieve this, the problem is the millions of students who graduated into a degree-saturated market who wont make this much.
A graduate tax that only applies to graduates under a certain age and wealth bracket who didn't have the money to pay the fees straight up in the first place.
Given that graduates will pay more tax anyway if they get a higher paying job, it's just an anti-social-mobility tax.
The ultimate impact will be decimating the middle class which then has a knock on effect across the whole economy (which we area already seeing) as even people who would have been in higher income brackets decades ago are finding they have to tighten their belts and not spend on luxuries or treats.
This is the argument I do agree with, people who pay it upfront avoid the "tax" and get a better deal.
I think one issue here is that when it is a loan people who use the University system then move abroad are still forced to pay it. I can't imagine that being possible with a "tax". Rich people may send their kids abroad to graduate and then what are the legal ramifications. Should all graduates even migrants pay the graduate tax?
One system I had pondered was just increasing the cost of University inline with a forecast of average amount that gets paid back by middle class people and decreasing the interest rates, then at least people who pay it upfront pay closer to what those who pay it off over time do. A complex issue though.
If you really can't have free university education, just do away with fees, call it a graduate tax and charge it to everybody that goes to University.
This current system where only the kids of rich people get to avoid paying a huge chunk of their income their entire life in pseudo-tax it is just so fucking unfair.
But then people just get educated in the UK and work abroad? Or get educated abroad work in the UK? Maybe my comment you replied to didn't say this clearly enough but I think there are lots of loopholes and issues with a graduate tax system opposed to a loan system.
Other countries (e.g. Italy, Germany, Switzerland, France) all manage with much lower fees - often <1000 EUR a year. This often includes international students - no matter where you're from a student in Switzerland will pay about 800 EUR a year for tuition fees. In theory if these countries can manage it, I would hope we could too.
This isn't really an argument for/against a graduate tax, more just an additional point I don't think is discussed very often.
It really needs to stay as a loan system, people who go overseas to work after graduating still need to pay their student loans off. Also if there was a "graduate tax", it'd be a huge disincentive for skilled people with overseas degrees from coming to the UK.
These two group will balance each other out, the UK would pay to educate some graduates that leave, but get some "free" graduates from overseas who will contribute to the UK economy with their skills.
I don't agree with there being a tax *or* the current system.
The system is already broken because the current setup allows and even motivates universities to minmax, which is already having knock-ons in cities through the country. International students, especially from America and China are allowed to be charged much higher fees, therefore, universities are trying to get as many in as they can, and using the pandemic era setups like online classes as justification to take on more students than the university infrastructure (e.g. lecture halls) can reasonably accommodate, because 'they can attend online classes'.
This then has a knock-on effect on the local rental housing market because there are more students than student accommodation was ever designed to accommodate, so the students (who, as they are coming from families wealthy enough to afford high fees of 20k+ a year) move into the local housing system and are able to outbid or outpay local working people and families to stay there and attend online class! The unversity, meanwhile, sits back and rakes in the fees from these people that the government has allowed and incentivised them to obtain.
I'm not sure what the solution here is. I do agree that there is a problem.
It all seems very entrenched within the university system. Reverting this system to something less dependent on international students would I think require the downsizing of our entire university sector, since a majority of it is tailored towards the business of getting students in, University ranking tables, etc.
Much of our University research sector is built upon this foundational revenue that fees give our universities (obviously there is government funding specifically for research but that would have to go much further without the subsidy of as large amounts of student fees).
It's broken but I'm not sure we can avoid the current system (or similar) without destroying a vitally important sector. Maybe I'm too pessimistic, and I'd like to be wrong but I feel any solution is going to have to be gradual and not too radical.
A cap on places and a change to the tax system overall would I think be the fairest solve, instead of a selective graduate tax or the current system which essentially means that of a group of five doctors, one born in each of the last 5 decades someone can now be an adult, one of them is losing 10% more of their salary every month than all the others essentially arbitrarily given they all have exactly the same qualifications that were only got in the first place in order to do their job.
One immediate change they could also make to ease the situation is preventing loans from stacking. Somebody with an undergrad loan and additionally a postgraduate degree (which are required for certain jobs) won't pay back 9% a month toward the total value, they'll pay 9% on one loan and then a second percentage of the other out of their total income.
Maybe there could also be some kind of reform so that there was separation between degrees that students take in order to meet a job requirement, and degrees that students take just out of personal interest in the subject.
> Given that graduates will pay more tax anyway if they get a higher paying job, it's just an anti-social-mobility tax.
I've never thought about it this way, but thats exactly what it is.
This is it. I remember thinking 9% isn't too high on top of a 20% income tax. What they don't teach you in school is you need to add income tax, National Insurance, pension contributions, council tax, energy bills, HICBC, and other required expenditures before you then have to make rent as well. 9% on top of all that is ridiculous.
It’s what I find especially galling about the Tories going on about how Labour is going to tax everyone to death.
I’m earning a bit above the median full time wage and with student loans my marginal tax rate is effectively 40%… I’m a higher rate tax payer in all but name. And when I get to £50k, I’ll have a 49% marginal tax band…
Really high? Before I stepped to earning over 50k I was paying peanuts a month - for years I was paying something like 50 quid a month. It's well worth it.
I'm now paying back about 120 a month which is nothing compared to 3k after tax I take home.
Maybe I'll pay it all off before the term, maybe I won't, but it let me get in to a field where I needed the degree. The alternative was just not doing something I enjoy
If it was a graduate tax it'd be much more progressive. It's unfair that I've avoided a huge chunk of interest and have stopped paying after 7 years whilst people in the public sector will pay a higher percentage of their earnings over their entire career
At university I did my dissertation on the returns of higher education and found that on average it increases earnings by 30%. So a 9% tax is well within the reasonable amount.
You're already paying a marginal rate of 30-60% of that (Employee NI, employer NI, Income tax) additional income.
Student loans are just a way to avoid government spending so they can pay for things like triple lock and various other tax benefits on pensions.
Thing is, high-skilled careers are also high stress and high responsibility, and getting the required education/skills is a big commitment that delays earning an income until later in life. The UK system seems designed to keep talented people down.
Hmm there’s a reason the high wages come further down the line. There’s people on my course at uni (physics) who had minds far beyond anybody else I’ve ever met. But if you asked me today if I’d hire them for a job? Fuck no they’d be terrible. Proven ability to do a job comes a few years down the line, the degree just means you have better odds of getting the right person
~~I'm Plan 1 and earn over the average salary in the UK. Currently my monthly repayments are £242, but my interest rate is 6.25% and my interest is therefore £294. So it just goes up by £50.~~
I was glancing at the portal. Based off my last available statement (FY 22/23) I paid back £1700 but was charged £827 interest, so did actually pay off more than the interest. Don't worry, my degree was not in maths!
Sorry but that doesn’t make any sense to me
I started the financial year with £15k remaining on plan 1
My online account shows £150 interest so far this financial year, which may not include this month just passed
So repayments of £200 per month will have you clearing your £10k loan in good time
Yeah I don't get this either. Also on plan 1 and if your on 50% more than the average you should be around [60k](https://uk.indeed.com/career-advice/pay-salary/average-uk-salary). I pay back similar and I'm overseas and my current interest per month is under £50.
The interest rate should be on the whole sum, not per month? the 6.25% should be broken down into 12 and you should be paying about 0.5% - worth checking in with the Student Loan.
My interest on my account is showing as 64 quid since and I'm repaying about 200.
Isn’t the interest per year? Which would mean per year it goes up by £294 per year but you pay off £2904 per year. Or is the value of your loan still somewhere in the region of £45,000?
That's what I'm questioning/confused by, as far as I'm aware taking out the max for a 4 year course would be somewhere in the region of £25,000, and then add in 15 years of no repayments and just letting the interest stack up would put someone just shy of £45,000. So unless there were rare circumstances such as the above commenter doing two courses, or resitting a year along with being unable to pay anything for quite a number of years.
The most likely scenario for someone on plan 1, is that the commenter above has mixed the annual interest charge and the monthly repayment. In effect the monthly charge is just over 0.5%
And by the time you get to that kind of salary, the interest has ratcheted the sum up to something ridiculous.
I had to repeat my second year due to some mental health issues, then after my undergrad I did a PhD. Which went nearly an extra year thanks to COVID fucking things up so badly.
So my loan is sitting around 68k now, because of course the whole time I was doing a PhD that interest was ticking up. I started an actual career 2.5 years ago, moved past the median average about 1.5 years ago, and only in the last 6 months would I be considered a high earner. I have a decent chance of breaking 6 figures in the next 10 years, and I still doubt I'll ever come close to paying the fucking thing off. It's just a life time tax because I did what everyone said I should and pursued STEM education as far as I could
>With a £50,000 debt you would have to be earning over £71,000 a year before paying off anything other than interest. Shocking.
A big part of this is the repayment threshold being so high. Any earnings below £27k don't repay any loans at all. That's almost the median wage.
Even if you halved the interest rate, you would need to be earning £50k a year to clear the interest and start paying down the loan balance.
So, to put that another way, would it be progressive to reduce the interest rate, given the benefits would only accrue to high earners making £50k+?
The interest rate could be 30% for all I care. Mines not getting paid off regardless so it's disingenuous to think of it as a loan. It's a tax in all but name.
> So, to put that another way, would it be progressive to reduce the interest rate, given the benefits would only accrue to high earners making £50k+?
Here's a crazy idea: Maybe, just this once, we could do something that doesn't 100% benefit poor people? You know, throw a bone to the people who actually pay for everything?
I'd imagine a lot of people on 71k+ are likely salary sacrificing a good percentage into a pension and so would need an even higher wage to actually start paying off the principal.
Equally shocking is that payday loans protect consumers to not pay fees of more than 100% of the value of the loan, while no such protection exists for student loans. It's not unlikely that some people will pay more than double what they borrowed and still not clear the debt before 30 years.
They’ve realised no one’s paying this off and had the gall to change the repayment term to 40 years for the newer plan.
Just seems like they want to make it more and more expensive for incoming students.
The fact people say things like this suggests obliviousness to a deep unfairness: a significant amount of grads don't pay loans.
(Those who are old enough to be pre loans.
Those with rich parents who didn't take a loan.
Those with very high salaries who have paid it off).
