Student Loan Debt Is Now Considered When Applying For A Mortgage

[Neverwhere]

At what point does reality impinge on the bookeeping in all of this though? The loan book may grow rapidly but if it is mostly interest charges which have no hope of being repaid in aggregate what is backing it up? Even at 0% interest plenty will not repay it imo.

If unpaid during their lifetime won't whomever owns the loan book be able to claim the outstanding debt against the graduate's estate upon death? So in effect a 100% inheritance tax on many graduates - only going to a private company instead of the state.

The Lib Dems are spinning their betrayal of students by saying that the new loan/fees structure is basically just a graduate tax. Clearly, this news -while some on here may welcome it - proves that the new structure is anything but a graduate tax.

You're right, this is a lot worse than a graduate tax.

[1929crash]

If unpaid during their lifetime won't whomever owns the loan book be able to claim the outstanding debt against the graduate's estate upon death? So in effect a 100% inheritance tax on many graduates - only going to a private company instead of the state.

You're right, this is a lot worse than a graduate tax.

For some reason I thought the debt was extinguished upon death - never thought about it being claimable out of aperson's estate. Is this the case?

[Liquid Goldfish]

For some reason I thought the debt was extinguished upon death - never thought about it being claimable out of aperson's estate. Is this the case?

You were right I think.

Borrower is deceased

All outstanding loan amounts are written off on death. We will require the original:

• death certificate; or
• Coroners interim certificate.

[VeryMeanReversion]

It's effectively an extra 9% income tax for annual income over 21k, with RPI +3% interest on the principal.

If you do a good degree, get a good job at 50K-60K (child-benefit band), have two kids, your effective marginal tax rate will be around 74%.

How nice of the government to let you keep a quarter of your extra earnings. Has marginal tax on earned income ever been so high?

[btl_hater]

It's even worse than this. Most students also require the living costs portion of the loan, meaning they're borrowing £14,555 per year (£16,751 in London). So the numbers become:

Year 1: £14,555

Year 2: £14,555 + 1.055 * £14,555 = £29,910

Year 3: £14,555 + 1.055 * £29,910 = £46,110

So you start life about 50k in debt straight off. The repayment programme is carefully designed so that you'll never pay it off (without throwing extra money at it). I think you have to be earning over 50k or so before your PAYE contributions actually make a dent in the principal - and how many graduates start on 50k?

These poor sods will be paying the 9% extra tax their whole lives.

As long as the boomers are kept in M&S cream cakes and garden centre cafe lunches it's OK.

[bendy]

I’ll try and see a ‘bright’ side of this in terms of a HPC perspective!

Current average wage for grades lifetime – 35k.

Grads in UK – 12m

9% on 35-21k – 1.7k

20bn per year for the banks that they can offset the HPC against assuming that the graduate population stays constant (all a big gamble IMO)!

[The Knimbies who say No]

Lo-Fi, there is a 30 year write off horizon on the debt, from the date when a person first "becomes eligible to repay", I put that in quotes as I'm not sure what it means exactly. Could be graduation or the first time they hit £21k or over.

There will be some poor sods who die within this timeframe, but for many it would appear that they may be liberated of any remaining burden in their early fifties.

[fluffy666]

If you do a good degree, get a good job at 50K-60K (child-benefit band), have two kids, your effective marginal tax rate will be around 74%.

How nice of the government to let you keep a quarter of your extra earnings. Has marginal tax on earned income ever been so high?

Yes, in the 1970s - BUT it was at the very high end. The mad thing is that marginal rates are lower for extra income over £200k than £50k.

Of course, if you are from a wealthy family, they are likely to regard these fees as just an extension of school fees so you won't be paying this 'tax'. Just another tilt of the playing field.

[mikthe20]

Child benefit of £20.50 for a single child compounded at 3% over 18 years = £25k = student fees approx = your child doesn't start a career in debt = massive advantage for your adult child to save and acquire assets, make investments or take risks such as starting a business, throughout their lives. Just saying.

