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Tripling Tuition Fees Has Doubled Student Debt... But Will Still Cost Taxpayers More Because Half The Loans Will Never Be Repaid

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http://www.dailymail.co.uk/news/article-2935346/Tripling-tuition-fees-doubled-student-debt-cost-taxpayers-half-loans-NEVER-repaid.html

  • Decision to triple fees will end up costing students and taxpayers more
  • Ministers increased the cap on student fees from £3,000 to £9,000 a year
  • Student debts are written off after 30 years so 50% will not be recouped
  • Labour is trying to cut fees from the current maximum of £9,000 to £6,000
  • Shadow minister Chuka Umunna has promised to introduce a graduate tax

The Government’s decision to triple tuition fees will end up costing students and taxpayers more money – because half the loans will never be repaid, new figures have revealed.

Ministers increased the cap on student fees from £3,000 to £9,000 a year to fill the hole in university funding left by government cuts to the higher education budget.

But, because student debs are written off after 30 years, 49.5 per cent will never be recouped, meaning the scheme will cost the government £2.5billion a year more than ministers claimed, House of Commons library figures show.

At the same time average graduate debts have doubled from £20,000 in 2010 to £43,500.

It comes after Chuka Umunna, the shadow business secretary, revealed Labour would introduce a 'graduate tax' on the earnings of those who go to university to replace tuition fees.

Mr Umunna said the system would be 'fairer' than tuition fees and would be introduced 'in the medium term' if Labour returns to power.

The National Union of Students proposed an extra tax of between 0.3 per cent and 2.5 per cent of their income above £15,000, for a period of 20 years, with the highest earners paying higher rates.

A tax seems a better system, although then you might be at the whim of sudden tax increases by the govt?

Have the other threads on here quoted that 50% won't be paid back?

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EU students 3x more likely to default on debts apparently. No surprise, why would you ever bother about honoring debt taken out in another country, just take them for mugs.

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Sadly the students big bang was never about the students or an education equipping them for a better future. Nice for the educational establishment and helpful to politicians, but extending school for a significant proportion of the young is nothing more than giving them false hope and deluded aspiration.

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The student loan system is a graduate tax in all but name. Pay 10% of salary above a threshold, likely for 30 years unless you're a very high earner.

Sort-of. But that excludes those students who get sufficient grants/bursaries/scholarships to avoid debt.

It's an ugly compromise that satisfies no-one. Is it more or less ugly than the deals earlier generations had? I guess that depends on your attitudes to opening higher education to bright plebs (scholarships), to everyone with a braincell (grants - in theory, though less so in practice), and to vast numbers (make hairdressing a degree).

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A lot of discussion around grants/loans seems to focus on how the money is paid back, with the current situation where just about everyone goes to Uni, I don't think that makes a whole lot of difference - paying back the loan company or paying the govt via higher taxes, its the same money either way.

Where I do have a question is the level of fees.

You have a typical classroom with 1 lecturer (£35 K per year being generous) and maybe 30 students (£9K fees x 30 = £270,000)

£270,000 - 35,000 = £ 235,000 per class per year

I just don't believe the ancillary admin/library/building costs for 1 classroom of students can possibly cost that much, so someone is ripping us off.

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I've got a better idea chukka. Put an additional progressive tax on ALL graduates old and new less any fees already paid.

That would be fairer to all concerned.

Education is basically the only asset the post-1980 generation has been allowed to accumulate. I'm not opposed to taxing assets but maybe we could first go after the obvious one which is easy to value and where all the money is: property.

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Who'd volunteer for an extra 9% tax? Who'd spend three or four years not earning, out of the job market, and building up 40k in debt? Much better to be out working and enter adult life in the black, instead.

Education no longer means higher earnings. There are lots of PHDs out doing bar work or temping. The economics of getting a degree no longer add up. I'm starting to think that University went from being part of the class system - sorting the brightest into middle-class professions - to being a way to plunge people into debt and keep the money supply expanding by normalising borrowing.

And ultimately I don't think the country needs graduates any more - any bright person can learn a new skill on the job or with a bit of self-study. University has always been more of a right of passage than an actual educational necessity.

These kids with their 40k in loans (or 9% graduate tax) are going to be even worse off than my generation, when it comes to saving a deposit and buying a house. They're screwed.

Edited by irrationalactor

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A lot of discussion around grants/loans seems to focus on how the money is paid back, with the current situation where just about everyone goes to Uni, I don't think that makes a whole lot of difference - paying back the loan company or paying the govt via higher taxes, its the same money either way.

Where I do have a question is the level of fees.

You have a typical classroom with 1 lecturer (£35 K per year being generous) and maybe 30 students (£9K fees x 30 = £270,000)

£270,000 - 35,000 = £ 235,000 per class per year

I just don't believe the ancillary admin/library/building costs for 1 classroom of students can possibly cost that much, so someone is ripping us off.

Let me help you here.

You'll need a faculty director for the admin staff they'll be on probably £70k-£80k a year.

Dept manager will probably be on around £50k-£60k

Don't forget the Profs any decent dept will have probably at least 6 they'll be on £60k-£100K+ depending on how well they are rated.

VC - £200k+

Then you'll have got several Pro VC these will be on £100k+

Maybe a few Dean's £100k+

Senior lecturers and readers will be on £50k-£60K

You see the profit per class isn't as great as you think. Knowledge isn't cheap....

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slash easy lending. let unis charge what they want w/ scholarships. Uni of Nowhere will charge £1000pa Oxford will charge £30000 and they'll both be right

The problem is easy lending as in houses and cars. As always.

