I was responding to his point about LIVING EXPENSES
jswift909 said their example "won't include living expenses (student loan)" which I took to mean all maintenance costs, not just living expenses. Even if students only attend uni for 30 weeks per year, if they rent private accommodation that will be a whole years rent to be paid, which represents the whole maintenance loan at current student rents. Even in university halls, accommodation is often for 40 weeks minimum. So not included in this will be books, bills, food and travel expenses. That's a lot to make up out of part time employment.
I'm just grateful I came from a generation where I had a grant which was enough (with my parents' assessed contribution) to pay for rent, books and food. Tuition was of course free. That current students have to work hard for their degrees, and then most need to get a job in any spare time they have to support themselves, is unfair.
I'm just grateful I came from a generation where I had a grant which was enough (with my parents' assessed contribution) to pay for rent, books and food. Tuition was of course free. That current students have to work hard for their degrees, and then most need to get a job in any spare time they have to support themselves, is unfair.
Part-time student jobs are rather traditional, I think...
For my own bit, I used to do data entry work (credit card applications) 5 nights a week from 5pm to midnight for a few months in my final year. Was quite fun actually, and I wasn't the only student there.
I still got a 2:1, and managed to graduate with my bank account in credit - which was a 'world's first' for a student, according to the lady in the bank!
The NUS didn't organise the anarchists who hijacked the demos. I'm not sure how the NUS can be said to be selfish when their policy is in favour of graduate tax, so students would still make a significant extra contribution.
The NUS should be prepared top condemn the violence of these anarchists. Most of their spokespeople are refusing too.
The proposal is for a system where you pay nothing up front, and then a % of income above a certain level later. The practical application is very like a graduate tax to me. Except there is a chance that at some point it will end, and it definitely will after 30 years.
I would like to hear some proper debate on this where the details of proposals are discussed openly. It was very annoying on Question Time last week when Dimbelby refused to allow the details of the proposal to be explained. I have lost track of people complaining about things that show a misunderstanding of the policy.
I am very confused by it all and I have been trying to follow the arguments.
The NUS should be prepared top condemn the violence of these anarchists. Most of their spokespeople are refusing too.
The proposal is for a system where you pay nothing up front, and then a % of income above a certain level later. The practical application is very like a graduate tax to me. Except there is a chance that at some point it will end, and it definitely will after 30 years.
I would like to hear some proper debate on this where the details of proposals are discussed openly. It was very annoying on Question Time last week when Dimbelby refused to allow the details of the proposal to be explained. I have lost track of people complaining about things that show a misunderstanding of the policy.
I am very confused by it all and I have been trying to follow the arguments.
See the spreadsheet link in #101 and play with some figures. I created this just to check some figures -- to confirm I wasn't going mad and that interest is really going to balloon the debt.
Even with a starting debt of £21k (3x £7k) and starting salary of £33k, it seems to take over 16 years to pay off the debt. And when you have paid it off, you will have paid another £9k in interest.
I can't be sure my calculations are correct, but all the formulas are easy to see. You just change the starting salary and debt. If it is right it's very disturbing. You might also want to put in a debt of £10k, about what they have now.
Ok, I found this, which seems to confirm what you said.
"The interest rate on student loans will remain at zero until graduates earn £21,000 – when they will be charged three per cent, plus inflation. If debts are not repaid after 30 years, they will be wiped out."
Any student who earns more than the threshold, but not enough to cover the cost of the higher rate of interest – 2.2 per cent above inflation – would have the rest of interest rebated to them. No student should therefore face a rising real debt burden because of interest accrual.
I'll stick a broom up my ar&& and sweep the floor whilst I'm at it.
I'm looking at that, but I don't quite understand what they're getting at.
I saw the figure of 3% mentioned. Is it really 3% or 2.2% ?
That article was a bit out of date, so I'm looking for a more recent one, and to try to understand what this interest rebate is.
Update: It's still confusing because here it says:
"Under the new system though, graduates will be charged interest over and above RPI. The rate will be "progressive", so those earning more will be charged a higher interest rate. Those earning less than £21,000 – and therefore not starting to make repayments – will still be charged just the flat RPI rate, but once graduates' salaries top £41,000 they will pay the maximum of RPI plus three percentage points."
which suggest they will be charge interest at RPI even below £21k.
Even with a starting debt of £21k (3x £7k) and starting salary of £33k, it seems to take over 16 years to pay off the debt. And when you have paid it off, you will have paid another £9k in interest.
I can't be sure my calculations are correct, but all the formulas are easy to see. You just change the starting salary and debt. If it is right it's very disturbing. You might also want to put in a debt of £10k, about what they have now.
