Students Could Be Paying Loans Into Their 50S

[TheCountOfNowhere]

http://www.bbc.co.uk/news/education-26954901

"Students could be paying loans into their 50s "

"The new system will benefit graduates who earn very little in their lifetime. But for many professionals, such as teachers, this will mean having to find up to £2,500 extra a year to service loans at a time when their children are still at school, and family and mortgage costs are at their most pressing."

POP

[onlyme2]

Double fiddling of the figures. Using student debt to bring forward expenditure and then when the result fo that starts hitting the figures then changing the payback mechanism to backload the payments.

Those in government who have promoted the education and debt bubble are shameless crooks.

The researchers go on to say that, under the new system, most graduates will repay slightly less until they are in their mid-30s than they would have done under the old regime, but will then pay more in their 40s and early 50s.

[zugzwang]

Much of what passes for recovery in the US has been on the back of a gigantic student debt bubble. It's the new subprime.

[Smyth]

There is a huge amount of hypocrisy here. Those on the left wing (including the NUS etc) opposed tuition fee rises and instead wanted a 7-9% graduate tax. This is now essentially what we have, and yet they are still whining about how unfair it is.

Paying 7-9% for the rest of your life to pay for your degree was literally the exact policy that the libdems/NUS/labour etc wanted, so why are they now angry?

Edited April 10, 2014 by Smyth

[TheCountOfNowhere]

Much of what passes for recovery in the US has been on the back of a gigantic student debt bubble. It's the new subprime.

Much of what passes for recovery in the US has been on the back of a gigantic student money printing debt bubble. It's the new subprime.

[1929crash]

Much of what passes for recovery in the US has been on the back of a gigantic student money printing debt bubble. It's the new subprime.

There was an article on Zerohedge a day or so back, pointing out that car loans and student debt accounted for the 'growth' the US has 'enjoyed.'

[arrgee1991]

I read the other day that the majority of the UK population is now over forty, so in about twenty five years time it is likely more people will be of state pension age than of working age.

So the current generation of graduates will not only be paying back their loans but facing increased taxation to pay their parent's and grandparent's pensions. Even if nothing changes with regards to taxation (highly unlikely) when students start to pay higher rate tax , they will effectively be paying a 57% tax. If they happen to have a couple of kids they face a effective marginal rate of just over 72%. And they will have to wait longer to retire, as the state pension age will continue to be raised.

Under these circumstances, I expect a lot of graduates will look to move elsewhere.

[TheCountOfNowhere]

I read the other day that the majority of the UK population is now over forty, so in about twenty five years time it is likely more people will be of state pension age than of working age.

So the current generation of graduates will not only be paying back their loans but facing increased taxation to pay their parent's and grandparent's pensions. Even if nothing changes with regards to taxation (highly unlikely) when students start to pay higher rate tax , they will effectively be paying a 57% tax. If they happen to have a couple of kids they face a effective marginal rate of just over 72%. And they will have to wait longer to retire, as the state pension age will continue to be raised.

Under these circumstances, I expect a lot of graduates will look to move elsewhere.

Their solution.....immigration.

My solution....old bloke war.....the young should force them all to take up arms and they can run about shooting each other...they really would be the BOOMers then.

[arrgee1991]

Their solution.....immigration.

Yes. The UK educates its young to work abroad. Those who are educated elsewhere come to the UK to work. Add the student debt to the national debt. And print more money.

[zugzwang]

There was an article on Zerohedge a day or so back, pointing out that car loans and student debt accounted for the 'growth' the US has 'enjoyed.'

Yes, and where would UK carmakers be without the liar auto loan?

[Billy soy]

I read the other day that the majority of the UK population is now over forty, so in about twenty five years time it is likely more people will be of state pension age than of working age.

So the current generation of graduates will not only be paying back their loans but facing increased taxation to pay their parent's and grandparent's pensions. Even if nothing changes with regards to taxation (highly unlikely) when students start to pay higher rate tax , they will effectively be paying a 57% tax. If they happen to have a couple of kids they face a effective marginal rate of just over 72%. And they will have to wait longer to retire, as the state pension age will continue to be raised.

Under these circumstances, I expect a lot of graduates will look to move elsewhere.

State pension will be means tested, it's inevitable. Though maybe not for those that made it unaffordable.

[Errol]

State pension will be means tested, it's inevitable. Though maybe not for those that made it unaffordable.

Just another reason to ensure that there isn't anything to test, so to speak.

[fluffy666]

There is a huge amount of hypocrisy here. Those on the left wing (including the NUS etc) opposed tuition fee rises and instead wanted a 7-9% graduate tax. This is now essentially what we have, and yet they are still whining about how unfair it is.

Paying 7-9% for the rest of your life to pay for your degree was literally the exact policy that the libdems/NUS/labour etc wanted, so why are they now angry?

Actually, I thought the Lib Dems were going to cancel tuition fees..

In any case, roughly speaking, at £9k/year for a million students we are looking at £9 billion a year of which at least £4 billion will end up being covered by the general taxpayer. It's close to 'noise in the system'.

A chancellor with a modicum of intelligence might have simply scrapped student loans, scrapped the child benefit cuts and simply put the higher rate of tax up to 45%. Which would have significantly simplified the system overall.

