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Four In Ten Students May Default On Their Loans: Treasury Fear Funding System Is Unsustainable

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http://www.dailymail.co.uk/news/article-2312702/Four-students-default-loans-Treasury-fear-funding-unsustainable.html

An estimated 40 per cent will never be able to repay their student loans

The new figures come as a result of removing the cap on tuition fees

Students are left with the prospect of £36,000 in debt before living costs

Four out of ten student loans may never be repaid, amid fears that university funding is becoming unsustainable.

The Treasury is said to be concerned that the new system – which sees students borrow up to £9,000 a year for their course fees – will not recoup its costs.

:lol::lol::lol::lol::lol::lol::lol:

Seriously who could possible have expected this outcome!

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Four out of ten student loans may never be repaid, amid fears that university funding is becoming unsustainable.

The Treasury is said to be concerned that the new system – which sees students borrow up to £9,000 a year for their course fees – will not recoup its costs.

Officials anticipated that 28 per cent of loans would never be repaid. It is now understood that their estimate stands at 40 per cent.

From last September, the maximum amount universities could charge for tuition was nearly trebled from £3,290 to £9,000. This leaves students with the prospect of £36,000 of debt for a four-year course, before living costs are taken into account.

And graduate salaries have fallen dramatically in recent years, impairing their ability to repay the loans when they start work.

Ministers said it was necessary to put higher education ‘on a more sustainable footing’ – but some claim they fear the loans could increase the cost to the taxpayer in the long-term.

A senior source said yesterday: ‘The Treasury are all over this and are extremely worried about the viability of the system. They are taking a very long-term view but their estimate for non-repayment keeps going up.

‘It is not helped by the recession, which means graduate incomes are going to be lower than they hoped.’

That's what's great about the Student Loan Company being a government "company" - no matter what the risks involved or turn out to be the taxpayer's always there and at hand to cough up.

Mind you these days banking in the "private" sector is the same.

Edited by billybong

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Hmmm... student loan/funding system created by and for the financial services industry turns out to be completely unsustainable.

Shocker.

There are so many ways in which this *could* have been done.. but they chose the one that tried to maximise profits for the financial services industry, even though it's far more expensive than just sticking it on the government tab.

They could have abolished tuition fees altogether an hiked the higher rate to 45% (but that would have simplfied the tax system..). Have an 'account' of years giving a choice between earlier retirement vs. going to university (requires imagination). Link loans to the BoE rate. (too fair). But no, it had to be 'Try and make guaranteed above-inflation returns for bankers'.

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How can they default if it is automatically taken out of PAYE?

They always expect some to never pay back their loans. The last system wrote them off after 30 years.

That is why it should be renamed a student tax not a student loan....... ;)

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whistle.gif

Now if you were to move abroad and write the student loans company a letter each year telling them that you do not earn anything and that you live with great aunt Sylvia who pays for everything, thus you have no income then you never have to pay a penny back.

Of course they cannot prove or disprove the above story. Just saying... :lol:

Anyway, what gives anyone the right to take a student loan and not pay it back? The tax payers will end up with the debt blah blah...

Well what gave the Boomers the right to free uni education and isn't it the young who are now paying for it? :angry:

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How can they default if it is automatically taken out of PAYE?

They always expect some to never pay back their loans. The last system wrote them off after 30 years.

They wont earn enough to hit the minimum earnings threshold.

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whistle.gif

Now if you were to move abroad and write the student loans company a letter each year telling them that you do not earn anything and that you live with great aunt Sylvia who pays for everything, thus you have no income then you never have to pay a penny back.

Of course they cannot prove or disprove the above story. Just saying... :lol:

Anyway, what gives anyone the right to take a student loan and not pay it back? The tax payers will end up with the debt blah blah...

Well what gave the Boomers the right to free uni education and isn't it the young who are now paying for it? :angry:

I'm sure there's a market somewhere for an identity-swap service. Just swap your entire identity with an American recent graduate, so you can both claim to be living in a different country and hence not pay your student loan back..

Loading costs directly onto students - as opposed to collecting then through slightly higher upper tax rates - is expensive, bureaucratic, and a fairly direct form of class warfare.

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They wont earn enough to hit the minimum earnings threshold.

"saving since 2005" is correct though, the language suggests that its the students' fault, but in fact it is the fundamentals of the repayment system. Hell, I think it's actually impossible to get rid of the debt by bankruptcy, so 'default' is the last thing students can do, unless they die.

Utterly bonkers system, and was onbviously so from the start. Still though, they'll have money coming out of their ears for their Ponzi-house price, defined contribution pension, rocketing energy prices, tax hikes to cover the deficit etc etc etc....

The loan repayments are the least of our worries.

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Default is not the same as clearing the loan via bankruptcy; is has not been possible to clear it since 2004... unless the government decides to make it so down the road.

I'm pretty sure that these will follow you about until they are either paid off or you are dead.

The SLC claims to be non-profit. Haha.