I think you're pretty close to the truth with your numbers, jswift909.
And, yes, there's no question that folks starting on 33k (as per your example), and moving higher and higher are going to get clobbered.
That's the inevitable result of the progressive system.
Someone has to pay over the odds to subsidise graduates from poor backgrounds, or graduates who don't go on to earn the levels of salary at which payments (or even break-even payments) kick in.
Part-time student jobs are rather traditional, I think...
For my own bit, I used to do data entry work (credit card applications) 5 nights a week from 5pm to midnight for a few months in my final year. Was quite fun actually, and I wasn't the only student there.
I still got a 2:1, and managed to graduate with my bank account in credit - which was a 'world's first' for a student, according to the lady in the bank!
Regards,
Cypher
In my day (1970s) very few students I knew had term time jobs, which are commonplace these days. The expression "working your way through university" was almost unheard of this side of the pond. A few had bar jobs. Some students were sponsored by industry so had jobs as a result in the vacations. Working in the summer vacations was the norm, but that was basically to afford a holiday and get by until the next grant cheque arrived.
I never had an overdraught either, so maybe I beat you to it?
I'll stick a broom up my ar&& and sweep the floor whilst I'm at it.
I will say that I appreciate the effort you've put in here. While our ideologies may be different, your figures are at least proving the progressiveness of the system (even if you would prefer the nation as a whole to pay it, where I'm a let the student pay it
again, good work on that spreadsheet. V informative.
page 4 gives a comparison between what Browne proposed, and what the government is implementing.
Thanks. Haven't read it all yet, but this section on maintenance (rather than tuition) was interesting.
While there is a strong case for making upfront support for students relate to parental income, it is much harder to argue that graduate debt and therefore future graduate contributions should be related to parental income before studying rather than just the course taken and how well graduates do in the labour market. In particular it is hard to justify why students from households earning £42,600 should face larger debts than all other students doing similar priced courses. Whilst the proposed system is more progressive than the current system and Lord Browne’s proposals, the details of the proposed system are quite complex and less transparent than the system proposed by Lord Browne which featured a universal maintenance loan and means tested grant. A progressive, less complex system would be easy to devise and merits reconsideration.
Bursaries and scholarships.
Hopefully by the time my daughter thinks about university in a few years time, someone will have made sense of all this.
The NUS should be prepared top condemn the violence of these anarchists. Most of their spokespeople are refusing too.
Considering that some of those spokespeople are quite prepared to threaten violence against fellow students for disagreeing with them, I wouldn't expected a condemnation anytime soon.
I will say that I appreciate the effort you've put in here. While our ideologies may be different, your figures are at least proving the progressiveness of the system (even if you would prefer the nation as a whole to pay it, where I'm a let the student pay it
again, good work on that spreadsheet. V informative.
I think we all agree the loan repayments are more progressive. That is not in question. The key difference is supporters ignore the increase in debt, while opponents think this is an important factor.
Thanks. Haven't read it all yet, but this section on maintenance (rather than tuition) was interesting.
Hopefully by the time my daughter thinks about university in a few years time, someone will have made sense of all this.
What I find interesting is that the IFS report gives the repayment threshold as £18,840. i.e. £21,000 in 2012 terms. So until the recent concession that the threshold will be indexed year on year, clearly the system as intended, and as researched by the IFS, was rather less generous than the calculation on this thread shows. The concession is welcome, but it had to be forced out of the government.
People seem to be forgetting that teaching budgets are being cut by a very large percentage. So students now have to pay more for a lower quality of teaching? It doesn't necessarily matter if the repayment system is better under the new proposal when you look at it that way. Not a good incentive for new students to want to go to university is it.
Nothing upfront, at the moment students do pay some upfront.
Only start paying back once earning 21k.
Will be paying back far less per month than curently (will be around £30 a month)
Will get it wiped after 30 years
Poorest will get it paid for them for first two years.
Looks pretty fair to me, and Im a final year student myself.
Really, I think students need to actually start looking at the policy instead of just seeing the 9k figure and being fooled into thinking they are paying it upfront.
They will be getting a better deal than I will get, paying back when I earn 15k a year, and paying over £100 month if getting a job on the average wage. I also pay parts of my tutition fees upfront each year.
I would suggest people stop moaning, and actually read the policy that has been passed, because most students clearly have not.
Nothing upfront, at the moment students do pay some upfront.
Only start paying back once earning 21k.
Will be paying back far less per month than curently (will be around £30 a month)
Will get it wiped after 30 years
Poorest will get it paid for them for first two years.
Looks pretty fair to me, and Im a final year student myself.
