Ooh. Interesting. Is that why they set it up as a “loan”?

A cynic might say that the system is mainly designed the way it is – with very high loan amounts – because when it was devised (i.e. 2012 ish), loan outlay was not classed as spending in the national accounts at the time of loan issue, meaning it would only contribute to the deficit when unpaid loans were written off (i.e. 30 years hence). This was described by commentators as a ‘fiscal illusion’.

The Office for National Statistics corrected that in 2019, so that now a prediction of the amount of loan that will be written off (c. 53% for loans issued to full-time undergraduates this year). is scored on the deficit at the time of loan issue.

Ironically the very people who don’t pay back the loan are generally the same ones who didn’t use the university education to under pin their career choices (I get that life doesn’t always go to plan for some).

The arbitrary 50% into university was the start of this stupidity, we don’t need 50% of the population with a degree, in fact suggesting that 50% of people are capable of getting a degree means the degree isn’t the academic qualification it once was.

This whole policy was supposed to have increased social mobility, it’s done the opposite, back in the 80s bright kids from low income families could actually afford to go and come out relatively debt free with a deserved leg up the ladder.

The trouble we have now is an overly bloated university sector which would also need scaling back which would be very unpalatable for any politician. What we do now is beyond me, but we need to get back to university being merit based, and think long and hard about what degrees we fund (this should be more based on the quality of the teaching rather than the subject, a well taught arts degree is probably more valuable to society than a poorly taught STEM degree).

I don’t think that there is any demographic evidence of the ‘Arts degree -> Costa’ career path. In fact, I’m fairly certain that humanities graduates median income is the same as STEM graduates in the UK.

I’ll have to dig out some of the reading I did a few years ago for some of my pupils. I was definitely surprised to find this, as I’d telling kids for years to study Chemistry to get on the cash train.

There is some evidence that humanities graduates earn less than STEM graduates. The link below gives chemistry median salary 5 years after graduation as £29k. The same for humanities is £22k. The gap is even bigger for 10 years after graduation – £35k vs £23k. Humanities graduates have the lowest median salary out of those presented.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/790223/Main_text.pdf#page=26

There is a fundamental issue with our taxation approach at mid/high levels. Assuming post grad loan and a 12% pension:

on a high salary of £155k per year, you take home £70,867 (£5,905 per month).
on a still high high salary of £120,000 you take home £57,799 (£4,824 per month)
ona mid high level of £77,500 you take home £42,453 (£3,547 per month)
on a mid high level salary of £60,000 you take home £34,949 ((£2,912 per month).

If you are lucky enough to have 2 earners taking home £60k then you are approx £13k better off versus one earner on £120k. If you have two earners on £77,500 then you are approx £14k better off tahn one on £155k. And this does not take into account the loss of child benefit when one member of a household earns between £50 and £60k, which means an effective marginal rate of another 11% (for the first child) and a further 7% for the next). If added to tax (40%), NI, student loans and pension costs then pay rises are almost worthless in this band. Those that can afford to simply dump extra pay into a pension at this level, which avoids the taxation… Once you earn over £60k the marginal rate returns to a much lower figure. There are similar anomolies with the taper for the zero rate band between £100 and £125k which adds 20% to your marginal rate between these levels…but returns to a lower marginal rate between £125 and £149,999!

Why do we not do as many countries do and tax household income? Household income is used for child benefit clawback (see above), and for calculating how much a student can borrow.

A lot of social science degrees are, on their own, almost useless, but they’re a necessary stepping stone to Psychiatrist, Criminologist, etc.

Slight correction: Psychiatrists are medical doctors, so will have done a medical degree. I don’t think even the tories consider those ‘soft’?

If you are lucky enough to have 2 earners taking home £60k then you are approx £13k better off versus one earner on £120k. If you have two earners on £77,500 then you are approx £14k better off tahn one on £155k.

Yes, but offset against that is the fact that the spouse of the high earner in your example has huge amounts of time available , with associated benefit and potentially cost savings. Eg £30,000 of child minding.