I know not everyone can afford to do that but many can if they can bring themselves to think long term (which judging by my mates, most can't). Set up a direct debit as soon as they're born and job done.

[Guest]

If a student loan is not visible in the mortgage applicant's pay slips, lenders need to ask:

1. Do you have any student loans not currently being paid off (i.e. due to salary being under £21k)?

2. When do you anticipate your salary reaching £21k?

[Quicken]

Child benefit of £20.50 for a single child compounded at 3% over 18 years = £25k = student fees approx = your child doesn't start a career in debt = massive advantage for your adult child to save and acquire assets, make investments or take risks such as starting a business, throughout their lives. Just saying.

I know not everyone can afford to do that but many can if they can bring themselves to think long term (which judging by my mates, most can't). Set up a direct debit as soon as they're born and job done.

All well and good in theory, but how many parents were given 18 years notice of changes in fee levels? Also, if such saving schemes became widespread among parents, then the benefit would be slashed because it would be viewed politically as subsidising middle class savings.

Most people not only cannot think long term. They cannot budget or save effectively, or control what they eat to stop themselves getting fat. Sad, but true.

[Ash4781]

Strange. My and friends experience was that lenders always asked about student loan debts. They lifted the repayments off payslips and chucked them in their models. Maybe the numbers didn't feed anywhere?

[fluffy666]

Child benefit of £20.50 for a single child compounded at 3% over 18 years = £25k = student fees approx = your child doesn't start a career in debt = massive advantage for your adult child to save and acquire assets, make investments or take risks such as starting a business, throughout their lives. Just saying.

I know not everyone can afford to do that but many can if they can bring themselves to think long term (which judging by my mates, most can't). Set up a direct debit as soon as they're born and job done.

Adding £80/month in outgoings at the same time as income drops and costs go up. And the rate drops for subsequent children..

There's a reason why Child Benefit exists, it's not just pocket money for yummy mummies.

[Neverwhere]

Lo-Fi, there is a 30 year write off horizon on the debt, from the date when a person first "becomes eligible to repay", I put that in quotes as I'm not sure what it means exactly. Could be graduation or the first time they hit £21k or over.

There will be some poor sods who die within this timeframe, but for many it would appear that they may be liberated of any remaining burden in their early fifties.

Thanks for that info I wasn't aware of that (and should have been, I have a student loan). Actually looking into it further earlier student loans are cancelled either at 50, 60, 65 or after 25 years, and all student loans (including the current ones which have the 30 year write off) are written off on death so aren't ever applied to the estate http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3867066&_dad=portal&_schema=PORTAL , so your earlier point is a very good one: it is totally confusing where the profit margin is for those collecting the loans (or where the motivation is for graduates to earn considerably over 21k).

For some reason I thought the debt was extinguished upon death - never thought about it being claimable out of aperson's estate. Is this the case?

No, you're right! The MP who came around to our school to explain student loans to us promised us all that they incurred absolutely no interest whatsoever, from which I eventually learned a. always read a legally binding document before signing it (I feel a bit foolish that I hadn't worked this out as a teenager), b. never trust a politician, c. the government are trying to screw you. Clearly I was just leaping to unfounded conclusions based on the last of these premises!

[juvenal]

Lo-Fi, there is a 30 year write off horizon on the debt, from the date when a person first "becomes eligible to repay", I put that in quotes as I'm not sure what it means exactly. Could be graduation or the first time they hit £21k or over.

There will be some poor sods who die within this timeframe, but for many it would appear that they may be liberated of any remaining burden in their early fifties.

The debt starts accumulating interest from the first day you get it in your first term.

It's one element of Freshers Week that surprisingly they don't advertise...

Current regs from Govt site...

Interest on your student loans

There are different rules if your course started before 1 September 2012.

You pay interest from the time your first payment is made until you pay your loan back in full.

The following interest rates apply for courses that started on or after 1 September 2012.