Really, I think students need to actually start looking at the policy instead of just seeing the 9k figure and being fooled into thinking they are paying it upfront.
They will be getting a better deal than I will get, paying back when I earn 15k a year, and paying over £100 month if getting a job on the average wage. I also pay parts of my tutition fees upfront each year.
I would suggest people stop moaning, and actually read the policy that has been passed, because most students clearly have not.
My concern would be about the total debt, and the interest. It means, for most people, debts for 30 years.
You can put in £21k or £31k, or whatever, for the starting debt and put in a starting salary. It should give a good idea of the amount to pay back each month, and how the debt reduces (or doesn't).
Another thing is a double-whammy. You hit the 40% tax bracket at about £37k, then higher fee charges at £41k.
Note. This version includes interest on the fee amounts advanced during the study period, as the IFS said RPI interest was added during study.
I think we all agree the loan repayments are more progressive. That is not in question. The key difference is supporters ignore the increase in debt, while opponents think this is an important factor.
Hmmm, I don't think it's quite so clear cut.
I'm an opponent of this new system, but I don't see an issue with the 'debt'.
To my mind, it's not even a true debt, in the regular commercial sense of the word.
Debts have to be re-paid, whereas this is just something that *might* have to be paid depending on how much money the graduate ends up earning. It casts no greater shadow than the next income tax bracket up from what you are earning now - it won't affect you until you get there.
I'm against it because I just see hard-working graduates who succeed in their endeavours getting absolutely clobbered in order to cross-subsidise another group of graduates who stand no chance of finding degree-level jobs, simply because they don't exist.
The repayment scheme, to my mind, is just yet another tax on success. And a needless one at that...
I'm an opponent of this new system, but I don't see an issue with the 'debt'.
To my mind, it's not even a true debt, in the regular commercial sense of the word.
Debts have to be re-paid, whereas this is just something that *might* have to be paid depending on how much money the graduate ends up earning. It casts no greater shadow than the next income tax bracket up from what you are earning now - it won't affect you until you get there.
I'm against it because I just see hard-working graduates who succeed in their endeavours getting absolutely clobbered in order to cross-subsidise another group of graduates who stand no chance of finding degree-level jobs, simply because they don't exist.
The repayment scheme, to my mind, is just yet another tax on success. And a needless one at that...
Regards,
Cypher
I agree with you on the way it's a graduate tax, rather than 'debt' but I disagree with it being a tax on accomplishment.
While it does hit the richest hardest, it's a compromise to allow free education. However like you, i think, I would rather a system for 'core' subjects to be subsidised by the taxpayer.
it would perhaps lend itself to channelling our brightest to degrees that people consider of value.
I'm an opponent of this new system, but I don't see an issue with the 'debt'.
To my mind, it's not even a true debt, in the regular commercial sense of the word.
Debts have to be re-paid, whereas this is just something that *might* have to be paid depending on how much money the graduate ends up earning. It casts no greater shadow than the next income tax bracket up from what you are earning now - it won't affect you until you get there.
I'm against it because I just see hard-working graduates who succeed in their endeavours getting absolutely clobbered in order to cross-subsidise another group of graduates who stand no chance of finding degree-level jobs, simply because they don't exist.
The repayment scheme, to my mind, is just yet another tax on success. And a needless one at that...
Regards,
Cypher
It's a debt in every sense. You can't avoid paying what is due. That it expires after 30 years is not really relevant.
What frankly amazes me is that some people are defending what is effectively a 9% tax increment by saying it's only £xx per week. If that's the case, why don't we solve the deficit by putting income tax up by 9% above a £21K threshold as it's so affordable.
I'm trying to find some details on this, but can't find anything because all the Google links generally point to the violence rather than the actual story behind it.
Does anyone know how much each student will pay per month with the new policy (at most)?
Those students with any sense will set up a company, pay themselves a maximum of £21,000 per annum and get the rest of the money in dividends or "employ" their spouse and/or children. That way, they never have to pay a penny back.
Nothing upfront, at the moment students do pay some upfront.
Only start paying back once earning 21k.
Will be paying back far less per month than curently (will be around £30 a month)
Will get it wiped after 30 years
Poorest will get it paid for them for first two years.
Looks pretty fair to me, and Im a final year student myself.
Really, I think students need to actually start looking at the policy instead of just seeing the 9k figure and being fooled into thinking they are paying it upfront.
They will be getting a better deal than I will get, paying back when I earn 15k a year, and paying over £100 month if getting a job on the average wage. I also pay parts of my tutition fees upfront each year.
I would suggest people stop moaning, and actually read the policy that has been passed, because most students clearly have not.
