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Debt

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I know people that never went to university and are doing much better with their own businesses than friends of mine the same age that did go to uni. A particular friend of mine would probably have lost (or at least delayed) £180K of income (gross) if he'd gone to uni instead of setting his own business up.

... However, part of the problem may be that many who go to uni do so to delay getting a job...

But for some that isn't a problem, imho. If people can start a business and run it successfully at 18, great, they get a good start, and a better one than studying. But a lot of 18 year olds aren't motivated or sharp enough to do that, and three years at uni at least gives them more time to grow up and think about what they're going to do in life - in an environment that doesn't encourage it particularly for the first year or two, but certainly focusses you towards the end. As all your mates start applying for jobs, the careers office at the uni turns the handle ("never too early to start looking for jobs"), and your parents are on the phone asking how job applications are going. I think by 21 most people are at least grown up enough to go "oh yeah - real life, here it comes" !
I feel that all academic qualifications are losing their value. When I interview people I don't look at their educational record - I simply expect them to prove to me at interview and during testing that they are capable. This is in the IT industry.

ade.

Yeah, that's true. They show you know how to pass exams. But they are sometimes enough to get you to interview, and then the real person comes out. It'll be a long time before they're completely devalued - though possibly sooner in high-tech industries than in others. (e.g. "You want to be a lawyer, and you don't have a law degree / qualification?! Go home.")

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ShanghaiTim,

Some interesting points you raise and one hand I tend to agree with you. But on the other hand I can't help feeling that british tax payers shouldn't necessarily be paying for an expensive half-way house for young adults that aren't motivated. Shouldn't our schools and certainly our colleges be outputting young adults that are motivated ?

I also agree with your point r.e. the few types of degree and beyond study that are essential for certain careers - law, medicine etc.

I guess to me the ideal situation would be for far less degreee courses, but courses that are properly funded, whilst providing a decent income for example to trainee doctors etc.

The problem though is that governments have in the past relied upon getting as many people into education as possible to lower unemployment rates.

Getting back to the topic of "debt", perhaps our schools should include significant compulsory education in finance (personal and business)?

ade.

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You aren't paying attention are you zaranna?

The gvmt reckons the average graduate earns £400k over the average non graduate over their lifetimes.

Even tax rake of only 25% is £100k. If the cost of educating a University student for 3 or 4 years is truly over £25k per annum, someone really needs to look at the business side of academia in a hurry. Hell, top residential public schools cost less than that.

If we actually look at the tax rate as being closer to 40% then it works out to over £40k pa for a 4 year course. You cannot possibly tell me that the actual cost of educating a university graduate is more than either of those figures.

The question of funding higher education is an interesting one. I am just starting an MA as an e-course. This will cost me £3,200 a year for three years. Now I am not begrudging this - will be taking the course at the same time as working so can afford to do so. However there are a total of fours people staffing the course from Admin to teaching. If 100 people take the course, that's over £300,000 a year income from tyhe students alone, let alone income from the government (is that the way it works?) There will be no teaching buildings and associated costs to pay for. So I would say the University will be doing well out of the course...

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There are a number of interesting questions that have been brought up on this thread…

1) Have attitudes towards debt changed? Is there a debt industry? I wasn’t brought up here in the U.K., and before I came, I thought the British were quite conservative with debt. Frugality, Mr. Macawber, etc. But from the media here it seems like debt is becoming the norm. As mentioned in an earlier post, it seems like some take a pretty casual approach to mortgage equity withdrawal. I think the term (m.e.w.) itself is a bit deceptive… it’s almost as if it isn’t increasing one’s borrowing and debt… it's withdrawing money that you've earned. But even if your house has increased in notional value (because of the current bubble), you still have to live somewhere. So, you might be able to realise some profit by selling your house and moving to a smaller place or worse area, but how many people are genuinely happy to do this?

I’ve also wondered how much of the U.K. economy is underpinned by “mewing”. I’d read someplace that a reasonable percentage of new car purchases (>10%?) in Florida were paid for by mew-ing. And now the house market is bad news in the states. So you have to imagine then that there will be knock-on effects for car sales, etc.

2) Is university education a worthwhile investment? If one views a university education as a guarantee of a graduate level job, I’m not so sure. Are there really that many graduate level vacancies every year? Second, in my opinion, there are some university students who don’t really seem to care. They do the absolute minimum to get by. They will get by, but I wonder – what will they do with their lives? Would you hire someone who doesn’t want to work? Is there any benefit from spending 3 years doing very little?