Income Interest rate While you’re studying Rate of inflation (Retail Price Index) plus 3% £21,000 or less Rate of inflation £21,000 to £41,000 Rate of inflation plus up to 3% Over £41,000 Rate of inflation plus 3%

Edited June 3, 2014 by juvenal

[1929crash]

This is a once in a lifetime event - student loans, together with HPI have now condemned an entire generation of families to living in rooms.

You can be a graduate or you can be a homeowner, but you can't be both.

If this reality ever sinks into the minds of the general public, will they just continue to watch Britain's got Talent, or will they rise up?

[ingermany]

Lets be more precise about this for the benefit of the Libdems and Tories. This is an 9% additional tax on English graduates only. The tax is paid to the entity formerly known as the UK but it is only payable by the English faction.

Incidentally, was chatting to a Greek girl a few months ago who is planning to attend med school in Edinburgh because there are no fees. That must be comforting to those families living 100km from Edinburgh on the English side of the border.

The government and opposition and press have all been tactfully ignoring this massive inequality that has effectively ruptured the UK. Why would any English taxpayer in the future allow any payment to be transferred north of the border to benefit a population that regards them as more foreign than any other European nation?

[ingermany]

No, you're right! The MP who came around to our school to explain student loans to us promised us all that they incurred absolutely no interest whatsoever,

Was it Nick Clegg by any chance?

[Venger]

This is a once in a lifetime event - student loans, together with HPI have now condemned an entire generation of families to living in rooms.

You can be a graduate or you can be a homeowner, but you can't be both.

If this reality ever sinks into the minds of the general public, will they just continue to watch Britain's got Talent, or will they rise up?

Why would they? They only have to trawl though many a HPC thread of 2008-2010 to learn and understand the very people who outbid their elders by fortunes "only wanted a home," "believed what they saw on the telly," "were forced to take jumbo mortgages" - to understand that we need policy to protect all previous buyers paying silly high prices. That they've got a duty to rent forever.

Couldn't have a crash, because of the 'victims', and to lock in equity for all the olds, btls, bomads with higher up the ladder. That it is also their duty to be ever more badly priced out too - to satisfy people with no stomach for a crash and who enjoyed making up ever more ridiculous excuses. That it's now just a repeat of the boom again, with similar buyers paying ever higher zany prices, that no doubt many a hpcer will have a future excuse for. And from what I just heard on the radio, the jobs of the future (2025+) will be heavily involved in caring for the elderly.

And...

Graduate Pay Dropping

Started by AvidFan, Apr 14 2014

Graduate starting salaries 'drop 11% over five years'

Starting salaries for graduate jobs have fallen overall over the past five years, according to new analysis.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=197936

[ingermany]

Why would they? They only have to trawl though many a HPC thread of 2008-2010 to learn and understand the very people who outbid their elders by fortunes "only wanted a home," "believed what they saw on the telly," "were forced to take jumbo mortgages" - to understand that we need policy to protect all previous buyers paying silly high prices. That they've got a duty to rent forever.

Couldn't have a crash, because of the 'victims', and to lock in equity for all the olds, btls, bomads with higher up the ladder. That it is also their duty to be ever more badly priced out too - to satisfy people with no stomach for a crash and who enjoyed making up ever more ridiculous excuses. That it's now just a repeat of the boom again, with similar buyers paying ever higher zany prices, that no doubt many a hpcer will have a future excuse for. And from what I just heard on the radio, the jobs of the future (2025+) will be heavily involved in caring for the elderly.

And...

and, there has been a hell of a lot of bleating about the escalating cost of elderly care. It is no coincidence and should be no surprise that it has inflated at the same rate as house prices in UK. Yet for some reason government is hell bent on a bail out for the elderly, by capping the cost of their care. No mention of capping the price of their assets though.

At the other end of the age range student tuition fees are a fiasco. A quick fix for a fiscal black hole in 2010. A large slice of government debt (money government borrowed to fuel the HPI bubble) has been transferred to the younger generation in the form of an unrepayable loan, an education tax, whatever it is dressed up as. Those students with high earning potential will just depart from the shores of UK taxation and return at age 53 in time to get the debt written off. The rest, because we may need doctors, teachers and engineers will eventually be rescued with a "Retrospective English Graduate Relief of Education Tax"- REGRET.

