elfin – I went to uni when we didn’t have to pay fees, and I’d be very happy to show my suppport for the changes to the system being put through now by paying the same as future students will have to under the more progressive scheme being introduced. I’d rather not have to contribute under the regressive scheme introduced by Labour though, as I actually earn more than that £15k threshold.

Sweet. So I imagine you’ll be making a donation to the Treasury, equivalent to the amount incurred by students, plus interest etc? Nice one.

You go and work it out, then we’ll have a little ceremony to celebrate you handing over the cheque.

It’s a genius idea this you know; it’ll raise billions. Knighthood? Oh go on then! 😀

Oh, can’t be bothered.

I can’t understand why there is a 50% target for numbers of kids to go to university when 50% of kids can’t achieve 5 GCSE’s grade A-C including maths and English

plenty of careers don’t need a degree (accountancy for example) there seems to be a media bias pushing the expectation of ever larger numbers enjoying 3 years of university “life” without questioning whether it’s actually the right thing for the kid individually

Sweet. So I imagine you’ll be making a donation to the Treasury, equivalent to the amount incurred by students, plus interest etc? Nice one.

You go and work it out, then we’ll have a little ceremony to celebrate you handing over the cheque
Why, will they have to pay it all back in one lump sum with a cheque? I must have misunderstood – I thought it was a graduate tax in all but name that you only paid on your earnings over £21k – that was what I was offering. Where do I send my cheques every month?

Elfinsafety – Member

I came up with this brilliant idea a couple of weeks ago, but strangely din’t get a lot of response from those in favour of tuition fees. I’ll try again:

How about, right; all those who think students should pay big fat fees, speshly those who went to uni before fees were introduced, as well as all Tory politicians past and present who are still alive, and all Tory Party and LimpDem supporters, members and politicians, pay the maximum that fees would cost were they to go to uni after such fee rises? You know, to show how they personally support the policies of their parties and politicians? You know, all those who benefitted from free university education themselves yet think it’s ok to introduce fees for others?

Would raise a few quid, eh?

I assume the Tory Boys on here will be all voluntarily paying the £9000+ per year for their time at uni, as a protest against the current student protests. Y’know; kind of putting their money where their mouths are….

Anyone?

Money where yer mouths are. Or, just shut up.

Elf; i’d be delighted, i really would, it would save me a small fortune.

i’m serious, where do i sign up?

i’ve done some more maths; i will eventually pay 3 times the amount i would under the new system.

(remember, i earn close if not equal to, the national average)

put it another way; the students who will be affected by the new system will only pay 1/3rd of the amount paid by their predecessors (me).

the new system is far from a perfect solution, but it’s 3times better than the old one.

but remember, Nick clegg’s the bad guy!

(and i don’t mind the system i’m in – it’s fine, it really is)

(and i’m a socialist, more or less)

put it another way; the students who will be affected by the new system will only pay 1/3rd of the amount paid by their predecessors (me).

the new system is far from a perfect solution, but it’s 3times better than the old one.

You have just highlighted how ludicrous the new system is. The reason we ‘have’ to have it is because the country’s broke etc; yet it won’t raise a penny now when the treasury ‘needs’ it, and will result in a massive black hole that some unfortunate future government will have to sort out.

It’s entirely non-sustainable, badly thought out, with diasterous future consequences. No surprise then that it was brought to you by a (mainly) tory government…

Excuse me if I’m being a bit thick…

How will it create “a massive black hole”? Surely the idea is that a Uni eduction results in a person earning above the average wage, and therefore they will actually pay it back (unlike awhiles)? Is that not the whole concept?

i’m serious, where do i sign up?

I’m sure HM Treasury would be delighted to receive your cheques, or they could at least tell you where to pay the donation.

yet it won’t raise a penny now when the treasury ‘needs’ it, and will result in a massive black hole that some unfortunate future government will have to sort out.