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Meh,

You guys are missing so much, nobody has mentioned the fact that only 1 in 6 graduates EVER use their degrees for their intended use. Oh and then theres the fact that only 1/3 of students that start a degree end up finishing it.

There should be a warning printed on the degree literature that they send out. I dont know about you, but if I had been told that I would be unlikely to ever use my degree, then I would have never have started one!!!!

I dont deny that having a degree helps you get a job - with a higher salary, - but just not in the job you trained for.

They say TIME is the most valuable commodity - what could I have done with the time I wasted at Uni?

I'll rephrase that question, - its not "could" have done - but rather what "would" I have done.

What would you have done?

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the psychology of debt is interesting. Somehow, it seems that the more debt you have, the wealthier you are perceived to be, maybe because there is an assumption that you have the ability to service that debt, or the assets to back it up.

Overheard this in the changing room of my sports club last week - 'I reckon my house has gone up £170,000 over the last couple of years, so I've taken another £85,000 out'. This sounds to me like he's already taken the same amount out already, ie he's cashed in what equity he thinks he's made over this time.

His three or four mate's reactions are interesting: 'minted man!', 'lucky b*****d!', etc. He is obviously 'the man' in their eyes. All they can see is that he has a wad of cash to blow. They don't see the enormous financial hole he will now be paying interest on. Meanwhile, I'm thinking 'what a dick!'.

I can understand the mentality of 'keeping up with the Jones', though I've never bought into that myself, but the idea of declaring your indebtedness as a sign of wealth is just bizzare.

Interest rate rises, or redundancy is going to be a big wake up call for folks like this.

TLM

So many monkeys like this out there....but they'll all be lunching on peanuts in the near future.

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On the contrary, the real cost is absorbed by the exhorbitantly high wages (gvmt estimate £400k average over their working life) earned by a graduate compared to a non grad. Given that tax is going to be paid on that portion at around at least 30% + the national insurance, then the government rakes in at least £120k for the average graduate in extra taxes - thats before we factor in anything exciting like the extra fuel tax for the large car, the 17.5% rake on sales etc. But as a lecturer I am sure you have considered this already.

Not medicine - ended up with an MA in history and an MSc in AI. Now sitting pretty as a DBA for an international online gaming group, so the £130 a month repayments are less relevant. But when your take home is £1300 its a lot.

And you take home £13000 p/m, and you think thats sitting pretty, I dont think so. Do you want to read your own profile again and then re-assess that statement.

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And you take home £13000 p/m, and you think thats sitting pretty, I dont think so. Do you want to read your own profile again and then re-assess that statement.

That should say £1300 p/m not £13000 p/m. Cant edit now, am timed out.

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That should say £1300 p/m not £13000 p/m. Cant edit now, am timed out.

I'd feel like a pig in shit if I could take home £1300.

That's a lot more than your average "man on the street".

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There are a number of interesting questions that have been brought up on this thread…

1) Have attitudes towards debt changed? Is there a debt industry? I wasn’t brought up here in the U.K., and before I came, I thought the British were quite conservative with debt. Frugality, Mr. Macawber, etc. But from the media here it seems like debt is becoming the norm. As mentioned in an earlier post, it seems like some take a pretty casual approach to mortgage equity withdrawal. I think the term (m.e.w.) itself is a bit deceptive… it’s almost as if it isn’t increasing one’s borrowing and debt… it's withdrawing money that you've earned. But even if your house has increased in notional value (because of the current bubble), you still have to live somewhere. So, you might be able to realise some profit by selling your house and moving to a smaller place or worse area, but how many people are genuinely happy to do this?

I’ve also wondered how much of the U.K. economy is underpinned by “mewing”. I’d read someplace that a reasonable percentage of new car purchases (>10%?) in Florida were paid for by mew-ing. And now the house market is bad news in the states. So you have to imagine then that there will be knock-on effects for car sales, etc.

2) Is university education a worthwhile investment? If one views a university education as a guarantee of a graduate level job, I’m not so sure. Are there really that many graduate level vacancies every year? Second, in my opinion, there are some university students who don’t really seem to care. They do the absolute minimum to get by. They will get by, but I wonder – what will they do with their lives? Would you hire someone who doesn’t want to work? Is there any benefit from spending 3 years doing very little?

Speaking as a 30 year old North Eastern'er .......