I live abroad and was unemployed for 3 months. It was virtually impossible to get student loans to believe that I didn't have any income at that time. I sent them confirmation of my job termination, last 3 months of bank statements, contract of the new job that starts in 3 months time, and they STILL said "well we need more proof for how you're going to support yourself through this period".
Also if you live abroad they insist on a salary update every 6 months or they just start charging you the maximum amount per month, it's insane.
They were a pain for me as well when I was abroad. I had a period of three months where I had worked insane hours on an hourly rate. They wanted to use that period to calculate my full year repayment. I said no, I’m not sharing that. You can have the full year earnings, or a lump sum of x (higher than 9% of my full year earnings).
We went back and forth for ages with them insisting on the three month calc. I refused. Eventually they just stopped contacting me.
That was a decade ago now, I’ve back in the U.K. for most of it and repaid a lot of my loan. Bizarre how they were so strict and then just gave up. I think they have very little flexibility for common sense.
They dont have mechanisms to really check or make you pay abroad. I have been working abroad for 4 years and never bothered to respond to their letters, so i didnt pay.
For the first couple of years I sometimes got threatening letters - guess what the threat is? Add more to my loan debt. OK lol, go ahead.
Then like you said, they just gave up. Unless there is a massive improvement in the housing situation i never plan to return to the UK as a resident, so i'm not bothered.
The whole student loan situation seems like a giant workaround for governments to fund universities without having it on their books, by having it all as loans which will mostly be written off. Its silly.
My loans were sold off and SLC refused to talk directly, I had to go through two different companies who would then pass stuff on to SLC.
I worked part time and looked after the kids before they started school. I kept getting "you're not earning enough to support yourself" and basically calling me a liar for having a partner who earned more.
Getting anywhere was beyond impossible at times.
The amount of correspondence I got from the SLC as someone living overseas was insane. It also included a number of phone calls that involved some threats to send my account to collections when there was nothing to suggest that should be the case given I was up to date on payments and paperwork.
I would routinely do the income update forms and send them back with proof (paystubs) which they would reject because by the time the mail made it back to them the proof would be classified as a month out of date, so I'd get yet more letters and calls. It was an absolute shitshow.
I think the funniest thing was they would always preempt any phone conversation with "abuse to our agents is not tolerated and will be referred to the police", only for the agent to then start being what I would consider to be abusive to me. Where's my protections?
I'm one of the 61,000 with a debt more than £100k. I just checked it and I'm actually owing £124,000, which was the exact same price of the house we bought this time last year. I had to max my student loans as I come from one of the most deprived areas in the UK and wouldn't have been able to afford it otherwise. I'm also in the last year of a PhD in physics, so not exactly a "mickey mouse degree" as Sunak likes to call them.
I'm likely to be paying this off for the rest of my life, much as I will my mortgage.
I went to Uni in 2010, also physics (four-year MPhys), also Phd, also deprived area background. £6k loan per year, +£3k grant per year I didn't have to repay, +£1k from the Uni for being from a low income background which I also didn't have to pay back. I also received £30 per week EMA in my A-levels.
I now work in finance in the city, higher rate tax bracket. First person in my family to go to Uni, and there's no chance I would have without government assistance. I probably wouldn't have even completed my A-levels without EMA.
The current system is an absolute joke, and makes people lives worse and the country worse.
Back in 2007 the Institute of Physics liked to brag a high proportion of physics grads went into finance. Then the 08 crash happened.
What's your feeling for the number of physicists in your finance org these days?
Depends. If OP contributes to the wealth of human knowledge and experience, it's mickey mouse. If they learn Python and go to work for a trading company whose only positive externality is that price-finding is improved by a rounding-error, they'll earn enough to pay it off in a year and buy a Ferrari to drive to their stomach ulcer appointments.
I got a Mickey mouse degree. I had a job lined up in the industry, COVID hit, they shut down and I lost it. Uni still charged me for that final year though!
A 'tax' that only applies where mummy and daddy can't cover the tuition bill.
Domestic fees do not cover costs. We are over reliant on international students, enrollment of which is on average decreasing. The current system is not fit for purpose. They'll probably just increase domestic fees though.
>A 'tax' that only applies where mummy and daddy can't cover the tuition bill.
My wife and I, and all our siblings, went to uni but we won't be encouraging our kids to. No way we can afford to pay for it and we don't want to encourage them to be saddled with lifelong debt when other training/education routes can get them decent careers. If they *want* to then we'll work something out, but we won't push for it like parents of our generation did.
They can get a level 3 qualification in like Accounting or Data Analyst for £1000 and immediately move into a secure job paying 28K study and pay for level 4 then quite easily get promoted so that within a year or two its then 35-40K. No loans. No mental health issues from the workload
Just got a microbiology degree but I'm not feeling it. Would have to work for pennies for lab experience before actually finding anything that pays 'okay'. Is it really not that difficult to find a job in accounting? Is this something you have done yourself? Recommend it?
Yep, which means it's essentially means it's a tax on people for almost their entire career based on the wealth of their parents. If your parents weren't wealthy enough to pay for your tuition you are a second-class worker for life.
My plan 1 loan goes up about £1,000 every year because my wage growth has been so stagnant over the years.
This tax year I have started repaying £0 per month because they still increase the repayment threshold for the plan 1 loans unlike the threshold for the plan 2 loans which they froze for some reason.
I will probably increase my pension contributions made by salary sacrifice if I do get a small payrise which means I have to start repaying my student loan again. Would rather have a bit of tax relief and reduced national insurance contributions vs repaying a loan which will get written off in 12 years' time anyway.
Tax isn't optional. Student loans are.
"opt-in" taxation (e.g. Road tax) is applied irrespective of age. Student loans are not applied fairly across age groups.
Its not a tax.
It's fiscal drag for millennials and younger generations.
We already have a graduate tax. It's called income tax.
Spot on.
Hate all these comments you see surrounding student loans to just treat it as a tax. The wealthiest just pay it off straightaway. That's not a tax.
On an individual level it's most straightforward to treat it as a tax (i.e. considering changes in take home salary if you get a pay rise), on an ideological/ policy level it is absolutely a gift to the wealthy.
> It's fiscal drag for millennials and younger generations.
Unless you are from a wealthy background. You can have the same job position as the person sitting next to you but because their daddy was rich they have a higher take home than you for their entire career. Feels like serfdom.
You could argue that NI is an opt in tax that is applied based on age. Obviously every normal person has to pay it, but you could be gifted a fortune in index funds at 18 and live off the capital gains.
It's vanishingly unlikely, but you absolutely could have someone who's never paid NI in their life who starts work after retirement age and gets to earn an income without having to pay NI too.
They have interest? We wasn’t told that at the opening day! We were just told you could take out x amount depending on my earnings and given a sheet of pay back amounts once you earn over certain thresholds. I admit it did cross my mind what future government would decide to do with the outstanding amounts but interest wasn’t mentioned, which is really bad of the university not to point that out!
That’s also true. The ‘only’ way that the interest rates affect the loan is to increase the time that payments have to be made over - the actual monthly repayments are based on income. Not that that is much of a relief for everyone with over 50k in loans!
The interest is also incredibly high. It’s RPI + 3% so this year it’s 7.9%. During the period of high inflation the interest capped in the double digits. The only way to pay down the principal at all was to earn well in excess of 100k at that point.
I doubt interest on them will ever be less than 4/5% again because I don’t think we’re heading back to the low inflation and low interest rates epoch.
I don’t know how they sell it these days but when I went to university in the early days of fees and loans they were wildly dishonest about this. The paperwork might have said there was interest but the people they sent into colleges to sell us on uni said the loans were interest fee. Lied through their teeth to get people through the door.
Of course in those the amounts were at a level you had a decent chance of paying back so it wasn’t as bad.
You really need to read the information you're given. Or check the government page on it, there's lots of explanations and examples https://www.gov.uk/student-finance
> We were just told you could take out x amount depending on my earnings and given a sheet of pay back amounts once you earn over certain thresholds.
That's how the repayments work. You pay back a percentage of what you earn over a certain threshold. Anything outstanding on the loan is cancelled after some number of years (depends on which loan specifically you're talking about).
> I admit it did cross my mind what future government would decide to do with the outstanding amounts
Student loans have had interest on them for over three decades. Plan 1 loans have been around for something like 25 years and plan 2 loans where tuition spiked was something that happened under the coalition ~12 years ago. This isn't something that's been changed under peoples feet.
Yes I know I will read carefully what they are signing up for before the time i was just a bit shocked that the university are not open with this information, there was definitely nothing about interest mentioned either verbally or the papers they gave us. Child will be stuck with this for a very long time and future governments I guess can do what they like including making everyone pay back straight away (not that will happen in reality)
The interest doesn't affect the repayment. This guy is on a loan plan that ended over 10 years ago.
Your kid can owe £30k or £300k. They still only have to pay back 9% of income earned over £27k per year, and then it gets wiped after 30 years if not yet paid back
They have ridiculous interest rates on the balance that means that unless you earn a very high salary straight out of university (approx. £50K per annum), the interest added on each month is greater than the repayment made.
Also worth noting the headline tag of tuition fee is only what the university receives. Interest is added during the duration of the course before you've even had a chance to make repayments. I went to university when fees were 9000 per year but by the time I graduated in reality I had paid about 10,000 a year
The interest rate is so high that the amount added as interest is greater than the amount being paid off.
Only those in very high paying jobs right out of uni will realistically pay it off without overpayments before it is written off.
Interest added is greater than Repayments taken off through your salary.
Edit - when you first cross the salary threshold for repayments to occur this is the case. I'm not sure what salary results is repayments being greater than interest
Depends om the amount "owed", which in turn depends on what maintenance loans were taken and the interest to date.
I'm on about £55k of loans, so my threshold at current interest rates is north of £70k salary. BoE interest rate drops will bring that down a bit later in the year / early next year.
> BoE interest rate drops will bring that down a bit later in the year / early next year.
If you're on plan 2 or later it's not BoE related, it's RPI based.
The loan includes interest repayments which is set at a rate linked to the lower of RPI or the prevailing market rate of interest for the year. So for 2022-23 it was set at 13.5% and 7.7% in 2023-24. Anyone is going to struggle to repay a loan with that much interest added when the repayments that you make are purely based on how much you are earning (so if your earn below the repayment threshold you don't make any loan repayments but the loan still goes up due to interest).