Full time degree students pay nothing up front at present if they get a full tuition loan.
The £21k threshold is exactly the same as what the current £15k one was uplifted each year.
75% of students will be worse off under the new system.
There is no interest on the current loan - it can be 3% above inflation under the new system.
I don't think it's such a good deal - thankfully my daughter will have finished her degree by the time it's brought in although my son won't.
I agree with you on the way it's a graduate tax, rather than 'debt' but I disagree with it being a tax on accomplishment.
While it does hit the richest hardest, it's a compromise to allow free education. However like you, i think, I would rather a system for 'core' subjects to be subsidised by the taxpayer.
it would perhaps lend itself to channelling our brightest to degrees that people consider of value.
It doesn't hit the rich hardest - many of the rich will not need to borrow it in the first place so avoiding the repayment altogether, in spite of being likely to be higher earnings.
Watch out for a likely amendment where the early repayment penalties get kicked into the long grass to appease Tory supporters who are well off.
What frankly amazes me is that some people are defending what is effectively a 9% tax increment by saying it's only £xx per week. If that's the case, why don't we solve the deficit by putting income tax up by 9% above a £21K threshold as it's so affordable.
Income tax is ridiculously high already, and totally unfair to those on lower incomes when you consider all the other things that they are hit with - VAT, council tax, TV licence, fuel tax etc... The last thing we need is to push it up further, IMHO.
It's a small mercy that this problem has not been shared amongst the wider economy. But that still doesn't make it right.
Comments
I'm just grateful I came from a generation where I had a grant which was enough (with my parents' assessed contribution) to pay for rent, books and food. Tuition was of course free. That current students have to work hard for their degrees, and then most need to get a job in any spare time they have to support themselves, is unfair.
Part-time student jobs are rather traditional, I think...
For my own bit, I used to do data entry work (credit card applications) 5 nights a week from 5pm to midnight for a few months in my final year. Was quite fun actually, and I wasn't the only student there.
I still got a 2:1, and managed to graduate with my bank account in credit - which was a 'world's first' for a student, according to the lady in the bank!
Regards,
Cypher
The NUS should be prepared top condemn the violence of these anarchists. Most of their spokespeople are refusing too.
The proposal is for a system where you pay nothing up front, and then a % of income above a certain level later. The practical application is very like a graduate tax to me. Except there is a chance that at some point it will end, and it definitely will after 30 years.
I would like to hear some proper debate on this where the details of proposals are discussed openly. It was very annoying on Question Time last week when Dimbelby refused to allow the details of the proposal to be explained. I have lost track of people complaining about things that show a misunderstanding of the policy.
I am very confused by it all and I have been trying to follow the arguments.
See the spreadsheet link in #101 and play with some figures. I created this just to check some figures -- to confirm I wasn't going mad and that interest is really going to balloon the debt.
Even with a starting debt of £21k (3x £7k) and starting salary of £33k, it seems to take over 16 years to pay off the debt. And when you have paid it off, you will have paid another £9k in interest.
I can't be sure my calculations are correct, but all the formulas are easy to see. You just change the starting salary and debt. If it is right it's very disturbing. You might also want to put in a debt of £10k, about what they have now.
Looking quite good that now. did you add this bit
http://www.ft.com/cms/s/0/f83a7dca-d58c-11df-8e86-00144feabdc0.html#ixzz17oenLpm9
I'll stick a broom up my ar&& and sweep the floor whilst I'm at it.
I'm looking at that, but I don't quite understand what they're getting at.
I saw the figure of 3% mentioned. Is it really 3% or 2.2% ?
That article was a bit out of date, so I'm looking for a more recent one, and to try to understand what this interest rebate is.
Update: It's still confusing because here it says:
"Under the new system though, graduates will be charged interest over and above RPI. The rate will be "progressive", so those earning more will be charged a higher interest rate. Those earning less than £21,000 – and therefore not starting to make repayments – will still be charged just the flat RPI rate, but once graduates' salaries top £41,000 they will pay the maximum of RPI plus three percentage points."
which suggest they will be charge interest at RPI even below £21k.
http://www.telegraph.co.uk/finance/personalfinance/8194206/How-much-will-you-pay-for-a-university-education.html
No wonder everyone is so confused.
I think you're pretty close to the truth with your numbers, jswift909.
And, yes, there's no question that folks starting on 33k (as per your example), and moving higher and higher are going to get clobbered.
That's the inevitable result of the progressive system.
Someone has to pay over the odds to subsidise graduates from poor backgrounds, or graduates who don't go on to earn the levels of salary at which payments (or even break-even payments) kick in.