1) Yes, most of my friend (typically the lower earners) seems hell bent on borrowing money to buy utter crap they neither need nor respect, they have no grasp of how to control there financal spending.

2) Nope, unfortunately University seems to be the easy option to a lot of people I have met (easier than getting a job) I was very surprised how much time was wasted when I was at Uni, unless things have changed I would say 18 months tops to study for a degree.

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There good debt and bad debt....

Good debt - you borrow from banks to do business, buy property and ultimate appreciate many fold which you gain when fully return the principle loans + interest

Bad debt - spend on credit card to buy liability etc

<_<<_<<_<

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Meh,

You guys are missing so much, nobody has mentioned the fact that only 1 in 6 graduates EVER use their degrees for their intended use. Oh and then theres the fact that only 1/3 of students that start a degree end up finishing it.

There should be a warning printed on the degree literature that they send out. I dont know about you, but if I had been told that I would be unlikely to ever use my degree, then I would have never have started one!!!!

I dont deny that having a degree helps you get a job - with a higher salary, - but just not in the job you trained for.

They say TIME is the most valuable commodity - what could I have done with the time I wasted at Uni?

I'll rephrase that question, - its not "could" have done - but rather what "would" I have done.

What would you have done?

I find it informative that German education tends to throw out older graduates, my ex got her Masters after 6-7 years or so of full time higher education, and that's only after getting her "Abitur" at 20-21.

I seriously think UK education throws Academic students too early into figuring out what they're actually interested in, and too many "degrees" should actually be more classed as NVQ or Apprenticeship type qualifications, with the associated sensible paid work component.

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I find it informative that German education tends to throw out older graduates, my ex got her Masters after 6-7 years or so of full time higher education, and that's only after getting her "Abitur" at 20-21.

I seriously think UK education throws Academic students too early into figuring out what they're actually interested in, and too many "degrees" should actually be more classed as NVQ or Apprenticeship type qualifications, with the associated sensible paid work component.

I disagree. I'm an academic (fixed term contract) in a research lab in Cambridge. I'm at least 4 years younger than my continental colleagues at the same stage in their career (in one case I'm 10 years younger). I don't consider my career to be particularly well established yet, but I have a few years in hand to build it up before I either have children or if I decide the academic life is not for me then I have time to leave and try my hand at something else. It's a totally different prospect to try something new at 35 or 40 when you have kids to feed.

The benefit of a good academic degree to society is enormous, even if people don't go on to use their subject matter. For example, it benefits society to have people with science degrees working in non-science roles - they can point out quackery like Gillian McKeith if nothing else!

My real problem is the shovelling of everyone into higher education regardless. In particular I feel sorry for nurses and the like that used to get free training but now nursing has been turned into a degree with all the associated fees!

Zaranna - you sound quite bitter. It's going to destroy you if it's how you spend most of your time. Most people I work with are well aware that Cambridge is an expensive place and that it's impossible to have the same standard of living on an academic salary that one could have even 10 years ago. It doesn't help that there is a large population of people who come to Cambridge for a three year post - doc or something, and then move on. These people would have traditionally rented anyway so I think any discontent with the housing situation is muted. And having worked for a major investment bank and in academia, I would say I definitely prefer academia.

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I read his post to mean he was earning £1300 when, after college, he started to work. He found the £130 a month mortgage payment on that salary painful at the time, but 'less relevant' now.

And you take home £13000 p/m, and you think thats sitting pretty, I dont think so. Do you want to read your own profile again and then re-assess that statement.
On the contrary, the real cost is absorbed by the exhorbitantly high wages (gvmt estimate £400k average over their working life) earned by a graduate compared to a non grad. Given that tax is going to be paid on that portion at around at least 30% + the national insurance, then the government rakes in at least £120k for the average graduate in extra taxes - thats before we factor in anything exciting like the extra fuel tax for the large car, the 17.5% rake on sales etc. But as a lecturer I am sure you have considered this already.

Not medicine - ended up with an MA in history and an MSc in AI. Now sitting pretty as a DBA for an international online gaming group, so the £130 a month repayments are less relevant. But when your take home is £1300 its a lot.

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A friend of mine told me how a few years ago he and his wife had been working really hard at their (low paying) jobs and he said" i told her youve worked hard treat yourself. get a loan and buy yourself some thing nice"

he was telling me that they were that well off they could afford a loan!....wow. ...

Term Papers

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