It’s entirely non-sustainable, badly thought out, with diasterous future consequences. No surprise then that it was brought to you by a (mainly) tory government…

(Agrees with Zokes. Feels a little uneasy…) 😉

now then Elf, here’s my offer:

i will gladly retrospectively pay annual tuition fees of £9000 – an increase from the fees of £1000 i paid during my 4 year degree course.

i will gladly increase my debt to the student loans co by £32,000, in return it would only be fair that i transfer my debt to the new repayment system.

that would be awesome!

druidh – Member

Excuse me if I’m being a bit thick…

How will it create “a massive black hole”? Surely the idea is that a Uni eduction results in a person earning above the average wage, and therefore they will actually pay it back (unlike awhiles)? Is that not the whole concept?

You’re excused.

There is a massive presumption that graduates will earn enough to pay off the loan – this presumption will have been factored into treasury models for future finances.

The sad fact is however, that most graduates won’t earn close to these high-flying salaries, ever. So there’ll be projected money that doesn’t turn out to be there when the unpaid loans get wiped upon retirement.

As there are already serious issues relating to a growing aged population, and these are only set to get worse. Too many people needing a pension, and not enough contributing – this will only get worse. Also, as the population ages, it needs pension for longer, and probably increasingly expensive healthcare.

So, in summary, at a time when the graduates of the future retire, drawing a pension that by then the state probably can’t afford; they’ll also default on the (possibly substantial) remainder of their loan.

That, druidh, is the black hole.

(And even if you disgaree with my rather gloomy projections, you can’t possibly think that lending people an extra 3-6K pa is saving the treasury money now, when it needs it)

There is a massive presumption that graduates will earn enough to pay off the loan – this presumption will have been factored into treasury models for future finances.

Massive presumption by the same people who think £9k a year is a lot worse than £3k a year because they ignore the repayment threshold increasing. I’d be extremely surprised if the treasury didn’t have pretty good figures on how much people people earn (and how much they’re projected to earn) to put into their models.

zokes – Member

You’re excused.

There is a massive presumption that graduates will earn enough to pay off the loan – this presumption will have been factored into treasury models for future finances.

Ah – sorry if I wasn’t 100% clear. Is the assumption not that on average a Uni graduate will end up earning more than the qualifying amount and will therefore be paying back the loan .i.e. by gaining a better qualification, they’ll end up in a better paid job? If so, then the number of defaulters will be small.

9K owed is not worse than 3 k just run that maths by my could you?
Paying less back per month ,on more, for longer is not actually better off.

I’d be extremely surprised if the treasury didn’t have pretty good figures on how much people people earn (and how much they’re projected to earn) to put into their models.

me too. So will the treasury get less or more back ? If the later it can only be because people pay more back than currently.

oh come on junkyard, i’ve explained this about a dozen times…

i will never clear my debt – the amount is irrelevant, i’ll be paying until i retire.

i’d rather pay £40/month for the next 22 years (new system), than £90/month until i retire (old system – the one i’m in).

(the debt is also cancelled earlier under the new system)

Over a lifetime, a graduate will probably be worse off than under the current system.

At the start of their career, most will be paying nothing while they probably would under the current model, so most will be better off at that time.

On a month-to-month basis, all graduates will have more money in their pocket than under the current system.

I like that the threshold for repayment has been raised. Otherwise, it’s crap.

I’ll buy your bike for twenty five pounds, and then you’ll be able to pay your debt off a bit quicker.

I’m helping the economy! 🙂

By my reckoning, I’d be a grand a year worse off now if I’d gone through HE taking out loans on the new system, compared to paying nothing.

over a lifetime, someone earning an average salary will be about £40k BETTER OFF under the new system.

(600 X 30) + (1100 X 15) + interest

Interesting article:

http://www.independent.co.uk/news/uk/politics/only-a-quarter-of-all-graduates-will-pay-off-loans-2158168.html

And then scroll down to comments, this one:

Question: on average how much would someone have to earn per year to pay back their loan (predicted to be £33,879 for a 3 year course or £11,293 per year) after 30 years?

Answer: their average salary would have to be between £38,000-40,000 per year over the 30 year period.

If on average you earned £1,750 per month (£21,000 per year) you would pay £0 per month (£0 per year), so it wouldn’t be repaid in 30 years (at this rate it would never be repaid).

If on average you earned £2,083 per month (£25,000 per year) you would pay £30 per month (£360 per year), so it wouldn’t be repaid in 30 years (at this rate it would take 94 years to repay). After 30 years the graduate would have paid off £10,800 or about 32% of their loan.