[Bloo Loo]

and, there has been a hell of a lot of bleating about the escalating cost of elderly care. It is no coincidence and should be no surprise that it has inflated at the same rate as house prices in UK. Yet for some reason government is hell bent on a bail out for the elderly, by capping the cost of their care. No mention of capping the price of their assets though.

At the other end of the age range student tuition fees are a fiasco. A quick fix for a fiscal black hole in 2010. A large slice of government debt (money government borrowed to fuel the HPI bubble) has been transferred to the younger generation in the form of an unrepayable loan, an education tax, whatever it is dressed up as. Those students with high earning potential will just depart from the shores of UK taxation and return at age 53 in time to get the debt written off. The rest, because we may need doctors, teachers and engineers will eventually be rescued with a "Retrospective English Graduate Relief of Education Tax"- REGRET.

I take it a UK University education is free all over the rest of the world.

[Snugglybear]

and, there has been a hell of a lot of bleating about the escalating cost of elderly care. It is no coincidence and should be no surprise that it has inflated at the same rate as house prices in UK. Yet for some reason government is hell bent on a bail out for the elderly, by capping the cost of their care. No mention of capping the price of their assets though.

At the other end of the age range student tuition fees are a fiasco. A quick fix for a fiscal black hole in 2010. A large slice of government debt (money government borrowed to fuel the HPI bubble) has been transferred to the younger generation in the form of an unrepayable loan, an education tax, whatever it is dressed up as. Those students with high earning potential will just depart from the shores of UK taxation and return at age 53 in time to get the debt written off. The rest, because we may need doctors, teachers and engineers will eventually be rescued with a "Retrospective English Graduate Relief of Education Tax"- REGRET.

I'm afraid it won't be written off by the time you return to the UK. When you move abroad you're obliged to contact the SLC and arrange payments if you're earning over a certain amount (amounts vary depending on what country you're living in). If you don't, the SLC can allocate a monthly default payment and/or start court proceedings. When you return, the whole loan plus any default sums plus any court proceedings will all be waiting for you.

The balance of the loan owing is only written off after 30 years if you've played by whatever rules were in force during that period, including making any payments demanded.

[ingermany]

I take it a UK University education is free all over the rest of the world.

Scotland

Edited June 4, 2014 by ingermany

[ingermany]

I'm afraid it won't be written off by the time you return to the UK. When you move abroad you're obliged to contact the SLC and arrange payments if you're earning over a certain amount (amounts vary depending on what country you're living in). If you don't, the SLC can allocate a monthly default payment and/or start court proceedings. When you return, the whole loan plus any default sums plus any court proceedings will all be waiting for you.

The balance of the loan owing is only written off after 30 years if you've played by whatever rules were in force during that period, including making any payments demanded.

I guess the brightest and best will leave for good then. Still, plenty of people waiting in Calais to replace them.

[katchytitle]

Very odd choice of lines on that chart.

If anything you appear to be showing increasing demand from the below 40s. Is that what you meant to show?

Sorry - I should have explained the lines a little better.

What I was trying to show was the perfect pyramid scheme that existed for the people aged 40 and over in terms of population growth. Debt, salaries and work promotions were all driven by this. People who moved up the pyramid had less competition, less debt and greater salaries as they passed on their workloads to the larger groups below who got paid less in real terms, had greater compeition and and to increase debt loads to cope.

After the 60s Britain embarked on a mass immigration policy that no doubt swelled the numbers of the 30 and under population in order to keep the ponzi going. That is certainly a factor which is causing the demand we have seen of late (and I'm no UKIP supporter). If you look at the link it goes in to more detail on the theory behind the lines (its only a theory!)

http://katchytitle.blogspot.co.uk/2013/08/measures-for-reducing-youth.html