Regards,
Cypher
I never had an overdraught either, so maybe I beat you to it?
page 4 gives a comparison between what Browne proposed, and what the government is implementing.
I will say that I appreciate the effort you've put in here. While our ideologies may be different, your figures are at least proving the progressiveness of the system (even if you would prefer the nation as a whole to pay it, where I'm a let the student pay it
again, good work on that spreadsheet. V informative.
Thanks. Haven't read it all yet, but this section on maintenance (rather than tuition) was interesting.
Hopefully by the time my daughter thinks about university in a few years time, someone will have made sense of all this.
What I find interesting is that the IFS report gives the repayment threshold as £18,840. i.e. £21,000 in 2012 terms. So until the recent concession that the threshold will be indexed year on year, clearly the system as intended, and as researched by the IFS, was rather less generous than the calculation on this thread shows. The concession is welcome, but it had to be forced out of the government.
I assume this is still the case as I've heard nothing to say it isn't.
Assuming a £31k total debt over 3 years.
Only start paying back once earning 21k.
Will be paying back far less per month than curently (will be around £30 a month)
Will get it wiped after 30 years
Poorest will get it paid for them for first two years.
Looks pretty fair to me, and Im a final year student myself.
Really, I think students need to actually start looking at the policy instead of just seeing the 9k figure and being fooled into thinking they are paying it upfront.
They will be getting a better deal than I will get, paying back when I earn 15k a year, and paying over £100 month if getting a job on the average wage. I also pay parts of my tutition fees upfront each year.
I would suggest people stop moaning, and actually read the policy that has been passed, because most students clearly have not.
My concern would be about the total debt, and the interest. It means, for most people, debts for 30 years.
I wanted to see for myself so I created this spreadsheet
http://opennet.co.uk/student_payback.xls
You can put in £21k or £31k, or whatever, for the starting debt and put in a starting salary. It should give a good idea of the amount to pay back each month, and how the debt reduces (or doesn't).
Another thing is a double-whammy. You hit the 40% tax bracket at about £37k, then higher fee charges at £41k.
Note. This version includes interest on the fee amounts advanced during the study period, as the IFS said RPI interest was added during study.
Hmmm, I don't think it's quite so clear cut.
I'm an opponent of this new system, but I don't see an issue with the 'debt'.
To my mind, it's not even a true debt, in the regular commercial sense of the word.
Debts have to be re-paid, whereas this is just something that *might* have to be paid depending on how much money the graduate ends up earning. It casts no greater shadow than the next income tax bracket up from what you are earning now - it won't affect you until you get there.
I'm against it because I just see hard-working graduates who succeed in their endeavours getting absolutely clobbered in order to cross-subsidise another group of graduates who stand no chance of finding degree-level jobs, simply because they don't exist.
The repayment scheme, to my mind, is just yet another tax on success. And a needless one at that...
Regards,
Cypher
I agree with you on the way it's a graduate tax, rather than 'debt' but I disagree with it being a tax on accomplishment.
While it does hit the richest hardest, it's a compromise to allow free education. However like you, i think, I would rather a system for 'core' subjects to be subsidised by the taxpayer.
it would perhaps lend itself to channelling our brightest to degrees that people consider of value.
What frankly amazes me is that some people are defending what is effectively a 9% tax increment by saying it's only £xx per week. If that's the case, why don't we solve the deficit by putting income tax up by 9% above a £21K threshold as it's so affordable.
Those students with any sense will set up a company, pay themselves a maximum of £21,000 per annum and get the rest of the money in dividends or "employ" their spouse and/or children. That way, they never have to pay a penny back.
Full time degree students pay nothing up front at present if they get a full tuition loan.
The £21k threshold is exactly the same as what the current £15k one was uplifted each year.
75% of students will be worse off under the new system.
There is no interest on the current loan - it can be 3% above inflation under the new system.
I don't think it's such a good deal - thankfully my daughter will have finished her degree by the time it's brought in although my son won't.
It doesn't hit the rich hardest - many of the rich will not need to borrow it in the first place so avoiding the repayment altogether, in spite of being likely to be higher earnings.
Watch out for a likely amendment where the early repayment penalties get kicked into the long grass to appease Tory supporters who are well off.
Of course you can, you just don't aspire to being a high income earner.
And that's the problem with it - it will stifle aspiration.
Income tax is ridiculously high already, and totally unfair to those on lower incomes when you consider all the other things that they are hit with - VAT, council tax, TV licence, fuel tax etc... The last thing we need is to push it up further, IMHO.
It's a small mercy that this problem has not been shared amongst the wider economy. But that still doesn't make it right.
Regards,
Cypher