If on average you earned £2,500 per month (£30,000 per year) you would pay £68 per month (£816 per year), so it wouldn’t be repaid in 30 years (at this rate it would take 41.5 years to repay). After 30 years the graduate would have paid off £24,480 or about 72% of their loan.

If on average you earned £3,333 per month (£40,000 per year) you would pay £143 per month (£1,716 per year), so it would be repaid in under 20 years.

If on average you earned £4,167 per month (£50,000 per year) you would pay £218 per month (£2,616 per year), so it would be repaid in under 13 years.

If on average you earned £5,000 per month (£60,000 per year) you would pay £293 per month (£3,516 per year), so it would be repaid in under 10 years.

Question: if only 25% of students are going to be able to pay back their entire student loan then who is going to have to pay the outstanding loans for the 75% who won’t earn enough to pay it back?

Answer: the taxpayer.

Question: how much will the taxpayer have to pay?

Answer: if there are 481,854 students, then 361,390 (75%) won’t pay back their loans. If none of them contribute to their loan the cost to the taxpayer will be £12,243,531,810 (£12 billion). If they all earn £25,000 per year the cost to the taxpayer will be £8,325,601,631 (£8 billion). If they all earn £30,000 per year the cost to the taxpayer will be £3,428,188,907 (£3 billion).

Thus the taxpayer will have to pay between £3-12 billion per year to make up the shortfall.

b r – Member

Thus the taxpayer will have to pay between £3-12 billion per year to make up the shortfall.

So – how much does the taxpayer currently provide and how much would they have to provide to satisfy the demands of the universities for increased funding if these new proposals were abandoned?

druidh – I think there is no extra money for the universities – its just coming from a different direction from the government and is supposed to be going to be paid back

Well this seems to indicate it costs about £80k per graduate over a 3 year degree:

http://www.ifs.org.uk/publications/5354 – table 1

I don’t want my loan transferred to the new system.

I graduated 7 years ago (ouch!) and i’ve only got five years of loan repayments left, granted that wasn’t a loan to pay for fees (they were upfront back then).

If people aren’t earning enough to pay it off quickly they really should be working a bit harder and helping the country out. We’re in a hole as a country, tax receipts fell an awful lot during the recession and they need to increase if we’re going to reduce the deficit. We’re in this together people, work harder!

Thanks b r. I was fairly sure I wasn’t the only one who’d spotted the elephant in the room.

There aren’t many graduates who command an average salary of >£35-40k over their careers, and in lending the money, the it doesn’t save the government anything now.

There aren’t many graduates who command an average salary of >£35-40k over their careers, and in lending the money, the it doesn’t save the government anything now.

It’s basically creative accounting, it means they can put it somewhere else on the balance sheet and make it look like they’re reducing the deficit.

There aren’t many graduates who command an average salary of >£35-40k over their careers, and in lending the money, the it doesn’t save the government anything now.

There used to be far more, but thats because there were far fewer of them 😐 if you get my drift.

Basically now they’ll pretty much all be paying, for ever (or 30 years), whichever is shorter. And all that time the taxpayers will still be paying out, and then the debts will be ‘written-off’ and the taxpayer will take another ‘hit’.

Plus because of the ‘debt’ the graduate will not be able to borrow money very easily, bringing down another ‘house of cards’.

Plus because of the ‘debt’ the graduate will not be able to borrow money very easily, bringing down another ‘house of cards’.

I don’t have a student loan, so can’t say from direct experience, but all that I’ve seen suggests the banks don’t consider a student loan to be a real debt (it is after all a very soft loan – it doesn’t get called in if you lose your job, quite the opposite). Therefore the only difference it makes to your ability to borrow other money is the effect it has on your disposable income. The banks aren’t stupid – why on earth would they count it as a normal debt when it’s quite clearly not?

Yet another of the common misconceptions. As we keep pointing out, it’s a (time limited) graduate tax in all but name.

Therefore the only difference it makes to your ability to borrow other money is the effect it has on your disposable income

Thereby reducing graduates’ spending power, and the effects that will have on the economy…

except the new system means they’ll have more disposable cash…

(£50/month more cash)

(£600/year more cash)

(£18,000 more cash over the 30years before the debt is canceled)

yes, that’s right, the students are protesting about being given an £18,000 discount.