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Sadly the students big bang was never about the students or an education equipping them for a better future. Nice for the educational establishment and helpful to politicians, but extending school for a significant proportion of the young is nothing more than giving them false hope and deluded aspiration.

This^....anyway you can gain a good education that includes an education in life for a fraction of the cost by not falling into that costly trap.....not all good employers are asking for degrees, bits of paper, they can test using their own tests and questions and go on to teach their new employees while at the same time paying them a wage.winners all round.

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I loved my time at University but I would definitely concede it had next to no use in terms of practical knowledge for my career.

University education is at a crossroads; is at something that is supposed to develop the human mind or is it practical training for careers?

At £40-50k it had better boost earnings, but if it is all about training who will do the important research that allows new business to flourish?

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Thare are armies of admin staff for each lecturer! Just you try getting paid by a university! Takes longer to do the forms than to do the job!

I understood the whole student loans thing was simply a massive wheeze to generate huge amounts of debt, to keep the debt-money-system going.

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Education no longer means higher earnings.

Indeed. You can't expect to send 50% of kids to uni and expect them to all earn megabucks.

What do repayments start at now? 16k? 6k under national average wage?

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Let me help you here.

You'll need a faculty director for the admin staff they'll be on probably £70k-£80k a year.

Dept manager will probably be on around £50k-£60k

Don't forget the Profs any decent dept will have probably at least 6 they'll be on £60k-£100K+ depending on how well they are rated.

VC - £200k+

Then you'll have got several Pro VC these will be on £100k+

Maybe a few Dean's £100k+

Senior lecturers and readers will be on £50k-£60K

You see the profit per class isn't as great as you think. Knowledge isn't cheap....

Yes but those senior level people will be covering multiple years and multiple courses.

Lets say you have £1,000,000 per year for those salaries but they cover 5 courses each 3 years long, so 15 classes of students per year

£1,000,000 /15 = £66,666

£270,000 - 35,000 - 66,666 = £ 168,334 per class per year

Getting closer but still a lot of unaccounted money going somewhere.

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Indeed. You can't expect to send 50% of kids to uni and expect them to all earn megabucks.

What do repayments start at now? 16k? 6k under national average wage?

Says it all really, you shouldn't be paying anything back until you are in the higher rate tax bands, but then there aren't enough of those jobs to make the system pay.

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So, let me get this straight. 50% of students are never going to earn more than the future equivalent of 16k pa?

Doesn't that suggest that at least half of all degrees are utterly useless?!

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http://www.dailymail.co.uk/news/article-2935346/Tripling-tuition-fees-doubled-student-debt-cost-taxpayers-half-loans-NEVER-repaid.html

A tax seems a better system, although then you might be at the whim of sudden tax increases by the govt?

Have the other threads on here quoted that 50% won't be paid back?

It is a "tax". The nominal loan is used to target the tax (monthly repayments) at graduates with a nominal loan.

So "tax" is levied for the duration of the loan irrespective of whether the nominal loan it is paid off in full.

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I loved my time at University but I would definitely concede it had next to no use in terms of practical knowledge for my career.

It's pretty obvious that it was always a bit of a sledge hammer to crack a nut. It's a boost to GDP like digging holes and filling them up again. I guess it is a system that rewards diligent students by giving them the rite of passage thing and provides employment for staff and BTL fodder for landlords.

The Institutions themselves live in la la land like sending staff to a one hour conference across the pond for a couple of grand a pop. Buy hey this is Blair's fantasy of education education and giving academic achievement a reward.

I guess some provincial towns would just fall apart like Leeds, Manchester, Oxford and Nottingham without their Russell Group Unis. Whether this is the best way to support these economies God only knows.

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A lot of people will not be repaying the loan not because of the size of the loan but the speed at which it rolls up, the rate of interest charged.

At 3% above RPI it very quickly becomes unrepayable.

The effect is to make the rich richer as they will settle debts straight away and hence pay less i.e. have a 'lower tax' equivalent.

I guess Governments assumed that wages would grow faster than prices like they used to.

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A lot of people will not be repaying the loan not solely because of the size of the loan, but the speed at which it rolls up, the rate of interest charged.

At 3% above RPI it very quickly becomes unrepayable. That was the other part of the changes which went largely uncommented when they dramatically raised the fees and loan sizes but is no less important.

The effect is to make the rich richer as they will settle debts straight away and hence pay less i.e. have a 'lower tax' equivalent.

So youd have to be pretty dumb to pay it off wouldnt you? I mean, if it is written off anyway if your earnins remain low, and it becomes unrepayable if they are high?

Nominal loan value was always a red herring. Its the targetted income yield that theyre after.

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So youd have to be pretty dumb to pay it off wouldnt you? I mean, if it is written off anyway if your earnins remain low, and it becomes unrepayable if they are high?

Nominal loan value was always a red herring. Its the targetted income yield that theyre after.

All courses to include personal income tax planning on the syllabus?

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So youd have to be pretty dumb to pay it off wouldnt you? I mean, if it is written off anyway if your earnins remain low, and it becomes unrepayable if they are high?

Nominal loan value was always a red herring. Its the targetted income yield that theyre after.

So you have large debt which can never be paid off and you can't earn more to buy a house because you'll get taxed on it???

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Students who started after 1st September 2012 i.e. those graduating this year and those following, who have been paying £9,000 a year in tuition fees, won't have to start repaying their loans until they earn £21,000 p.a..

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