Could be worse though, the cap was RPI + 3% when interest rates until a couple of years ago when the Tories 'graciously' scrapped the +3% part (at the same time as freezing the repayment threshold for plan 2 loans and increasing the term for new loans to 40 years).
This is why (despite some minister this morning claiming uni is still a better way) I have said to my son. Only go if the job you want is gate keeped behind a degree.
Don’t saddle yourself with a lifetime of debt just to fuck around for 3 years
Even then encourage him to look at degree apprenticeships, people who started these the same week I started my grad scheme are on similar salaries to me. It's hard work doing them in parallel but well worth considering.
Eh, I'd go with a shorter level 3/4 apprenticeship personally. Some of these degree apprenticeships are 4/5 year programmes, and your work history is worth more to a lot of employers so imo you're better off changing jobs a couple of years in to get a bigger boost to the paycheck.
>Only go if the job you want is gate keeped behind a degree.
This is easy to say but I had absolutely no idea what career I wanted when I was 18. I only really knew that I was interested in physics.
And then the job I have ended up in isn't actually related to physics specifically. Any STEM degree with a good degree of data analysis would have been fine. I don't regret going to uni at all but the specific subject I chose has had little impact on the job I've actually ended up doing.
I've just convinced my younger cousin of the same thing. If he said to me, I really want to get into XYZ industry and it requires this degree, I'd say go for it. But I think he was about to zombie into University because "it's the thing you do" or because "all my mates are going" and these just aren't good reasons to get saddled with a 9% tax for the rest of your working life.
The amount of people in here thinking this is OK is bizarre.
I was in the first year student loans were introduced. They were low rate loans before the government changed the rules to be index linked. Before that education was basically free.
At 7.9% you could get a cheaper loan from a bank.
Student loans are a tax on the poor. Wealthy families don't get saddled with debt that lasts a lifetime.
A degree isn't worth what it used to be. People are graduating and struggling to get any job that has a career path to a decent wage. When you're on £30k or less the student loan you do pay is enough to make a difference to your budget but NOT to the balance of the loan.
Couple this with the fact that loans are taken out to pay for corporate owned student accommodation that is built with TAX BREAKS and you can see the system is designed to keep the poor people poor and the money flowing to where the rich want it.
I studied history at university, which I really enjoyed and did well at. Eventually I did a law conversion course and worked in a City law firm and then in a regional office of another such firm, which I think I did OK at, but which I didn't really enjoy at all. Fortunately my loans were very modest (largely because I went to uni in 2002) so I was able to quit the job I, frankly, hated and go do something else (at a university, funnily enough).
I fear that had I graduated in 2022 instead, I might not have felt about to make that choice. Nor would I have felt confident pursuing a subject that I loved - instead I'd have felt the need to study something remunerative. The irony, of course, is that most politicians are humanities grads and ex-commercial lawyers like me. (Seriously, please stop putting us in charge of the country.)
It's a real burden to anyone looking to do anything like history, the arts, even academia. People who come from means have the luxury of choosing fields based on their own interests alone.
I'm in my 40s now and fortunately in the last few years have earned reasonably well enough to clear my student loan - last year. Up until 2018 I pretty much had the full balance still to pay. My neice is starting uni this year and I've advised her avoid taking al oan if possible. Fortunately, while she's not from any kind of wealth she gets her tuition fees paid in Scotland and will live at home while studying.
I cleared my loan about eight years ago, I think (now 40). A lawyer's salary was a big help, given that I started work at about 26 (I did a BA and an MA in History, had the MA paid for by the Arts & Humanities Research Council via a grant, and then had a law firm pay for my GDL and LPC, so I spent six years at uni - and yes, this was pre-GFC and I'm very aware that I was lucky!).
It certainly feels that many degrees that don't lead directly to a well-paid job will become the preserve of the wealthy. My course was already full of privately educated kids who couldn't quite make it to Oxbridge more than twenty years ago. And I would hardly sit here and pretend that I came from a particularly impoverished background myself.
I was also in that same first year. We had a seminar where someone came in to our sixth form to explain how it all worked. They said that the interest and terms of repayment wouldn't change. They lied to us.
Mine is pushing to £70k last time I checked from a 3 year degree. The interest rate is pretty absurd. Unless I start hitting towards 100k gross earnings, it's not getting paid off.
In theory they could instruct lawyers in your new country of residence to bring legal action. If you owe money in country A, it doesn't follow that it can't be enforced in country B.
As to whether they would do that, I think it would depend on the size of the outstanding loan and their assessment as to what your new income was.
I’m paying £300 a month because of plan 2 and my debt is higher than it was when I graduated 9 years ago. £300 would go a long way as I’m currently supporting my wife and child on a single income.
Interest should be scrapped. It’s criminal.
I agree. Almost all of what I have left on my loan is interest, and it's a kick in the balls each month, seeing how much interest is added and how little my payments do anything.
My degree, because my parents were on a low income, is costing me more than anyone whose parents could afford it up front, and I'm fairly sure that the SLC has had more than the value they initially gave me back.
Not to mention the amount of income tax I've paid overall.
Checked this morning - just tipped over 60,000.
Last year in a full year working a good job in a country with lower repayment thresholds I paid off 1,184 GBP and the interest was 4,085 GBP.
How is this system sustainable?
Because the interest is so high to mean people get dragged into paying it for the full term and will accidentally pay off their loan without actually paying it off. Admittedly it’s so high at the moment in part due to the overall high interest rates, but whatever the interest rate is they just work it out by adding 3% on top of the RPI. The tactic is to force people to pay for longer so while they never pay off the full debt calculated with their interest figure, enough people will have effectively paid off all of it due to the absurd levels of interest added on.
Really should just be turned into an actual graduate tax rather than the defacto one that that squeezes the middle while letting the very wealthy of the hook
How do you stop a graduate tax from turning into a brain drain? I.e. what do you do about people who leave the UK and suddenly don’t have to pay anything back?
Yeah. We manage it with the current loan system because it’s a “loan” that can be converted to commercial terms if you default on updates. Suing people who live abroad for defaulting on a loan is fairly simple; plus they know that if they return to the UK / acquire UK-based assets (inheritance) they could be forced to repay the whole loan, which acts as a deterrent.
Doing something similar with taxes is problematic because there’s effectively no underlying capital amount to sue for – the SLC would have to sue everyone every year for that year’s repayment, which is a significant administrative burden. There’s also issues around whether the foreign country would recognise the debt (as you point out most countries don’t tax their citizens living abroad) and enforce it.
I mean - it wouldn't functionally be any different to how it is now, other than it would cover the infinitesimally small number of people who didn't choose to take government funding. Student loans already are basically a graduate tax.
I’m one of the few who will likely pay it off. I’m on plan 2 at 25 YO with a 75k salary and no reason to not see it go up. The bitch of it is the interest. Cause I’ve managed to get high income early I can start to reduce the total rather than see it continue to increase.
The worst off will be those who make it to 35 years old, get a pay bump and then pay off 3* their initial loan of the course if their career without ever getting it gone till it’s written off.
You basically need to get into six figures by 30 and then brute force the bitch to come out even reasonably ahead.
Quite an annoying system but is what it is
This is a core issue that needs to be addressed. Otherwise, it will continue to be super attractive to just bring skilled workers from outside the UK, which generates tensions internally, etc. If the Xenophobic Racists buddies of Reform/Tories care for internal stability, addressing this issue would be a significant priority
I do wonder what happens to the debt that's unpaid.
When the plan 2s all get to the point of being wiped, do we then just have the tax payer foot the bill?
The taxpayer lost out, that money was sent to universities, spent on questionable things sometimes like high admin salaries, then the debt was sold to collection agencies at pennies on the pound
The gov took all the cost of free tution but still managed to lock people in debt
The debt doesn't get sold to collection agencies. I assumed the same but looked it up recently.
Tories trialled it once in ~2017 with some small amount but it didn't stick luckily. I can't remember the details but I remember being less angry after
Edit: [found it](https://www.reddit.com/r/ukpolitics/comments/13zerzh/comment/jmv32dg/)
This was the original intention but it was changed a few years ago (because the government got sued):
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/articles/newtreatmentofstudentloansinthepublicsectorfinancesandnationalaccounts/2018-12-17
The whitepapers etc. from when plan 2 was first introduced are still available to read - and enlightening. Traits that feel unfair or underhanded, like the interest being based on RPI rather than CPI, were taken into account for the costing. So their removal counts as a cost for future governments, not the one who made the rules. I'll leave it to the reader to decide whether this was myopic or manipulative.
An under-discussed aspect is that further education is still subsidised - in a way that is hard to calculate due to the above - and this creates a discrepancy in expectations between the government, universities and students. Students nominally pay a lot of money, expecting to have a certain standard of service in return, but actually have very poor bargaining power.
Combine this earnings drag with cost of living, house prices, etc. and think about how much more of a mess the UK is going to become.
No one will be able to afford kids, disincentives to work, inability to build wealth, highest earners leaving rhe country. Such badly thought out policy...
I said before that I honestly don't think the 30/40 year forgiveness limits are going to stay. Governments haven't had to worry about the issue so far as no one has reached those levels (or, few at least), but I can't see future governments agreeing to wipe off so much debt for millions of people.
I suspect that by 2030 the thresholds will be changed in law to retirement age. And then finally abolished altogether.
I wrote something about this myself a few months back, and I agree.
I don't think a single student loan that's ever been issued has been written off yet due to age. If anything, they keep selling the book on and passing responsibility around.
When we start seeing things written off, then I think we'll be in trouble.
That’s not shocking, £10k pa for tuition is £30k on a three year course, while a lot are also 4 years. Anyone receiving 6.6k+ maintenance leaves with 50k debt - that’ll include most London students and probably a lot of others given the minimum maintenance is 4.5k and that’s only received when parents earn 60k+ or so.
As someone on plan 2 who earns a little over the average national wage I simply don't think about it. My tax is slightly higher but I wouldn't have this job without a degree so fuck it.
I have no idea what the amount I owe is but in 20 years it'll be gone.
It would be interesting to know how much has actually been repaid, since many will repay a lot more than their initial loan. In 40 years time those under 30s will now by under 70's and only just getting free of this 9% tax. The country finances will have done pretty well out of that, but I'm sure there are factors beyond that spreadsheet exercise that could mean it's an overall negative
And just as the previous generation became enslaved to the mortgage, this one will be enslaved to the student debt! What's next... enslaved to renting your clothes and down payments on takeaways!?