Not suggesting it fully covers it, but it is worth bearing strongly in mind.

Ironically the very people who don’t pay back the loan are generally the same ones who didn’t use the university education to under pin their career choices (I get that life doesn’t always go to plan for some).

The arbitrary 50% into university was the start of this stupidity, we don’t need 50% of the population with a degree, in fact suggesting that 50% of people are capable of getting a degree means the degree isn’t the academic qualification it once was.

This whole policy was supposed to have increased social mobility, it’s done the opposite, back in the 80s bright kids from low income families could actually afford to go and come out relatively debt free with a deserved leg up the ladder.

The trouble we have now is an overly bloated university sector which would also need scaling back which would be very unpalatable for any politician. What we do now is beyond me, but we need to get back to university being merit based, and think long and hard about what degrees we fund (this should be more based on the quality of the teaching rather than the subject, a well taught arts degree is probably more valuable to society than a poorly taught STEM degree).

I kind of agree, but people should be able to progress and expand their skills and learning throughout life. University education has become the new 11 plus, if you don’t get one you are left behind, I wouldn’t even get an interview for the job I have now. It shouldn’t just be a case of saying t”too many people are doing degrees”, the current further educations ystem needs a shake up, but not by restricting access to education it can be changed and become even more accessible, just matched to modern needs.

IMO further education in its current form should be reduced, but lifelong learning needs massive investment. Giving people the opportunity to lean and progress throughout life would be much more in sync with modern life and work trends. It would allow people to make leaning decisions based on their current lives, needs and wants rather than just take a punt at 18 and live with it good or bad for the rest of their lives.

edit – think i got my numbers wrong

There is some evidence that humanities graduates earn less than STEM graduates. The link below gives chemistry median salary 5 years after graduation as £29k. The same for humanities is £22k. The gap is even bigger for 10 years after graduation – £35k vs £23k. Humanities graduates have the lowest median salary out of those presented.

Thanks @pjm60 – I hadn’t seen that as I was looking through Scottish data at the time. I doubt the demographic picture is much different up here so either my memory is faulty or the data were grouped very differently!

Ironically the very people who don’t pay back the loan are generally the same ones who didn’t use the university education to under pin their career choices (I get that life doesn’t always go to plan for some).

Is there evidence to back that up? As I understand it someone who does a nursing, dental nurse, vet nurse degree (hard to say that those are not university choices that under pin a career) will never earn enough to completely pay off their loans (assuming max English loans). In contrast I seem to know a lot of people with geography degrees (purely by coincidence) who are making very good money doing things that were never part of a thought out plan and will have paid off their loans long before retirement. Obviously its all by anecdote but looking around my friends, former classmates, colleagues I don’t see strong links between (a) what people applied to do at 17 and what they are doing around 50; and (b) those who had a clear vision at 17 earning more (in fact, I’d probably say the opposite is true – people who were less focussed on the job have earned more).

I’ll have to dig out some of the reading I did a few years ago for some of my pupils. I was definitely surprised to find this, as I’d telling kids for years to study Chemistry to get on the cash train.

Almost nobody who studies chemistry would tell you that is a road to riches! It may not be the worst but if money is your objective I definitely wouldn’t be picking chemistry.

Also career paths are not immediately apparent when just looking at the title of a degree. When my son was looking at engineering, we went to Imperial, who quoted stats of around 70% of their graduates working in the city rather than as engineers. This was very different from other engineering courses.

The arbitrary 50% into university was the start of this stupidity, we don’t need 50% of the population with a degree, in fact suggesting that 50% of people are capable of getting a degree means the degree isn’t the academic qualification it once was.

I went back to my Uni department 7 ish years after I graduated, they told me they’d had to drop the 3rd year courses and now only covered the 1st two years of my degree (Engineering). The 1st year was spent doing what used to be A levels! I suspect that at all by the very top of the University Tree that has been the case with nearly all degrees.

This whole policy was supposed to have increased social mobility, it’s done the opposite, back in the 80s bright kids from low income families could actually afford to go and come out relatively debt free with a deserved leg up the ladder.

