| Pensioners, students, small business owners 17:13 - Nov 4 with 2778 views | blueasfook |
I wonder who is next to be squeezed by Labour. They'll probably go after disabled people |  |
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| Pensioners, students, small business owners on 22:51 - Nov 8 with 250 views | Swansea_Blue |
| Pensioners, students, small business owners on 20:31 - Nov 8 by BanksterDebtSlave |
Bloody hell Swanners just when I needed some good news after trying to find car insurance for Junior less than 1k I go and read this. She is going to be enjoying life as an adult nurse isn't she. Each day of late it just feels like you're being fleeced a little bit more....perhaps it's time to give that Farage fella a go!!
Edit....out of interest do you know what total a student with a £60k loan over 3 years of study would be paying back over those 40 years? [Post edited 8 Nov 2024 20:34]
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It depends which scheme she's on. She'll be tied into the scheme that she signed up to when she took out the loan. The government has info here which talks about the different thresholds for the different plans - https://www.gov.uk/repaying-your-student-loan/what-you-pay
To generally try to illustrate how it works and to show the impact of the September 2023 changes, I'll try to use the examples Martin Lewis gave on his 5 Live piece earlier this week (here - https://www.bbc.co.uk/sounds/play/p0k32c7j).
The threshold was lowered to £25k in Sept 23. So let's say someone took out a loan for university year 23/24 onwards, and then leaves Uni earning £30k per year. They would pay 9% of their income over the now cap (£25k). £30k-£25k is £5k paid at 9% = £450 per year. Let's assume they stay at that wage throughout their career and have inflationary pay rises (the laon tracks inflation, so I'm ignoring it for simplicity!). They would pay £450 per year for 40 years (= £18,000 repaid in total and then the balance of the loan (whatever it is) would be written off).
Under the previous rules, so someone entering the system in 22/23, earning the same exit salary of £30k would pay nothing, as the threshold was £31,395 in 22/23. So they'd be £18k better off than someone entering the system in 22/23.
That's very simplistic and it's fiendishly complicated. The take home message is that it's not a loan in the traditional sense and it's pretty much the cheapest debt you can have. The scheme is a way to fund universities now by the state guaranteeing the loans. Many will not be paid off (although more will now they have lengthened the term).
Critically, in relation to the politics of Labour's recent fee rise, this has no impact on the affordability for the individual. Because what you pay is calculated on your income above the threshold. Repayments are not calculated on what you owe.
To prove that point:
1. Old fees of £9,250 per year. On a £30k salary with current threshold of £25k you pay 9% on on salary over the threshold = £450 per year. You pay for 40 years = £18,000 paid in total and the rest written off.
2. New fees to £9,535. You pay 9% of your salary over above £25k threshold (0.09*£5,000) = £450 per year. You pay for 40 years = £18,000 paid in total and the rest written off.
3. Let's say they get greedy and they increase fees to £1,000,000 per year! You still pay 9% of your £30k salary above the £25k threshold (0.09*£5,000) = £450 per year. You pay for 40 years = £18,000 paid in total and the rest written off. At lower incomes where the loan will never be fully written off; the government is always subsidising a good chunk of it.
The annual repayments are identical for your given salary irrespective of the amount of loan taken out. But the higher fees do help the university, as the government pays them that money now (via the student who has to pay their fees up front).
This article was released when the changes were announced last year - https://www.moneysavingexpert.com/news/2023/05/martin-lewis-good-morning-britain
That's a really long-winded answer and very simplistic, so I'd recommend looking at the resources for more specific info. I'm trying to get my head around it myself, as the eldest will be off to uni in less than 2 years (but it's different here in Wales - we get more money as a grant not a loan).
Edit - you'll know this already, but the largest cost to the parents is contributing towards their living costs. Forget about the loans to cover fees, as those costs fall later and only when they start earning over the threshold. And it's still really low cost debt despite the changes last year. Anyone with kid nearing uni age needs to be saving money towards their maintenance costs as a priority. [Post edited 8 Nov 2024 22:57]
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