Student debt - a lifelong millstone for some.

[dosxuk]

But all the government have done is double their up-front costs, prolong the amount of time before they will see any return by raising the salary required for repayments, without increasing the percentage of salary paid. They're going to start charging a real rate of interest, but all that does is increase the amount owed, not the amount being repaid. Very few students will have any chance of ever paying it off.

 

What they have done is find a way of reducing the defecit - not by reducing the amount of money the government is spending, by increasing it, and labelling it as personal debt held by young people. However, all of those loans which don't get paid off fully will end up being governmental debt all over again.

 

I can't really be bothered to actually work through the calculations but it just doesn't seem to make financial sense at all.

 

It makes a tiny bit of financial sense, if you don't think in the long, or even medium term. The changes are not to anyone's benefit though, not student's and not tax payers.

[llamatron]

But all the government have done is double their up-front costs, prolong the amount of time before they will see any return by raising the salary required for repayments, without increasing the percentage of salary paid. They're going to start charging a real rate of interest, but all that does is increase the amount owed, not the amount being repaid. Very few students will have any chance of ever paying it off.

 

I can't really be bothered to actually work through the calculations but it just doesn't seem to make financial sense at all.

 

They paid all this money before through tax, now they will be getting more of it back-at least I guess thats the idea.

[Twiglet]

They paid all this money before through tax, now they will be getting more of it back-at least I guess thats the idea.

 

Except they won't. Currently students pay 9% of everything they earn over £15,000. Under the new scheme, they will pay back 9% of everything they earn over £21,000 (and this salary threshold will increase with inflation each year). The government stands to get much less money back.

 

What dosxuk says about shifting national debt to student personal debt makes sense now.

[harvey19]

Maybe it will focus the minds of prospective students on whether it is worth their while going to university or not.

If they decide a university education is for them hopefully they will choose a course which will give them good employment prospects.

This new scheme may inject some forward thinking into the consequences of what they pay for and how their chosen degree will benefit them.

After all reading for a degree is a choice.

[HJL_Shef]

Maybe it will focus the minds of prospective students on whether it is worth their while going to university or not.

If they decide a university education is for them hopefully they will choose a course which will give them good employment prospects.

This new scheme may inject some forward thinking into the consequences of what they pay for and how their chosen degree will benefit them.

After all reading for a degree is a choice.

 

It is a choice, yes.

 

However, the new scheme could equally put people off studying what they are passionate about, because the job prospects are poor in that sector. Passion drives innovation, and the UK is so far along the economic growth curve that innovation is the only thing that truly allows the country to earn any real money. My main concern is that, being as careers in science are few and laboratory jobs are very poorly paid, the new measures indirectly affect scientific innovation, which would be a disaster for our economy. We can't fall back on traditional methods of wealth generation (basic industry and agriculture) because we are over-developed and cannot compete with foreign profit margins!

[llamatron]

Except they won't. Currently students pay 9% of everything they earn over £15,000. Under the new scheme, they will pay back 9% of everything they earn over £21,000 (and this salary threshold will increase with inflation each year). The government stands to get much less money back.

 

What dosxuk says about shifting national debt to student personal debt makes sense now.

 

That would be true if all graduates always earned the minimum required to start paying back the loan. You are taking far too simplistic a scenario.

[nightrider]

What I currently don't understand is, who is going to pay for it? Surely this is a false economy?

 

I'm assuming that if a university charges £6,000 per year, this will be paid upfront by the Student Loans Company. I also came to the conclusion the other day that probably more than 50% of students will never pay off their loans. Even if they do, it will take decades. Who is going to make up the shortfall?

 

the government finances presumably.

[harvey19]

It is a choice, yes.

 

However, the new scheme could equally put people off studying what they are passionate about, because the job prospects are poor in that sector. Passion drives innovation, and the UK is so far along the economic growth curve that innovation is the only thing that truly allows the country to earn any real money. My main concern is that, being as careers in science are few and laboratory jobs are very poorly paid, the new measures indirectly affect scientific innovation, which would be a disaster for our economy. We can't fall back on traditional methods of wealth generation (basic industry and agriculture) because we are over-developed and cannot compete with foreign profit margins!

I think anyone passionate about a subject will read a degree in it no matter what.

What I think it will do is focus the mind of those who do a degree without considering the future opportunities related to it.

The days of any degree opening doors are gone, but I also despair at employers asking for degrees from job applicants just because there are so many unemployed graduates and that degree of learning is not necessary.

[Twiglet]

That would be true if all graduates always earned the minimum required to start paying back the loan. You are taking far too simplistic a scenario.

 

I don't understand how that is too simplistic?

 

Average graduate wages aren't about to dramatically increase. The government has increased the threshold at which graduates start paying back debt, without increasing the percentage that they pay. That means the government will be getting far less back than they do currently.

[llamatron]

because the higher earners will be paying back more than they did previously, subsidising the poorer graduates.