The trouble we have now is an overly bloated university sector which would also need scaling back which would be very unpalatable for any politician.

I’ll agree with this. Though Jnr is about to start a Music degree, so best he also gets trained as a barista for when he graduates.

I did my degree part time in the early 2000s – even then lecturers were saying that the first year of a full time degree was making sure everyone was at the same A level standard for year 2.

Seriously? Why target low and middle income graduates? Why target graduates at all? Double or even triple the tax on take home booze instead. That would raise a bloody huge amount of cash and people would have a choice of whether they wanted booze or not. Might even cut binge drinking, alcohol related health problems and drink driving.

Why target graduates at all? Double or even triple the tax on take home booze instead. That would raise a bloody huge amount of cash and people would have a choice of whether they wanted booze or not.

What if they decide they don’t and the tax take isn’t any higher?

Taxing graduates for something they have a choice over isn’t exactly unfair. Taxing drinkers, who may have not gone to Uni, does seem a little unfair.

The problem is that changing this for graduates who are just starting degrees now changes the whole financial equation of further education. Previously, most students would never expect to pay off the entire loan, as they are written off 30 years after graduation – if they start taking cash at lower incomes, then a lot more students will start paying them back earlier, and end up paying a lot more over that period.

did my degree part time in the early 2000s – even then lecturers were saying that the first year of a full time degree was making sure everyone was at the same A level standard for year 2.

Bloody hell, what poly was that?

It’s only “taking people out of the workplace” if you think that 18 year olds are already adequately trained and educated for work.

It might be true enough for fruit-pickers but was certainly not the case for me in my line of work.

Of course if you’re talking about the work that an 18-year-old school leaver can do, maybe a 14-year-old can do it too, and there’s no need to go to the huge expense of “taking them out of the workplace” for an additional 4 years either.

What has always been clear is that this graduate-tax-cum-debt-mountain is pretty much the worst possible way of funding it. £100k debt is pretty common, there’s not a hope in hell of paying it off for a large majority (so the govt still picks up the tab really), but there’s still a whopping great tax burden for young workers trying to establish a career, family, buy a house, etc.

It’s only “taking people out of the workplace” if you think that 18 year olds are already adequately trained and educated for work.

I suspect for a lot of jobs which graduates end up doing (eg barista in Costa) a three year degree in Philosophy won’t actually make any difference….

On a slightly more serious note, the idea of the policy change is to encourage more 18 year olds to do appreticeships / vocational training which is shorter, cheaper and probably better matched to the skills required by the market. There are only so many philosophical baristas the economy actually needs.

(so the govt still picks up the tab really)

Which means that everyone ends up paying for it through higher taxes or less money spent on hospitals etc…..

nevermind

doris5000
Free Member

The vast majority of graduates will never pay back the full capital. This is just a tax hike on lower earners.

This is the most important thing. Since the last big changes, the student loans system including tuition fees is no longer really a loans system at all. Instead, it’s a cunning scam designed to divide a chunk of the national debt up into little bits and give it to young people to carry for most of their working lives, making today’s government figures look a little bit better. And then, it’ll be written off but it’ll be some future government’s problem.

It also almost certainly costs the average taxpayer more than the old system did (the forecasts were going that way and then the year that it was expected to go negative, the government stopped releasing the forecasts so, draw your own conclusions)

Everything else to do with student lending needs to be seen through that lens. It’s never about the students, it’s never about education, it’s not even about value for money. It’s entirely about cooking the books.

Well they have just raised NI to pay for the NHS…

they raised NI. How much of that goes to the NHS and how much to their mates in medical insurance companies, private clinics etc remains to be seen.

I do have some sympathy for the Chancellor, huge Covid debt to pay off,

Utter cobblers, as rone will be along to tell you. The covid money was borrowed from outselves.