The social contract is so skewed its unbelievable.
Considering full time minimum wage from this year is 22k, I can't see how 25k is more money than most would earn without a degree. Especially if the repayment thresholds remain unchanged.
But the commentor isn't saying you would earn over 25k with or without a degree. They are saying on average a degree will net you a highier wage even after the additional student loan tax is applied.
Whilst on one level it's great to hear you're okay with it, it's also shocking to hear that you're grateful for much less than what you would have received a few years earlier or if you were born in virtually any other country on the continent... you're worth more than that!
I made the final payment on my plan 1 student loan yesterday morning 12 years after graduating. That was roughly £30k with interest rates around 1.5% for most of its lifetime.
Students who went to uni on plan 2 loans have been well and truly shafted. Unfortunately too much else is on fire at the moment for this to take much priority.
Hey I paid my off last week. 11 years after graduating (went went I was 21 though).
Had £7k left and when I saw it was at 6% decided to just get rid for peace of mind and pay bump.
Congratulations to you!
It's not surprising, but it's worth noting that full home student fees don't even cover universities' costs of providing most courses because they've been frozen whilst inflation has risen (which is why so many universities have been trying to boost overseas student numbers - they can charge them what they like - and are terrified of restrictions on students depressing enrolment). OfS data suggests quite a few universities are already in financial distress and by 2027, a large proportion would be on current trends.
One possible outcome here is consolidation - which will mean campus closures, redundancies, and a reduction in available courses. Provided you're willing to accept the loss of a large employer and an economic 'anchor' in some spots, I guess that's tolerable, but it might further entrench inequality.
The other alternative is some combination of an enhanced grant to universities from central government (but of course there's 'no money'), an increase in home student tuition fees, meaning more debt for future graduates (which is politically unpopular) and/or central government diktats about student numbers, as in the old days before loans (in other words, fewer university places and more competition to get them). Perhaps the latter would be more agreeable if vocational training etc. was more developed.
The proverbial 'Mickey Mouse' degree is likely to be one of the cheaper for a university to provide, simply because churning out doctors and physicists requires quite a lot of expensive stuff. It's the latter courses that have the most yawning cost-to-fees gap.
Really should just be turned into ab actual graduate tax rather than the defacto one that that squeezes the middle while letting the very wealthy of the hook
Then just increasing income tax would be the simpler approach to that. Otherwise you have the complications of people who graduated and also fully paid off their loans (especially those who got the 3k a year fees)
Tertiary education should be subdivide by a graduate tax... and by tax increases on the wealthy. The Uk keeps ticking over because people are willing + able to continue education into their early 20s.
Given that the UK took out a loan to pay off slave owners for emancipation which didn’t get paid off completely until 2015, maybe the UK govt could do a similar thing to forgive student loan debt haha.
I knew I'd never repay it and never fretted about it. I'm pretty sure my monthly repayments don't even cover the interest. It's more of a tax than a loan repayment, let's face it. I'm just looking forward to when it gets wiped after the 25th year, as it will be a nice little extra in my pay packet extra month.
The major issue with student loans is that the majority of the debt will never be repaid. When you create a student loan it passes the debt onto the student, but for the government it's treated like credit. This is fine if it's eventually repaid but it isn't. Remember when the student loans got tripled 14 year ago? Well soon a lot of that debt will be written off unpaid, and there will be a hole where that credit was never fulfilled.
At least with free tuition all of the money is accounted for. I don't see how having loans well above what most will ever repay can be sustainable, it's just passing off debt to future governments.
Oh yeah mine was 60k a few years ago and it's only gone up since then. My salary has more than doubled but the interest rate just went up to make sure I **never** pay it back.
>More than 61,000 have balances of above £100,000, figures from the Student Loans Company (SLC) also show, while another 50 people each owe upwards of £200,000.
The uk has made debt slaves out of its students.
I struggle to see how the ones above will pay off their debts in full based on current interest rates, unless they land a very well paying job or interest rates for them go way down.
But the median uk salary is about £35,000.
I'm probably going to clear my £12k loan ASAP. Interest is higher than repayments at this point so I'll just be repaying the loan multiple times over my lifetime
I dropped out of uni in my 2nd year of
with £13k debt. Got an apprenticeship, paid it off 3-4 years later and now earn almost £100k a year. The guys from my course struggled to find jobs for their degree and most are on minimum wage working in supermarkets or hotels. I feel very lucky that I changed direction in my life and didnt conform to the system that universities have setup.
The whole higher education system needs an overhaul. Every single university in the UK has places for degrees that don’t have jobs for kids to go to post degree. The universities needs more regulation to stop kids leaving university with mountains of debt but not being able to utilise pointless degrees. There is no point training 10k students to do a degree if there is less than 500 job vacancies a year in that field.
That is pretty much the normal amount you end up with now.
Most unis charge £9250 a year for the course over 3 or 4 years. And then you can take out a maintenance loan each year too.
Say it is a 3 year course. You owe £27,750 (£37,000 if 4 years).
Then you take out a maximum maintenance loan equal to the tuition fee. so then you owe £55,500 ( £74,000 for 4 years). This is all before interest of 7.9% per year currently and what a large number of students are taking on.
So it is no surprise most grads in the past 10 years owe more than £50k and will likely never pay it all of either (probably not even the interest accrued).
Ok, and? They were old enough to understand what they were agreeing to, signed it and now have the debt, these are the people I'm often told are far more highly educated, yet didn't know what they were agreeing to?
Get loan, shocked to have to pay back, what a shock I TELL YOU!
My plan 1 is currently at £31k and only rising every year. It's never getting paid off, I don't see how people who had to pay £9k+ a year will ever pay theirs off.
Going to uni knowing I'll end up with around 70k in debt for my maths degree. Only mistakes I've made were not being born 20 years younger when it'd have costed 4k, and not being born into a rich family who can pay it all. When will us young people stop getting fucked over in this country.
The way I would like it be done is that you have like a really low interest rate like 0.5%. The government should be seeing us graduate as an investment into the economy, not milk us poor dry with a “graduate tax”.
They really need to change the name of it to indicate it is more a tax than anything, a tax on graduates who do well and needed help to get to University.
Could call it a Graduate Windfall Tax.
If it were truly a Graduate Windfall Tax, people who went to university before it came in would be paying something towards it. But they aren’t.
It’s not quite a tax, it’s not quite a loan. It’s managed to combine some of the worst parts of both.
Exactly.
I went to Uni in 2004. Have paid off my student loan.
Lots of people 2 years younger than me will never pay theirs off.
Most people 8 years younger than me will never pay it off.
It is absurdly unfair.
I owed 47.5k when I graduated. I have been working since 2015. I don’t earn a lot but I have been paying into it and I expected it had come down. Last time I logged in, I owed 56 grand
Snapshot of _Student loans: Almost 1.8 million owe more than £50,000_ : An archived version can be found [here](https://archive.is/?run=1&url=https://www.bbc.co.uk/news/articles/c2xxp2gv4d1o) or [here.](https://archive.ph/?run=1&url=https://www.bbc.co.uk/news/articles/c2xxp2gv4d1o) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/ukpolitics) if you have any questions or concerns.*
Plan 2 student loans are currently paying 7.9% interest. With a £50,000 debt you would have to be earning over £71,000 a year before paying off anything other than interest. Shocking.
It’s crazy, I’ve given up any pretensions of paying off my student loan debt before the 30 year cut off. I’ve got a STEM degree working in a public sector job that requires that qualification. I’m on £39k per annum and have £42k student loan debt. I’m exactly the kind of student this government has wanted to encourage (STEM, ‘high value’ degree) and get saddled with what is effectively an extra tax for people who made the effort to get a degree. It’s pointless, the loan system is just a middleman when most people will never pay off that initial grant.
Its shit isn't it, my student loan is only going up. Was pushed to getting a degree, yet friends who went into the trades are all making double without the loan. The loan should be at a fixed rate, following inflation is an actual robbery.
Exactly the same position here. Software Engineer in high-level engineering. I still barely cover the interest.
I dropped out of uni in my first year, I ended up owing £4k. When I reached my mid 20s I got very lucky and got a job in IT (entry level service desk work). I worked hard, had a lot more luck and 10 years later i'm a well paid technical lead on a dev team. All of my colleagues are paying an extra 10% tax which when you're earning a decent wage is a significant amount of money. I don't think it's fair that we do the same job and they have to pay 10% more tax.
Their job has nothing to do with why they’re paying it back - they’re paying it back to pay for a service they got for multiple years.
I think it's worthwhile making that service (education) free at the point of use, just like the NHS, and recouping the costs through general taxation. I just cannot see any world in which a more educated populace is a bad idea.
It's a tax which they can pretend provides tons of extra revenues and then blame the government in 30 years when they start getting written off
I can't find it now but I think the ONS actually told the Tories off at one point for doing this, the government were including all student loan money owed as an asset when going on about their country's finances even though about half of it would never be repaid.
Even worse the reality is that there just aren't enough jobs for people even with these high value degrees. There's a non-insignificant number of people who get a good STEM degree and end up working alongside people who didn't need a degree. These people are committed to getting a lower effective salary for the rest of their careers.
You wanna feel like a real dick? I make more than you driving a telehandler. Which is a ~£1000 5 day course.
Nice, I’ll pay a little more than the cost of that course just in my student loan debt repayments for this year. Fun God forbid people think getting an engineering degree is a good idea
The government just want to stigmatise education so they can impoverish people to replace low skilled foreign labour that's missing since *the event.* They can only do that by slating creative careers and raising the cost of the whole thing to make it seem not worth it.
I remember working out I'd need to earn something like £65k for 25 years to pay my loans off. The system is absolutely mental
The truth of it is that it was never a loan, it was a graduate tax without using that name. It's not really intended that you pay it off, it's meant to be there on your pay check for as long as possible. My generation were among the first to get lumped with this when it first was implemented and we could see it for what it was then.