EDIT: people should stop blaming the university tuition charges for their ills, and start attacking the secondary school and its counselling system for pushing/coaching kids into pointless education.

Universities are about making profit in the UK.

Of course, you can send your kids abroad, if they have the grades and language ability.

Good schools, actually, generally much better schools all over Europe.

Edited by cashinmattress

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http://

en.wikipedia.org/wiki/Student_loans_in_Germany

Gives some information on the German system. The media never seem to seriously compare the UK system with other "developed" countries (except maybe the US which they always seems present as more costlier for participants compared to the UK).

Maybe the German system offers cheaper education because Germany's economy is more successful and even produces stuff?

Edited by billybong

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They could have abolished tuition fees altogether an hiked the higher rate to 45% (but that would have simplfied the tax system..). Have an 'account' of years giving a choice between earlier retirement vs. going to university (requires imagination). Link loans to the BoE rate. (too fair). But no, it had to be 'Try and make guaranteed above-inflation returns for bankers'.

Now that's not very fair on higher rate tax payers who never had a university education, they do exist.

A far simpler solution would be to scrap university fees altogether and have only the brightest 5-10% of the population attend.

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Default is not the same as clearing the loan via bankruptcy; is has not been possible to clear it since 2004... unless the government decides to make it so down the road.

I'm pretty sure that these will follow you about until they are either paid off or you are dead.

The SLC claims to be non-profit. Haha.

EDIT: people should stop blaming the university tuition charges for their ills, and start attacking the secondary school and its counselling system for pushing/coaching kids into pointless education.

Universities are about making profit in the UK.

Of course, you can send your kids abroad, if they have the grades and language ability.

Good schools, actually, generally much better schools all over Europe.

My idea was this:

From the age of 18 you get 4 year's 'education funding' between then and retirement.

Don't use them.. retire 4 years early.

They can be used at any point. So you could take the traditional route.. or work for a few years then do a degree. or have some 1-year or even 6-month career breaks for study of one kind or another. This would help anyone losing their job as well.

Hopefully this would discourage people from doing a random humanities degree for the sake of it, and also help people change career and/or improve themselves.

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BoE was always going to end up buying up a chunk of student debt. That was the whole point.

The accounting is irrelevant - you can't undo the education received which is the main thing.

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Now that's not very fair on higher rate tax payers who never had a university education, they do exist.

A far simpler solution would be to scrap university fees altogether and have only the brightest 5-10% of the population attend.

That's not fair either!

A 5% flat education tax on pensions would pay nicely. Seriously I think the issue is more down to a lack of jobs in a declining economy and employers not wanting to train anyone even if it means leaving a position vacant for years,

[edit] - How do you measure the "brightest 5-10% of the population" and at what arbitory stage in their life do YOU decide this for them?

Edited by Gone to Ireland.

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@fluffy666

Basic education is a right.

Higher education is a privilege.

Those with good grades and high intellect, and in vocational courses, should be state funded.

Perhaps take the politicians out of education and let the free market dictate what education is actually required.

The worrying thing for the long run in Britain is its global marketability in education.

Having legions of debt ridden desmonds in liberal arts crying foul, protesting their 'injustice' via ranting mobs does not make for good advertising.

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How can they default if it is automatically taken out of PAYE?

They always expect some to never pay back their loans. The last system wrote them off after 30 years.

By f****** off abroad, which is surely the only sensible thing for any graduate to do.

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How can they default if it is automatically taken out of PAYE?

Most will never make enough to even start paying the loan through PAYE.

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BoE was always going to end up buying up a chunk of student debt. That was the whole point.

Agreed. I see the entire student loan system as just more money printing. And not even a particularly covert form of it either.

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My idea was this:

From the age of 18 you get 4 year's 'education funding' between then and retirement.

Don't use them.. retire 4 years early.

They can be used at any point. So you could take the traditional route.. or work for a few years then do a degree. or have some 1-year or even 6-month career breaks for study of one kind or another. This would help anyone losing their job as well.

Hopefully this would discourage people from doing a random humanities degree for the sake of it, and also help people change career and/or improve themselves.

Sounds fair enough. Perhaps pension available after a set number of working years rather than just on age?

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Sounds fair enough. Perhaps pension available after a set number of working years rather than just on age?

Could be a problem for those with kids...

But you would expect people who had been unemployed for a few months to look at using some of their 'allowance' for relevant training.

An important bit of this is that since everyone gets something - even if it's just earlier retirement - it's perfectly reasonable to fund the whole thing out of general taxation.

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Most will never make enough to even start paying the loan through PAYE.

consider this career trajectory,

person goes to university to train as teacher, starts working, perhaps briefly exceed the threshold for repayment but then starts family and goes part time (may as well the benefit tax system means that this is almost as rewarded as working full time) 25 years later last child leaves home and person is now 50 they go back to work full time as child tax credits+ benefit have evaporated, but the loan is written off at 50!! so this person will never pay off perhaps any of their loan...

obviously what i am describing is a typical married womans life at the moment so that is potentially 50% for a start

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  • 241 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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