Our household income puts us in the non-means tested loan bracket, so what I’ve agreed to do is top that up to the level the government offers to “looked after children” on the logic that they think you can survive on this if you are sensible / prudent; and encouraging son to be frugal is an important part of the uni experience

I believe that is the expectation on a household anyway… https://www.moneysavingexpert.com/pressoffice/2021/6/martin-lewis-tells-ministers-to-stop-hiding-the-p1-000s-parents-/

The covid money was borrowed from outselves.

Still needs to be paid back if the UK wants to maintain confidence in the £.

Been the subject of a couple of recent More or Lesses, about 1/3 of debt is owed to the BoE, but will still be repaid.

Young people don’t have much of a future unless they have well off parents.
It’s utterly unfair and I’m amazed Labour under Starmer are making no meaningful attempts to grab the young vote.
The country is increasingly pitting old vs young and I expect the political parties to reposition accordingly.

Feeling lucky we live in Scotland (So no tuitionfees) and my son chose to his degree at a local university so he didn’t need to go into digs. Took out small loans during his course which were paid off by age 27.

Now works in IT in Cambridge. The devaluation of degrees when 50% get them is perhaps illustrated by a joking remark his boss made about him showing how well you could get on when you only got a second.

In retrospect the best choice he made was leaving with an ordinary degree part way through his honours year` to accept a job offer. Going the experiences of others in his year the hardest part is getting the first job.

Going the experiences of others in his year the hardest part is getting the first job.

When everyone has a degree it’s no longer a differentiator and standards are so low at some places, it barely marks you as literate / numerate. However, having held a real job where someone pays you to do something at least shows potential!

My undergraduate degree student loan has been in deferment since I left uni. It’s about to voided as I’m a year off 25 years. I’ll be paying my PGDE loan off till I retire. 9% of my pay per month just so I can get abused by teenagers 😂

Still needs to be paid back if the UK wants to maintain confidence in the £.

Been the subject of a couple of recent More or Lesses, about 1/3 of debt is owed to the BoE, but will still be repaid.

Yes but the speed with which it needs to be repaid is completely artificial, there is no need to rush to repay it

Even looking at the “non-soft” degrees, there are a lot of consultants/lawyers/City types with expensively acquired and totally superfluous knowledge of quantum mechanics, set theory, organic chemistry etc.

Personally I’d like to see each degree course funded by the university taking an equity stake in its graduates. The courses that couldn’t get their students into gainful employment would be quickly winnowed out.

Even looking at the “non-soft” degrees, there are a lot of consultants/lawyers/City types with expensively acquired and totally superfluous knowledge of quantum mechanics, set theory, organic chemistry etc.

But given that they’re all high earners and will have paid back more in taxes than their education cost, is there a problem here?

The real problem is too many people doing degrees which have no commercial value which just adds to the national debt with no obvious benefit to society (other than being able to discuss a subject at what used to be A level standard with a recent graduate who is now a barista with a BA etc). We have a missmatch of skills acquired to skills needed in the economy and acquiring those skills costs £40k or more plus the opportunity cost of three years lost working. EDIT Plus the opportunity cost of spending that £40k on something more useful eg hip replacements etc. And all because we must have 50% or more of young people going to University without ever questioning why.

There are degrees that are harder and perhaps more commercially useful than others. However this is a full on cash grab and raid on people who they know are not their voter base.

But given that they’re all high earners and will have paid back more in taxes than their education cost, is there a problem here?

The real problem is too many people doing degrees which have no commercial value which just adds to the national debt with no obvious benefit to society

Which is it? If a degree adds no “commercial value”, why is it relevant that the recipient is rich or not? What you’re basically saying is the rich should be free to waste resources and the poor should have their options limited to those that can be proven to directly result in a career that is deemed of enough value to make that education worth while. The word “obvious” is doing so much work there. Obvious to whom? Shown how? All smacks of wanting to reform education to suit your prejudices.

just adds to the national debt with no obvious benefit to society

“No obvious benefit to society” of, say, producing works of art from sculptures to TV shows? Creating and appreciating literature?

Another way to look at it is to recognise that this is what society is FOR.