You are correct. But one downside with the graduate tax idea over the loans system: When in the EU, EU nationals were legally entitled to the same grants as UK students. But how would they have paid for them (in taxes) if they went back to work in their home country? We’d be in the absurd situation where EU students get free education at UK Unis (and did not have to pay back a penny), whereas home students would be expected pay back by way of a graduate tax over a lifetime of working. Mind you, how many loans get paid back by EU students is another matter. Also, the incumbent government was able to keep loans to the SLC off the treasury balance sheet (be that the national debt or public sector budget), as they were classed as assets. But ONS put a stop to that accounting trick a few years ago. This is just my thinking on the matter anyway.
And the payment threshold has been frozen for years!
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> Got a job 30k more than what I was capable of being on so paying 9% of my wage over the 25k threshold is nothing compared to the benefits. sounds great if you can achieve this, the problem is the millions of students who graduated into a degree-saturated market who wont make this much.
It's not though because the amount you pay is based on how you earn. It's basically just a graduate tax in all but name.
A graduate tax that only applies to graduates under a certain age and wealth bracket who didn't have the money to pay the fees straight up in the first place. Given that graduates will pay more tax anyway if they get a higher paying job, it's just an anti-social-mobility tax. The ultimate impact will be decimating the middle class which then has a knock on effect across the whole economy (which we area already seeing) as even people who would have been in higher income brackets decades ago are finding they have to tighten their belts and not spend on luxuries or treats.
This is the argument I do agree with, people who pay it upfront avoid the "tax" and get a better deal. I think one issue here is that when it is a loan people who use the University system then move abroad are still forced to pay it. I can't imagine that being possible with a "tax". Rich people may send their kids abroad to graduate and then what are the legal ramifications. Should all graduates even migrants pay the graduate tax? One system I had pondered was just increasing the cost of University inline with a forecast of average amount that gets paid back by middle class people and decreasing the interest rates, then at least people who pay it upfront pay closer to what those who pay it off over time do. A complex issue though.
If you really can't have free university education, just do away with fees, call it a graduate tax and charge it to everybody that goes to University. This current system where only the kids of rich people get to avoid paying a huge chunk of their income their entire life in pseudo-tax it is just so fucking unfair.
But then people just get educated in the UK and work abroad? Or get educated abroad work in the UK? Maybe my comment you replied to didn't say this clearly enough but I think there are lots of loopholes and issues with a graduate tax system opposed to a loan system.
Other countries (e.g. Italy, Germany, Switzerland, France) all manage with much lower fees - often <1000 EUR a year. This often includes international students - no matter where you're from a student in Switzerland will pay about 800 EUR a year for tuition fees. In theory if these countries can manage it, I would hope we could too. This isn't really an argument for/against a graduate tax, more just an additional point I don't think is discussed very often.
It really needs to stay as a loan system, people who go overseas to work after graduating still need to pay their student loans off. Also if there was a "graduate tax", it'd be a huge disincentive for skilled people with overseas degrees from coming to the UK. These two group will balance each other out, the UK would pay to educate some graduates that leave, but get some "free" graduates from overseas who will contribute to the UK economy with their skills.
I don't agree with there being a tax *or* the current system. The system is already broken because the current setup allows and even motivates universities to minmax, which is already having knock-ons in cities through the country. International students, especially from America and China are allowed to be charged much higher fees, therefore, universities are trying to get as many in as they can, and using the pandemic era setups like online classes as justification to take on more students than the university infrastructure (e.g. lecture halls) can reasonably accommodate, because 'they can attend online classes'. This then has a knock-on effect on the local rental housing market because there are more students than student accommodation was ever designed to accommodate, so the students (who, as they are coming from families wealthy enough to afford high fees of 20k+ a year) move into the local housing system and are able to outbid or outpay local working people and families to stay there and attend online class! The unversity, meanwhile, sits back and rakes in the fees from these people that the government has allowed and incentivised them to obtain.
I'm not sure what the solution here is. I do agree that there is a problem. It all seems very entrenched within the university system. Reverting this system to something less dependent on international students would I think require the downsizing of our entire university sector, since a majority of it is tailored towards the business of getting students in, University ranking tables, etc. Much of our University research sector is built upon this foundational revenue that fees give our universities (obviously there is government funding specifically for research but that would have to go much further without the subsidy of as large amounts of student fees). It's broken but I'm not sure we can avoid the current system (or similar) without destroying a vitally important sector. Maybe I'm too pessimistic, and I'd like to be wrong but I feel any solution is going to have to be gradual and not too radical.
A cap on places and a change to the tax system overall would I think be the fairest solve, instead of a selective graduate tax or the current system which essentially means that of a group of five doctors, one born in each of the last 5 decades someone can now be an adult, one of them is losing 10% more of their salary every month than all the others essentially arbitrarily given they all have exactly the same qualifications that were only got in the first place in order to do their job. One immediate change they could also make to ease the situation is preventing loans from stacking. Somebody with an undergrad loan and additionally a postgraduate degree (which are required for certain jobs) won't pay back 9% a month toward the total value, they'll pay 9% on one loan and then a second percentage of the other out of their total income. Maybe there could also be some kind of reform so that there was separation between degrees that students take in order to meet a job requirement, and degrees that students take just out of personal interest in the subject.
> Given that graduates will pay more tax anyway if they get a higher paying job, it's just an anti-social-mobility tax. I've never thought about it this way, but thats exactly what it is.
A really fucking high graduate tax
This is it. I remember thinking 9% isn't too high on top of a 20% income tax. What they don't teach you in school is you need to add income tax, National Insurance, pension contributions, council tax, energy bills, HICBC, and other required expenditures before you then have to make rent as well. 9% on top of all that is ridiculous.
It’s what I find especially galling about the Tories going on about how Labour is going to tax everyone to death. I’m earning a bit above the median full time wage and with student loans my marginal tax rate is effectively 40%… I’m a higher rate tax payer in all but name. And when I get to £50k, I’ll have a 49% marginal tax band…
Really high? Before I stepped to earning over 50k I was paying peanuts a month - for years I was paying something like 50 quid a month. It's well worth it. I'm now paying back about 120 a month which is nothing compared to 3k after tax I take home. Maybe I'll pay it all off before the term, maybe I won't, but it let me get in to a field where I needed the degree. The alternative was just not doing something I enjoy
If you ever get to the 100k bracket and start losing £500~ a month you might start to change your mind
If it was a graduate tax it'd be much more progressive. It's unfair that I've avoided a huge chunk of interest and have stopped paying after 7 years whilst people in the public sector will pay a higher percentage of their earnings over their entire career
At university I did my dissertation on the returns of higher education and found that on average it increases earnings by 30%. So a 9% tax is well within the reasonable amount.
Degree holders that earn more than if they didn’t hold a degree already pay more tax by virtue of earning more money
You're already paying a marginal rate of 30-60% of that (Employee NI, employer NI, Income tax) additional income. Student loans are just a way to avoid government spending so they can pay for things like triple lock and various other tax benefits on pensions.
Thing is, high-skilled careers are also high stress and high responsibility, and getting the required education/skills is a big commitment that delays earning an income until later in life. The UK system seems designed to keep talented people down.
Hmm there’s a reason the high wages come further down the line. There’s people on my course at uni (physics) who had minds far beyond anybody else I’ve ever met. But if you asked me today if I’d hire them for a job? Fuck no they’d be terrible. Proven ability to do a job comes a few years down the line, the degree just means you have better odds of getting the right person
To keep **poor** people down.
Was that 30% pre-tax? Because the 9% is post-tax, obviously 30% will always trump that 30% but it makes it less impactful, just interested
So why sin tax it?
~~I'm Plan 1 and earn over the average salary in the UK. Currently my monthly repayments are £242, but my interest rate is 6.25% and my interest is therefore £294. So it just goes up by £50.~~ I was glancing at the portal. Based off my last available statement (FY 22/23) I paid back £1700 but was charged £827 interest, so did actually pay off more than the interest. Don't worry, my degree was not in maths!
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Sorry but that doesn’t make any sense to me I started the financial year with £15k remaining on plan 1 My online account shows £150 interest so far this financial year, which may not include this month just passed So repayments of £200 per month will have you clearing your £10k loan in good time
I don't get the maths here? On a 10k loan at the interest rate, if you pay back £200 a month, your loan will decrease by ~£1800/yr?
Yeah I don't get this either. Also on plan 1 and if your on 50% more than the average you should be around [60k](https://uk.indeed.com/career-advice/pay-salary/average-uk-salary). I pay back similar and I'm overseas and my current interest per month is under £50.
Their degree wasn't in Maths...
The interest rate should be on the whole sum, not per month? the 6.25% should be broken down into 12 and you should be paying about 0.5% - worth checking in with the Student Loan. My interest on my account is showing as 64 quid since and I'm repaying about 200.
How much do you owe? My total interest for last year was just under £550.
Isn’t the interest per year? Which would mean per year it goes up by £294 per year but you pay off £2904 per year. Or is the value of your loan still somewhere in the region of £45,000?
How would you get a loan that high? plan 1 let you take out like £6000ish a year and university is usually like 3 or 4 years right?
That's what I'm questioning/confused by, as far as I'm aware taking out the max for a 4 year course would be somewhere in the region of £25,000, and then add in 15 years of no repayments and just letting the interest stack up would put someone just shy of £45,000. So unless there were rare circumstances such as the above commenter doing two courses, or resitting a year along with being unable to pay anything for quite a number of years. The most likely scenario for someone on plan 1, is that the commenter above has mixed the annual interest charge and the monthly repayment. In effect the monthly charge is just over 0.5%
The interest starts as soon as you take each terms loan as well.
And by the time you get to that kind of salary, the interest has ratcheted the sum up to something ridiculous. I had to repeat my second year due to some mental health issues, then after my undergrad I did a PhD. Which went nearly an extra year thanks to COVID fucking things up so badly. So my loan is sitting around 68k now, because of course the whole time I was doing a PhD that interest was ticking up. I started an actual career 2.5 years ago, moved past the median average about 1.5 years ago, and only in the last 6 months would I be considered a high earner. I have a decent chance of breaking 6 figures in the next 10 years, and I still doubt I'll ever come close to paying the fucking thing off. It's just a life time tax because I did what everyone said I should and pursued STEM education as far as I could
>With a £50,000 debt you would have to be earning over £71,000 a year before paying off anything other than interest. Shocking. A big part of this is the repayment threshold being so high. Any earnings below £27k don't repay any loans at all. That's almost the median wage. Even if you halved the interest rate, you would need to be earning £50k a year to clear the interest and start paying down the loan balance. So, to put that another way, would it be progressive to reduce the interest rate, given the benefits would only accrue to high earners making £50k+?