The banks aren’t stupid – why on earth would they count it as a normal debt when it’s quite clearly not?

Recent history has shown the first part of your statement to be incorrect…,

and what else is it, but debt and a 9% reduction in income, over and above the £21k (minimum required to live decently)?

Can we safely assume that you studied neither English, Maths nor Economics at Uni?

why on earth would they count it as a normal debt when it’s quite clearly not

Is it the bit where you have to pay it back that makes them think the debt is a debt???

what about the bit where you only have to pay it back if you’re earning over a threshold?

that doesn’t happen with my mortgage.

or my credit card

or the loan i’ll be getting to buy a new car

or…

etc.

or what about the bit where the debt to the student loans co. is cancelled after 30 years?

that doesn’t happen with my blah blah blah.

or what about the bit where you don’t need to buy insurance to stop the debt being passed on to your next of kin if you die?

and anyway, how is the status of the debt or non-debt any different from the system we had last week that you weren’t complaining about?

From an anonymous university prospectus:

“Don’t worry about your debt after university, you’ll not get a decent job anyway.”

Is it the bit where you have to pay it back that makes them think the debt is a debt???

On the contrary – it’s the bit where you don’t have to pay it back which makes them think it’s not a debt!

Can we safely assume that you studied neither English, Maths nor Economics at Uni?

Why, which one did you study – given you seem unable to understand that under the new system they’ll have more income than they had under the old? awhiles has said it far more comprehensively than me, but the basic point is that the repayment terms are nothing like any ordinary debt, therefore the banks don’t treat it like one. Or are you disputing the point that the banks don’t consider it a normal debt when assessing suitability for loans?

Thereby reducing graduates’ spending power, and the effects that will have on the economy…

Just like income tax, graduate tax etc. The latter being what people seem to think is the correct alternative (those who fail to comprehend that this is in effect a graduate tax). Should we cut income tax so as to get the economy working better?

it’s the bit where you don’t have to pay it back which makes them think it’s not a debt!

ok so if I borrow money with an earning threshold it is not really borrowing thanks for the financial tip.

those who fail to comprehend that this is in effect a graduate tax

inclusing the person who brought it in then
http://www.metro.co.uk/news/843531-vince-cable-rejects-graduate-tax-as-superficially-attractive

Just google vince cable rejects graduate tax and see what you get eh
from Hansard on the day of the vote /debate here he is explaining how much better off everyone will be

Concretely, what that means is that just a little under 25% of all future graduates will pay less than they do under the current system that we inherited from the Labour Government.

Should we cut income tax so as to get the economy working better?

I thought this was the tory way, especially if it’s tax cuts for the rich…

I’d have more respect for the Tories is they just came out and said ‘You know what? We really don’t actually give two hoots about the people of Britain; we’re only actually interested in lining our pockets, but thanks to all those who voted for us. No, we’re not going to sort you out, not unless you’re very rich like us’. Y’know; if they were actually honest for once, like…

It’s the pretending to give a toss that really gets my goat.

“those who fail to comprehend that this is in effect a graduate tax”

inclusing the person who brought it in then
Did you miss the “in effect” bit?

I really can’t be bothered trying to argue any more with your misunderstanding though, Junkyard. You clearly don’t actually understand how the fact you only have to pay back a % of your income above a (quite high) threshold and that it gets written off after 30 years makes it totally unlike any conventional loan, sufficiently so that the banks don’t treat it like one when assessing whether to make other loans to you. You’re also ignoring the facts that I’ve done the calcs based on my own circumstances, and unless something remarkable happens to my salary over the next 10 years I’d have been far better off under the new loan scheme than the old one (I’m fortunate enough not to be on either of course). Right now I’d be making no repayments under the new scheme, and it’s not like I’m exactly on the breadline. It’s only those on sufficiently high earnings not to be deserving of the support of all the lefties on here who will actually be worse off.

But don’t let facts like this get in the way of your ideology.

In fact, the concept of having to deal with these fools at all should be enough to cause riots…

http://www.bbc.co.uk/news/business-11994421

So it is different to any other loan. You carry on paying it even when you have paid it off….