[Smyth]

A chancellor with a modicum of intelligence might have simply scrapped student loans, scrapped the child benefit cuts and simply put the higher rate of tax up to 45%. Which would have significantly simplified the system overall.

Yeah except for the part where you are furthering increasing the tax burden on the productive middle classes in order to fund people studying sociology at Plymouth university to get a job in Starbucks.

[crashmonitor]

Yeah except for the part where you are furthering increasing the tax burden on the productive middle classes in order to fund people on a fun packed rite of passage at Plymouth university to get a job in Starbucks.

corrected for you

Edited April 10, 2014 by crashmonitor

[R K]

Yeah except for the part where you are furthering increasing the tax burden on the productive middle classes in order to fund people studying sociology at Plymouth university to get a job in Starbucks.

Fail.

Are you Sajid Javid?

[Errol]

A chancellor with a modicum of intelligence might have simply scrapped student loans, scrapped the child benefit cuts and simply put the higher rate of tax up to 45%. Which would have significantly simplified the system overall.

Or just put the tax rate down to 10% for EVERYONE. Let people pay their own health insurance etc (if they want). And let the Universities sink or swim depending on whether people actually want/need to study at them - no more government loans or subsidies. Let the market do the talking.

[crashmonitor]

Or just put the tax rate down to 10% for EVERYONE. Let people pay their own health insurance etc (if they want). And let the Universities sink or swim depending on whether people actually want/need to study at them - no more government loans or subsidies. Let the market do the talking.

What and destroy all those middle class jobs in administration and lecturing, all those BTL empires in University towns and end a rite of passage that has become a Human right thanks to Tony Blair.

[fluffy666]

Or just put the tax rate down to 10% for EVERYONE. Let people pay their own health insurance etc (if they want). And let the Universities sink or swim depending on whether people actually want/need to study at them - no more government loans or subsidies. Let the market do the talking.

Education for the rich only, you mean?

If there is one thing that student loans systems tell us, it's that commercial-terms loans will not fund higher education. So either the state pays, or access is determined by family wealth. I assume you want the latter.

[Sancho Panza]

Fail.

Are you Sajid Javid?

Nicky Morgan?

Shaun Richards is on this today

http://www.mindfulmo...-gone-so-wrong/

'Despite the increase in repayments, we estimate that nearly three-quarters of graduates will not repay their loan in full under the new system, compared with just under a third under the old system.

Moreover, we estimate that the amount that will be written off will be nearly three times higher in real terms under the new system than under the old one.

Other problems

Last November an older style student loan book was sold and there was a problem. You see loans with a value of £890 million were sold for only £160 million. If that is a true estimate of value imagine what the new higher burden student loans will be worth.'

Full IFS report here

http://www.ifs.org.uk/publications/7165

Edited April 10, 2014 by Sancho Panza

[Smyth]

What and destroy all those middle class jobs in administration and lecturing, all those BTL empires in University towns and end a rite of passage that has become a Human right thanks to Tony Blair.

You know that tuition fees only make up a small part of total revenue at top universities, right? And that it would be a lot more profitable for universities to just stop admitting UK students altogether and instead go for international students only, who are prepared to pay actual market rates for their degrees (£15-25k/year at good places) rather than complaining about being asked to pay a heavily subsidised £6-9k.

With the possible exception of humanities/art departments, the top universities in the UK could fill their places with smart students from China/Singapore/Taiwan/India etc several times over, and make a lot more money while doing it.

Edited April 10, 2014 by Smyth

[zugzwang]

Nicky Morgan?

Shaun Richards is on this today

http://www.mindfulmo...-gone-so-wrong/

'Despite the increase in repayments, we estimate that nearly three-quarters of graduates will not repay their loan in full under the new system, compared with just under a third under the old system.

Moreover, we estimate that the amount that will be written off will be nearly three times higher in real terms under the new system than under the old one.

Other problems

Last November an older style student loan book was sold and there was a problem. You see loans with a value of £890 million were sold for only £160 million. If that is a true estimate of value imagine what the new higher burden student loans will be worth.'

Full IFS report here

http://www.ifs.org.u...blications/7165

It's the new subprime alright.

[R K]

You know that tuition fees only make up a small part of total revenue at top universities, right? And that it would be a lot more profitable for universities to just stop admitting UK students altogether and instead go for international students only, who are prepared to pay actual market rates for their degrees (£15-25k/year at good places) rather than complaining about being asked to pay a heavily subsidised £6-9k.

With the possible exception of humanities/art departments, the top universities in the UK could fill their places with smart students from China/Singapore/Taiwan/India etc several times over, and make a lot more money while doing it.

suckers - corrected for you.

[R K]

Or just put the tax rate down to 10% for EVERYONE. Let people pay their own health insurance etc (if they want). And let the Universities sink or swim depending on whether people actually want/need to study at them - no more government loans or subsidies. Let the market do the talking.

Why? What's so good about 'the market'?

Markets fail - and have only one signal : price. Which is usually wrong.

[@contradevian]

Why? What's so good about 'the market'?

Markets fail - and have only one signal : price. Which is usually wrong.

Funny but true