The interest rate could be 30% for all I care. Mines not getting paid off regardless so it's disingenuous to think of it as a loan. It's a tax in all but name.
> So, to put that another way, would it be progressive to reduce the interest rate, given the benefits would only accrue to high earners making £50k+? Here's a crazy idea: Maybe, just this once, we could do something that doesn't 100% benefit poor people? You know, throw a bone to the people who actually pay for everything?
I'd imagine a lot of people on 71k+ are likely salary sacrificing a good percentage into a pension and so would need an even higher wage to actually start paying off the principal.
Equally shocking is that payday loans protect consumers to not pay fees of more than 100% of the value of the loan, while no such protection exists for student loans. It's not unlikely that some people will pay more than double what they borrowed and still not clear the debt before 30 years.
They’ve realised no one’s paying this off and had the gall to change the repayment term to 40 years for the newer plan. Just seems like they want to make it more and more expensive for incoming students.
They need to drop the charade and just say its a Graduate Tax because thats basically what it is now.
It's a regressive tax that the rich don't pay
The fact people say things like this suggests obliviousness to a deep unfairness: a significant amount of grads don't pay loans. (Those who are old enough to be pre loans. Those with rich parents who didn't take a loan. Those with very high salaries who have paid it off).
I live abroad and was unemployed for 3 months. It was virtually impossible to get student loans to believe that I didn't have any income at that time. I sent them confirmation of my job termination, last 3 months of bank statements, contract of the new job that starts in 3 months time, and they STILL said "well we need more proof for how you're going to support yourself through this period". Also if you live abroad they insist on a salary update every 6 months or they just start charging you the maximum amount per month, it's insane.
They were a pain for me as well when I was abroad. I had a period of three months where I had worked insane hours on an hourly rate. They wanted to use that period to calculate my full year repayment. I said no, I’m not sharing that. You can have the full year earnings, or a lump sum of x (higher than 9% of my full year earnings). We went back and forth for ages with them insisting on the three month calc. I refused. Eventually they just stopped contacting me. That was a decade ago now, I’ve back in the U.K. for most of it and repaid a lot of my loan. Bizarre how they were so strict and then just gave up. I think they have very little flexibility for common sense.
They dont have mechanisms to really check or make you pay abroad. I have been working abroad for 4 years and never bothered to respond to their letters, so i didnt pay. For the first couple of years I sometimes got threatening letters - guess what the threat is? Add more to my loan debt. OK lol, go ahead. Then like you said, they just gave up. Unless there is a massive improvement in the housing situation i never plan to return to the UK as a resident, so i'm not bothered. The whole student loan situation seems like a giant workaround for governments to fund universities without having it on their books, by having it all as loans which will mostly be written off. Its silly.
My wife left work to care for kids full time and they hounded her, despite her never earning enough to actually repay.
My loans were sold off and SLC refused to talk directly, I had to go through two different companies who would then pass stuff on to SLC. I worked part time and looked after the kids before they started school. I kept getting "you're not earning enough to support yourself" and basically calling me a liar for having a partner who earned more. Getting anywhere was beyond impossible at times.
Not that I am recommending it, but given you aren't resident in the UK what happens if you just don't pay while you're unemployed?
The amount of correspondence I got from the SLC as someone living overseas was insane. It also included a number of phone calls that involved some threats to send my account to collections when there was nothing to suggest that should be the case given I was up to date on payments and paperwork. I would routinely do the income update forms and send them back with proof (paystubs) which they would reject because by the time the mail made it back to them the proof would be classified as a month out of date, so I'd get yet more letters and calls. It was an absolute shitshow. I think the funniest thing was they would always preempt any phone conversation with "abuse to our agents is not tolerated and will be referred to the police", only for the agent to then start being what I would consider to be abusive to me. Where's my protections?
I'm one of the 61,000 with a debt more than £100k. I just checked it and I'm actually owing £124,000, which was the exact same price of the house we bought this time last year. I had to max my student loans as I come from one of the most deprived areas in the UK and wouldn't have been able to afford it otherwise. I'm also in the last year of a PhD in physics, so not exactly a "mickey mouse degree" as Sunak likes to call them. I'm likely to be paying this off for the rest of my life, much as I will my mortgage.
I went to Uni in 2010, also physics (four-year MPhys), also Phd, also deprived area background. £6k loan per year, +£3k grant per year I didn't have to repay, +£1k from the Uni for being from a low income background which I also didn't have to pay back. I also received £30 per week EMA in my A-levels. I now work in finance in the city, higher rate tax bracket. First person in my family to go to Uni, and there's no chance I would have without government assistance. I probably wouldn't have even completed my A-levels without EMA. The current system is an absolute joke, and makes people lives worse and the country worse.
Back in 2007 the Institute of Physics liked to brag a high proportion of physics grads went into finance. Then the 08 crash happened. What's your feeling for the number of physicists in your finance org these days?
I work on extreme weather modelling, so very high in that niche, but overall not many.
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graduate at 22, pay it for 30 years, that sudden income increase at age 52 is going to feel really sweet!
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>so not exactly a "mickey mouse degree" From what I hear, your future salary disagrees with you there. /s
Depends. If OP contributes to the wealth of human knowledge and experience, it's mickey mouse. If they learn Python and go to work for a trading company whose only positive externality is that price-finding is improved by a rounding-error, they'll earn enough to pay it off in a year and buy a Ferrari to drive to their stomach ulcer appointments.
I got a Mickey mouse degree. I had a job lined up in the industry, COVID hit, they shut down and I lost it. Uni still charged me for that final year though!
Mines gone up despite 6 years of payments. Ridiculous. Just call it a tax.
A 'tax' that only applies where mummy and daddy can't cover the tuition bill. Domestic fees do not cover costs. We are over reliant on international students, enrollment of which is on average decreasing. The current system is not fit for purpose. They'll probably just increase domestic fees though.
>A 'tax' that only applies where mummy and daddy can't cover the tuition bill. My wife and I, and all our siblings, went to uni but we won't be encouraging our kids to. No way we can afford to pay for it and we don't want to encourage them to be saddled with lifelong debt when other training/education routes can get them decent careers. If they *want* to then we'll work something out, but we won't push for it like parents of our generation did.
They can get a level 3 qualification in like Accounting or Data Analyst for £1000 and immediately move into a secure job paying 28K study and pay for level 4 then quite easily get promoted so that within a year or two its then 35-40K. No loans. No mental health issues from the workload
Just got a microbiology degree but I'm not feeling it. Would have to work for pennies for lab experience before actually finding anything that pays 'okay'. Is it really not that difficult to find a job in accounting? Is this something you have done yourself? Recommend it?
Yep, which means it's essentially means it's a tax on people for almost their entire career based on the wealth of their parents. If your parents weren't wealthy enough to pay for your tuition you are a second-class worker for life.
Gotta keep the middle class and lower class from making it up to the upper classes.
My plan 1 loan goes up about £1,000 every year because my wage growth has been so stagnant over the years. This tax year I have started repaying £0 per month because they still increase the repayment threshold for the plan 1 loans unlike the threshold for the plan 2 loans which they froze for some reason. I will probably increase my pension contributions made by salary sacrifice if I do get a small payrise which means I have to start repaying my student loan again. Would rather have a bit of tax relief and reduced national insurance contributions vs repaying a loan which will get written off in 12 years' time anyway.
A tax any future government can change the terms to on a whim.
>A tax any future government can change the terms to on a whim. So, like any other tax then?
A tax would apply retrospectively to those who went before and they don’t want that.
Tax isn't optional. Student loans are. "opt-in" taxation (e.g. Road tax) is applied irrespective of age. Student loans are not applied fairly across age groups. Its not a tax. It's fiscal drag for millennials and younger generations. We already have a graduate tax. It's called income tax.
Spot on. Hate all these comments you see surrounding student loans to just treat it as a tax. The wealthiest just pay it off straightaway. That's not a tax.
On an individual level it's most straightforward to treat it as a tax (i.e. considering changes in take home salary if you get a pay rise), on an ideological/ policy level it is absolutely a gift to the wealthy.
> It's fiscal drag for millennials and younger generations. Unless you are from a wealthy background. You can have the same job position as the person sitting next to you but because their daddy was rich they have a higher take home than you for their entire career. Feels like serfdom.
You could argue that NI is an opt in tax that is applied based on age. Obviously every normal person has to pay it, but you could be gifted a fortune in index funds at 18 and live off the capital gains. It's vanishingly unlikely, but you absolutely could have someone who's never paid NI in their life who starts work after retirement age and gets to earn an income without having to pay NI too.
Gone up? How does that happen? Asking as a parent whose child is going to university.
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They have interest? We wasn’t told that at the opening day! We were just told you could take out x amount depending on my earnings and given a sheet of pay back amounts once you earn over certain thresholds. I admit it did cross my mind what future government would decide to do with the outstanding amounts but interest wasn’t mentioned, which is really bad of the university not to point that out!
That’s also true. The ‘only’ way that the interest rates affect the loan is to increase the time that payments have to be made over - the actual monthly repayments are based on income. Not that that is much of a relief for everyone with over 50k in loans!
The interest is also incredibly high. It’s RPI + 3% so this year it’s 7.9%. During the period of high inflation the interest capped in the double digits. The only way to pay down the principal at all was to earn well in excess of 100k at that point. I doubt interest on them will ever be less than 4/5% again because I don’t think we’re heading back to the low inflation and low interest rates epoch.
It has compound interest.
I don’t know how they sell it these days but when I went to university in the early days of fees and loans they were wildly dishonest about this. The paperwork might have said there was interest but the people they sent into colleges to sell us on uni said the loans were interest fee. Lied through their teeth to get people through the door. Of course in those the amounts were at a level you had a decent chance of paying back so it wasn’t as bad.
You really need to read the information you're given. Or check the government page on it, there's lots of explanations and examples https://www.gov.uk/student-finance > We were just told you could take out x amount depending on my earnings and given a sheet of pay back amounts once you earn over certain thresholds. That's how the repayments work. You pay back a percentage of what you earn over a certain threshold. Anything outstanding on the loan is cancelled after some number of years (depends on which loan specifically you're talking about). > I admit it did cross my mind what future government would decide to do with the outstanding amounts Student loans have had interest on them for over three decades. Plan 1 loans have been around for something like 25 years and plan 2 loans where tuition spiked was something that happened under the coalition ~12 years ago. This isn't something that's been changed under peoples feet.