Have to say, like some others here, that I disagree with this bit. Both the description of ‘soft’ courses and the espoused interest in subsidising technical training.

The government believes too many students are racking up debts studying “soft” three-year university courses in arts and social sciences, and is looking to funnel more 18-year-olds towards technical training that is cheaper and will pay a faster economic dividend

A degree should be pursued for selfish interests. Not necessarily functional ones.

What this, and prior, governments have done is listen to donors who are interested in short-term gains in cutting their own training costs. The consequences of this are numerous. They include assaults like this on learning and academic study. Perhaps the most significant effect is the ongoing ‘skills shortage’ in many job types. It is not really a skills shortage, more a failure to invest, plan, and, in the U.K. in particular, pay the going rate for the skills a business needs.

Seriously? Why target low and middle income graduates? Why target graduates at all? Double or even triple the tax on take home booze instead. That would raise a bloody huge amount of cash and people would have a choice of whether they wanted booze or not. Might even cut binge drinking, alcohol related health problems and drink driving.

An interesting suggestion. I don’t agree with @footflaps view. But the outcome of my view is similar: direct taxation is always a better choice than regressive taxation.

If you tax goods then folks on lower incomes pay a much bigger proportion of income as tax than wealthy folks. If a government ever wanted to appear not evil then repealing sales tax/VAT would be a start.

Having said that, the point made by a few folks on this thread stands: this is a cynical short-term move to increase income tax on lower-earning former students using the disguise of ‘student loans’.

Which is it? If a degree adds no “commercial value”, why is it relevant that the recipient is rich or not?

The issue at hand is we don’t have infinite money to spend on things. Every £ spent on something eg roads is a £ you can’t then spend on, say, hospitals.

If you spend a £ on something which returns > £ back then it’s a good investment as even if you don’t like merchant bankers with a pottery degree from an ex-Poly you get to tax them on their large salary and get more £s to spend on things you do like in the future eg housing the homeless etc.

We have a lot of undergraduates getting degrees which aren’t necessary for their careers and it costs a lot of money, which a lot of them (53%) can’t repay. Asking, is this the best use of tax payers money is a perfectly valid question (IMO anyway).

We also seem to have degraded undergraduate degrees to the point that pretty much anyone who signs up to Uni gets one, which means they’re bugger all use to employers to work out who to employ.

So, making degrees more expensive might reduce demand and persuade teenagers to consider alternate career paths, which again, might not be a bad thing.

“No obvious benefit to society” of, say, producing works of art from sculptures to TV shows? Creating and appreciating literature?

A very valid point, but how many English lit students produce literature which gets published, 1%? Probably less.

There’s also another aspect, we churn out 1000s of say Journalism graduates each year, all excited to go into journalism when the number of available jobs is tiny. Thanks to the internet and online advertising, local papers etc now run on skeleton staff and the industry has shrunk massively. No one bothers telling the teenages this before they rack up £50k in debt. A lot of degrees seem to be of more benefit to the University running them than the students paying for them. This does seem somewhat unfair to me.

As for appreciating literature, I’m currenty reading the French literary classics in French (just finished Les Miserables – admitedly not the 1800 page original version, although I might attempt it at some point) and studied Engineering at Uni. You can (and should) be able to learn outside of Uni.

So, if you’re rich, crack on and “waste” money on being educated however you wish. If you’re not rich, get trained in a way that someone deems appropriate and with “obvious” value. That’s clear.

So, if you’re rich, crack on and “waste” money on being educated however you wish. If you’re not rich, get trained in a way that someone deems appropriate and with “obvious” value. That’s clear.

The wealth of the teenager is irrelevant.

If your degree is likely to pay for itself, then lending someone money for it is a no brainer, you get to pay for more hip replacements with the future tax revenue.

If your degree will never be paid back then you’re effectively trading off several people’s rights to a hip replacement on the NHS against someone’s right to study Philosophy etc…

Which right is more worthy?

And you’ll never be able to fund everything, you always have to trade things off against each other…