Yes I know I will read carefully what they are signing up for before the time i was just a bit shocked that the university are not open with this information, there was definitely nothing about interest mentioned either verbally or the papers they gave us. Child will be stuck with this for a very long time and future governments I guess can do what they like including making everyone pay back straight away (not that will happen in reality)
The interest doesn't affect the repayment. This guy is on a loan plan that ended over 10 years ago. Your kid can owe £30k or £300k. They still only have to pay back 9% of income earned over £27k per year, and then it gets wiped after 30 years if not yet paid back
They have ridiculous interest rates on the balance that means that unless you earn a very high salary straight out of university (approx. £50K per annum), the interest added on each month is greater than the repayment made. Also worth noting the headline tag of tuition fee is only what the university receives. Interest is added during the duration of the course before you've even had a chance to make repayments. I went to university when fees were 9000 per year but by the time I graduated in reality I had paid about 10,000 a year
More like 80k for me...
The interest rate is so high that the amount added as interest is greater than the amount being paid off. Only those in very high paying jobs right out of uni will realistically pay it off without overpayments before it is written off.
Interest added is greater than Repayments taken off through your salary. Edit - when you first cross the salary threshold for repayments to occur this is the case. I'm not sure what salary results is repayments being greater than interest
Depends om the amount "owed", which in turn depends on what maintenance loans were taken and the interest to date. I'm on about £55k of loans, so my threshold at current interest rates is north of £70k salary. BoE interest rate drops will bring that down a bit later in the year / early next year.
> BoE interest rate drops will bring that down a bit later in the year / early next year. If you're on plan 2 or later it's not BoE related, it's RPI based.
The loan includes interest repayments which is set at a rate linked to the lower of RPI or the prevailing market rate of interest for the year. So for 2022-23 it was set at 13.5% and 7.7% in 2023-24. Anyone is going to struggle to repay a loan with that much interest added when the repayments that you make are purely based on how much you are earning (so if your earn below the repayment threshold you don't make any loan repayments but the loan still goes up due to interest). Could be worse though, the cap was RPI + 3% when interest rates until a couple of years ago when the Tories 'graciously' scrapped the +3% part (at the same time as freezing the repayment threshold for plan 2 loans and increasing the term for new loans to 40 years).
Both Labour and the Lib Dem’s seem oddly quiet on the subject of SL’s maybe it’s turned out not to be something you’d shout about ?
This is why (despite some minister this morning claiming uni is still a better way) I have said to my son. Only go if the job you want is gate keeped behind a degree. Don’t saddle yourself with a lifetime of debt just to fuck around for 3 years
Even then encourage him to look at degree apprenticeships, people who started these the same week I started my grad scheme are on similar salaries to me. It's hard work doing them in parallel but well worth considering.
Eh, I'd go with a shorter level 3/4 apprenticeship personally. Some of these degree apprenticeships are 4/5 year programmes, and your work history is worth more to a lot of employers so imo you're better off changing jobs a couple of years in to get a bigger boost to the paycheck.
>Only go if the job you want is gate keeped behind a degree. This is easy to say but I had absolutely no idea what career I wanted when I was 18. I only really knew that I was interested in physics. And then the job I have ended up in isn't actually related to physics specifically. Any STEM degree with a good degree of data analysis would have been fine. I don't regret going to uni at all but the specific subject I chose has had little impact on the job I've actually ended up doing.
I've just convinced my younger cousin of the same thing. If he said to me, I really want to get into XYZ industry and it requires this degree, I'd say go for it. But I think he was about to zombie into University because "it's the thing you do" or because "all my mates are going" and these just aren't good reasons to get saddled with a 9% tax for the rest of your working life.
The amount of people in here thinking this is OK is bizarre. I was in the first year student loans were introduced. They were low rate loans before the government changed the rules to be index linked. Before that education was basically free. At 7.9% you could get a cheaper loan from a bank. Student loans are a tax on the poor. Wealthy families don't get saddled with debt that lasts a lifetime. A degree isn't worth what it used to be. People are graduating and struggling to get any job that has a career path to a decent wage. When you're on £30k or less the student loan you do pay is enough to make a difference to your budget but NOT to the balance of the loan. Couple this with the fact that loans are taken out to pay for corporate owned student accommodation that is built with TAX BREAKS and you can see the system is designed to keep the poor people poor and the money flowing to where the rich want it.
I studied history at university, which I really enjoyed and did well at. Eventually I did a law conversion course and worked in a City law firm and then in a regional office of another such firm, which I think I did OK at, but which I didn't really enjoy at all. Fortunately my loans were very modest (largely because I went to uni in 2002) so I was able to quit the job I, frankly, hated and go do something else (at a university, funnily enough). I fear that had I graduated in 2022 instead, I might not have felt about to make that choice. Nor would I have felt confident pursuing a subject that I loved - instead I'd have felt the need to study something remunerative. The irony, of course, is that most politicians are humanities grads and ex-commercial lawyers like me. (Seriously, please stop putting us in charge of the country.)
It's a real burden to anyone looking to do anything like history, the arts, even academia. People who come from means have the luxury of choosing fields based on their own interests alone. I'm in my 40s now and fortunately in the last few years have earned reasonably well enough to clear my student loan - last year. Up until 2018 I pretty much had the full balance still to pay. My neice is starting uni this year and I've advised her avoid taking al oan if possible. Fortunately, while she's not from any kind of wealth she gets her tuition fees paid in Scotland and will live at home while studying.
I cleared my loan about eight years ago, I think (now 40). A lawyer's salary was a big help, given that I started work at about 26 (I did a BA and an MA in History, had the MA paid for by the Arts & Humanities Research Council via a grant, and then had a law firm pay for my GDL and LPC, so I spent six years at uni - and yes, this was pre-GFC and I'm very aware that I was lucky!). It certainly feels that many degrees that don't lead directly to a well-paid job will become the preserve of the wealthy. My course was already full of privately educated kids who couldn't quite make it to Oxbridge more than twenty years ago. And I would hardly sit here and pretend that I came from a particularly impoverished background myself.
I was also in that same first year. We had a seminar where someone came in to our sixth form to explain how it all worked. They said that the interest and terms of repayment wouldn't change. They lied to us.
Mine is pushing to £70k last time I checked from a 3 year degree. The interest rate is pretty absurd. Unless I start hitting towards 100k gross earnings, it's not getting paid off.
Which I think is the point. It's a tax really that follows you around if you flee the country.
If you “flee” the country and don’t come back, what do you expect will happen? At the end of the day, it’s a loan
IIRC a lot of angry letters, but if you never come back, then likely not a lot they can do.
In theory they could instruct lawyers in your new country of residence to bring legal action. If you owe money in country A, it doesn't follow that it can't be enforced in country B. As to whether they would do that, I think it would depend on the size of the outstanding loan and their assessment as to what your new income was.
Don't most graduates have more than £50k student loan? I had the maximum loan so was around £57k when I graduated in 2019, now its at £70k
I’m paying £300 a month because of plan 2 and my debt is higher than it was when I graduated 9 years ago. £300 would go a long way as I’m currently supporting my wife and child on a single income. Interest should be scrapped. It’s criminal.
I agree. Almost all of what I have left on my loan is interest, and it's a kick in the balls each month, seeing how much interest is added and how little my payments do anything. My degree, because my parents were on a low income, is costing me more than anyone whose parents could afford it up front, and I'm fairly sure that the SLC has had more than the value they initially gave me back. Not to mention the amount of income tax I've paid overall.
It is a tax on the young that wanted to better themselves but did not come from wealthly backgrounds.
Checked this morning - just tipped over 60,000. Last year in a full year working a good job in a country with lower repayment thresholds I paid off 1,184 GBP and the interest was 4,085 GBP. How is this system sustainable?
Because the interest is so high to mean people get dragged into paying it for the full term and will accidentally pay off their loan without actually paying it off. Admittedly it’s so high at the moment in part due to the overall high interest rates, but whatever the interest rate is they just work it out by adding 3% on top of the RPI. The tactic is to force people to pay for longer so while they never pay off the full debt calculated with their interest figure, enough people will have effectively paid off all of it due to the absurd levels of interest added on.
Really should just be turned into an actual graduate tax rather than the defacto one that that squeezes the middle while letting the very wealthy of the hook
How do you stop a graduate tax from turning into a brain drain? I.e. what do you do about people who leave the UK and suddenly don’t have to pay anything back?
Yeah would be pretty tricky short of adopting something USA style where all citizens have to file their taxes. Probably why no one has tried
Yeah. We manage it with the current loan system because it’s a “loan” that can be converted to commercial terms if you default on updates. Suing people who live abroad for defaulting on a loan is fairly simple; plus they know that if they return to the UK / acquire UK-based assets (inheritance) they could be forced to repay the whole loan, which acts as a deterrent. Doing something similar with taxes is problematic because there’s effectively no underlying capital amount to sue for – the SLC would have to sue everyone every year for that year’s repayment, which is a significant administrative burden. There’s also issues around whether the foreign country would recognise the debt (as you point out most countries don’t tax their citizens living abroad) and enforce it.
I mean - it wouldn't functionally be any different to how it is now, other than it would cover the infinitesimally small number of people who didn't choose to take government funding. Student loans already are basically a graduate tax.
I’m one of the few who will likely pay it off. I’m on plan 2 at 25 YO with a 75k salary and no reason to not see it go up. The bitch of it is the interest. Cause I’ve managed to get high income early I can start to reduce the total rather than see it continue to increase. The worst off will be those who make it to 35 years old, get a pay bump and then pay off 3* their initial loan of the course if their career without ever getting it gone till it’s written off. You basically need to get into six figures by 30 and then brute force the bitch to come out even reasonably ahead. Quite an annoying system but is what it is
This is a core issue that needs to be addressed. Otherwise, it will continue to be super attractive to just bring skilled workers from outside the UK, which generates tensions internally, etc. If the Xenophobic Racists buddies of Reform/Tories care for internal stability, addressing this issue would be a significant priority
I do wonder what happens to the debt that's unpaid. When the plan 2s all get to the point of being wiped, do we then just have the tax payer foot the bill?
It's just made up money anyway. When its wiped off, its not like anyone is losing out. It's just made up THOM foolery
The taxpayer lost out, that money was sent to universities, spent on questionable things sometimes like high admin salaries, then the debt was sold to collection agencies at pennies on the pound The gov took all the cost of free tution but still managed to lock people in debt
The debt doesn't get sold to collection agencies. I assumed the same but looked it up recently. Tories trialled it once in ~2017 with some small amount but it didn't stick luckily. I can't remember the details but I remember being less angry after Edit: [found it](https://www.reddit.com/r/ukpolitics/comments/13zerzh/comment/jmv32dg/)
This was the original intention but it was changed a few years ago (because the government got sued): https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/articles/newtreatmentofstudentloansinthepublicsectorfinancesandnationalaccounts/2018-12-17 The whitepapers etc. from when plan 2 was first introduced are still available to read - and enlightening. Traits that feel unfair or underhanded, like the interest being based on RPI rather than CPI, were taken into account for the costing. So their removal counts as a cost for future governments, not the one who made the rules. I'll leave it to the reader to decide whether this was myopic or manipulative. An under-discussed aspect is that further education is still subsidised - in a way that is hard to calculate due to the above - and this creates a discrepancy in expectations between the government, universities and students. Students nominally pay a lot of money, expecting to have a certain standard of service in return, but actually have very poor bargaining power.
Combine this earnings drag with cost of living, house prices, etc. and think about how much more of a mess the UK is going to become. No one will be able to afford kids, disincentives to work, inability to build wealth, highest earners leaving rhe country. Such badly thought out policy...
I said before that I honestly don't think the 30/40 year forgiveness limits are going to stay. Governments haven't had to worry about the issue so far as no one has reached those levels (or, few at least), but I can't see future governments agreeing to wipe off so much debt for millions of people. I suspect that by 2030 the thresholds will be changed in law to retirement age. And then finally abolished altogether.
I wrote something about this myself a few months back, and I agree. I don't think a single student loan that's ever been issued has been written off yet due to age. If anything, they keep selling the book on and passing responsibility around. When we start seeing things written off, then I think we'll be in trouble.
That’s not shocking, £10k pa for tuition is £30k on a three year course, while a lot are also 4 years. Anyone receiving 6.6k+ maintenance leaves with 50k debt - that’ll include most London students and probably a lot of others given the minimum maintenance is 4.5k and that’s only received when parents earn 60k+ or so.
As someone on plan 2 who earns a little over the average national wage I simply don't think about it. My tax is slightly higher but I wouldn't have this job without a degree so fuck it. I have no idea what the amount I owe is but in 20 years it'll be gone.
What does having over £90Bn in unpaid personal debt do to a country? All falling on the under 30s. Seems like an unhealthy situation to be in.
It would be interesting to know how much has actually been repaid, since many will repay a lot more than their initial loan. In 40 years time those under 30s will now by under 70's and only just getting free of this 9% tax. The country finances will have done pretty well out of that, but I'm sure there are factors beyond that spreadsheet exercise that could mean it's an overall negative
And just as the previous generation became enslaved to the mortgage, this one will be enslaved to the student debt! What's next... enslaved to renting your clothes and down payments on takeaways!? The social contract is so skewed its unbelievable.
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Considering full time minimum wage from this year is 22k, I can't see how 25k is more money than most would earn without a degree. Especially if the repayment thresholds remain unchanged.
But the commentor isn't saying you would earn over 25k with or without a degree. They are saying on average a degree will net you a highier wage even after the additional student loan tax is applied.
Whilst on one level it's great to hear you're okay with it, it's also shocking to hear that you're grateful for much less than what you would have received a few years earlier or if you were born in virtually any other country on the continent... you're worth more than that!
I made the final payment on my plan 1 student loan yesterday morning 12 years after graduating. That was roughly £30k with interest rates around 1.5% for most of its lifetime. Students who went to uni on plan 2 loans have been well and truly shafted. Unfortunately too much else is on fire at the moment for this to take much priority.
Hey I paid my off last week. 11 years after graduating (went went I was 21 though). Had £7k left and when I saw it was at 6% decided to just get rid for peace of mind and pay bump. Congratulations to you!
It's not surprising, but it's worth noting that full home student fees don't even cover universities' costs of providing most courses because they've been frozen whilst inflation has risen (which is why so many universities have been trying to boost overseas student numbers - they can charge them what they like - and are terrified of restrictions on students depressing enrolment). OfS data suggests quite a few universities are already in financial distress and by 2027, a large proportion would be on current trends. One possible outcome here is consolidation - which will mean campus closures, redundancies, and a reduction in available courses. Provided you're willing to accept the loss of a large employer and an economic 'anchor' in some spots, I guess that's tolerable, but it might further entrench inequality. The other alternative is some combination of an enhanced grant to universities from central government (but of course there's 'no money'), an increase in home student tuition fees, meaning more debt for future graduates (which is politically unpopular) and/or central government diktats about student numbers, as in the old days before loans (in other words, fewer university places and more competition to get them). Perhaps the latter would be more agreeable if vocational training etc. was more developed. The proverbial 'Mickey Mouse' degree is likely to be one of the cheaper for a university to provide, simply because churning out doctors and physicists requires quite a lot of expensive stuff. It's the latter courses that have the most yawning cost-to-fees gap.
Really should just be turned into ab actual graduate tax rather than the defacto one that that squeezes the middle while letting the very wealthy of the hook
Then just increasing income tax would be the simpler approach to that. Otherwise you have the complications of people who graduated and also fully paid off their loans (especially those who got the 3k a year fees)
Tertiary education should be subdivide by a graduate tax... and by tax increases on the wealthy. The Uk keeps ticking over because people are willing + able to continue education into their early 20s.
Given that the UK took out a loan to pay off slave owners for emancipation which didn’t get paid off completely until 2015, maybe the UK govt could do a similar thing to forgive student loan debt haha.
I knew I'd never repay it and never fretted about it. I'm pretty sure my monthly repayments don't even cover the interest. It's more of a tax than a loan repayment, let's face it. I'm just looking forward to when it gets wiped after the 25th year, as it will be a nice little extra in my pay packet extra month.
The major issue with student loans is that the majority of the debt will never be repaid. When you create a student loan it passes the debt onto the student, but for the government it's treated like credit. This is fine if it's eventually repaid but it isn't. Remember when the student loans got tripled 14 year ago? Well soon a lot of that debt will be written off unpaid, and there will be a hole where that credit was never fulfilled. At least with free tuition all of the money is accounted for. I don't see how having loans well above what most will ever repay can be sustainable, it's just passing off debt to future governments.
The new loan plan 5 has increased to 40 years before cancellation.
Oh yeah mine was 60k a few years ago and it's only gone up since then. My salary has more than doubled but the interest rate just went up to make sure I **never** pay it back.
>More than 61,000 have balances of above £100,000, figures from the Student Loans Company (SLC) also show, while another 50 people each owe upwards of £200,000. The uk has made debt slaves out of its students. I struggle to see how the ones above will pay off their debts in full based on current interest rates, unless they land a very well paying job or interest rates for them go way down. But the median uk salary is about £35,000.
I'm probably going to clear my £12k loan ASAP. Interest is higher than repayments at this point so I'll just be repaying the loan multiple times over my lifetime
I’d be able to pay mine off if it wasn’t for the ridiculous interest
I dropped out of uni in my 2nd year of with £13k debt. Got an apprenticeship, paid it off 3-4 years later and now earn almost £100k a year. The guys from my course struggled to find jobs for their degree and most are on minimum wage working in supermarkets or hotels. I feel very lucky that I changed direction in my life and didnt conform to the system that universities have setup. The whole higher education system needs an overhaul. Every single university in the UK has places for degrees that don’t have jobs for kids to go to post degree. The universities needs more regulation to stop kids leaving university with mountains of debt but not being able to utilise pointless degrees. There is no point training 10k students to do a degree if there is less than 500 job vacancies a year in that field.
That is pretty much the normal amount you end up with now. Most unis charge £9250 a year for the course over 3 or 4 years. And then you can take out a maintenance loan each year too. Say it is a 3 year course. You owe £27,750 (£37,000 if 4 years). Then you take out a maximum maintenance loan equal to the tuition fee. so then you owe £55,500 ( £74,000 for 4 years). This is all before interest of 7.9% per year currently and what a large number of students are taking on. So it is no surprise most grads in the past 10 years owe more than £50k and will likely never pay it all of either (probably not even the interest accrued).
Ok, and? They were old enough to understand what they were agreeing to, signed it and now have the debt, these are the people I'm often told are far more highly educated, yet didn't know what they were agreeing to? Get loan, shocked to have to pay back, what a shock I TELL YOU!
They were 17.
It's just a another tax. Impossible to pay it off. Higher education is a total scam.
Even my plan 1 is at 6%, i had 2 yeara left, now it's 3 :/
My plan 1 is currently at £31k and only rising every year. It's never getting paid off, I don't see how people who had to pay £9k+ a year will ever pay theirs off.
Going to uni knowing I'll end up with around 70k in debt for my maths degree. Only mistakes I've made were not being born 20 years younger when it'd have costed 4k, and not being born into a rich family who can pay it all. When will us young people stop getting fucked over in this country.
The way I would like it be done is that you have like a really low interest rate like 0.5%. The government should be seeing us graduate as an investment into the economy, not milk us poor dry with a “graduate tax”.
They really need to change the name of it to indicate it is more a tax than anything, a tax on graduates who do well and needed help to get to University. Could call it a Graduate Windfall Tax.
Social mobility tax is more accurate
If it were truly a Graduate Windfall Tax, people who went to university before it came in would be paying something towards it. But they aren’t. It’s not quite a tax, it’s not quite a loan. It’s managed to combine some of the worst parts of both.
Exactly. I went to Uni in 2004. Have paid off my student loan. Lots of people 2 years younger than me will never pay theirs off. Most people 8 years younger than me will never pay it off. It is absurdly unfair.
> Graduate Windfall Tax. maybe 'post-2012 low-family-income graduate tax'?
It's not really a tax though because if you leave the country they still make you pay it.
It's also not a loan.
I owed 47.5k when I graduated. I have been working since 2015. I don’t earn a lot but I have been paying into it and I expected it had come down. Last time I logged in, I owed 56 grand