Sheffield Vc Argues Tutution Fees Are Stopping People Getting A Mortgage

[interestrateripoff]

http://www.independent.co.uk/news/education/higher/sir-keith-burnett-says-9000-university-tuition-fees-are-a-disaster-financially-and-unsustainable-10196583.html

There is at least one voice in the wilderness among vice-chancellors calling for tuition fees to be scrapped altogether. He is Sir Keith Burnett, vice-chancellor of Sheffield University, who argues that the present system of fees of up to £9,000 a year is "a disaster financially and unsustainable".

"It is bad for the country and bad for the students," he says. "It's defended on the grounds that it doesn't discourage people from going to university. That may be true, but what I'm hearing from family and friends is that the tuition fee debt is affecting people's chances of getting a mortgage."

Sir Keith's university is one of the 24 in the Russell Group, whose members are amongst the most sought after in the country. He admits he may be a lone voice amongst vice-chancellors who are at odds with him over his stance.

Universities UK, the body which represents vice-chancellors, for instance, is sharply critical of Labour's pledge to reduce fees from £9,000 to £6,000 a year, fearing an incoming government will not make up the decrease in revenue from fees to universities. Other university vice-chancellors in the Russell Group, including Oxford, have called for fees to rise. Its vice-chancellor, Andrew Hamilton, has pointed out it costs the university £16,000 per student.

Sir Keith shares the concerns over the impact of a cut in fees but argues that the cost of the present scheme to the taxpayer will be as great as the system it replaced, as unpaid debts could total between 40 and 50 per cent. He believes that the UK could soon be going down the same road as the US "where student debt is approaching credit card debt".

Who'd have thought this student fees depress peoples ability to take on even more debt...

[TheCountOfNowhere]

Don't they mean mega bubble house prices relative to earnings are stopping people getting mortgages?

[Guest]

Uni debts are now over 40k.

You used to be able to buy a house for that.

If you don't make overpayments then you'll only start paying off the debt if you're lucky enough to earn 50k a year.

It took me eight years to pay off my rather smaller £16k loan.

Uni loans are just a mechanism to enslave this generation with debt.

[Save me from the madness!]

It's very sad. Eventually you get to the situation of "what can't be paid, won't be paid". Something has to give. Now that the genie is out of the bottle with tuition fees I worry for my son and he's only 2. The only changes seem to be upwards in the fee level.

[Venger]

Who'd have thought this student fees depress peoples ability to take on even more debt...

Err.. nearly every HPCer on the forum circa 2009-10, outlining how it will lead to fewer young people able to buy in the future... leading to a stalling market after a few years, for FTB homes... thus all the way up to the baby-boomer £500K homes, with fewer buyers to sell to.

[Limon]

Student fees aren't a 'debt' in any meaningful sense of the word for most people, they're just an extra 9% income tax paid on earnings above £21k.

[Hairy1305]

Uni debts are now over 40k.

You used to be able to buy a house for that.

If you don't make overpayments then you'll only start paying off the debt if you're lucky enough to earn 50k a year.

It took me eight years to pay off my rather smaller £16k loan.

Uni loans are just a mechanism to enslave this generation with debt.

I had an argument with my local MP (Tessa Munt LD) online but the other day.

I told her, that whilst she's been a great parliamentarian for the locals, and me, that I wouldn't be voting for her, down to her saying they'd not raise tuition fees and it being the first thing they did in government, that all she's aided if enslaving the young into the culture of being debt slaves, that putting a kid fresh from Uni out into the open with £40k debt was inhumane.

She answered that whilst they shouldn't have made the promise, it wasn't all that bad. (Now I'd quote her if I had access to facebook at work) The base of her argument was one of her kids is paying £3k fees and the other will pay £9k fees, but that the one paying £9k fees will be better off, as they have to earn more to pay the debt off.

It kind of shocked me that she was saying to her various followers that £27k debt (min) was better than £9k debt (min). I pointed out that 1. The lower limit for paying was £21k and UK average wages were £26k, that I come out of Uni (mkII) in 1999 and walked into a £21k grad job, that I would like to think my kids would earn more than that from the getgo, therefore would pay it straight away and be in debt. 2. They would have a large debt just for doing a degree, where education should be a right, not a purchase.

I couldn't understand her effectively saying her younger kid was better off being more in debt and I think it's this culture that is now all pevasive; debt is life. Madness.

[Hairy1305]

Student fees aren't a 'debt' in any meaningful sense of the word for most people, they're just an extra 9% income tax paid on earnings above £21k.

So is that for everyone, or just people who've been made to pay the fees. Say my local friends son who is a brickie earns over £21k, does he pay an extra 9%?

I tell you what, go abroad without telling them and don't pay the debt and tell me it isn't a debt in any meaningful way. Stop paying it and watch your credit record get burned and people come after you. It is a debt and it's stupid posts like this that make my blood boil.

Young kids, with lower than average income, with little or no chance before this came in of affording a house, now start off by paying 30% IT.

[Guest]

The ministers at the time effectively said it was a graduate tax.

Don't see them lining up to pay the 9%, mind.

[Caveat Mortgagor]

Perhaps VC of Sheff Uni will reduce the fees for his fine establishment

[Hairy1305]

The ministers at the time effectively said it was a graduate tax.

Don't see them lining up to pay the 9%, mind.

It's a fee, if I wanted to pay the fees up front, I could, it's just Polis masking it by saying it's a graduate tax. If you left the country, you're liable for the lot. For my second degree, I took out loans for £18k. I then started my own company and used to have to fill a spreadsheet in once a year with my liabilities on it and pass them the last 3 months wage slips. So I used to earn very little from March through May then earn the rest in dividends for the rest of the year. Got the 18k discharged last year and I must admit, it is quite sad how extraordinarily proud I was of the feat.

[200p]

House prices might come down - oh the horror!

[ingermany]

I wish people would stop calling it a tax.

It's a tax that children whose parents have a house in Scotland get a lifetime exemption to:

No wonder Vince Cable and Danny Alexander supported it.

[porca misèria]

Student fees aren't a 'debt' in any meaningful sense of the word for most people, they're just an extra 9% income tax paid on earnings above £21k.

There's even a clue in your payslip and tax return: student loan repayments as a box to tick. A graduate tax in all but name.

Looked at that way, it's mildly interesting to note that even those paying it are taxed significantly less than their parents were a generation ago. It's all being printed/borrowed instead, and our economy isn't back to the '70s bust yet.

[Hairy1305]

There's even a clue in your payslip and tax return: student loan repayments as a box to tick. A graduate tax in all but name.

Looked at that way, it's mildly interesting to note that even those paying it are taxed significantly less than their parents were a generation ago. It's all being printed/borrowed instead, and our economy isn't back to the '70s bust yet.

That's just a collection method. Don't pay it, leave the country to take a job elsewhere and then tell me it's a tax.

It isn't a tax, it's a loan. Period.

[Guest]

I agree it's not a tax - if your parents are rich enough to pay the fees upfront you don't pay it.

Inequality appears to be baked into our system. Being born into a rich family is everything.

[porca misèria]

I agree it's not a tax - if your parents are rich enough to pay the fees upfront you don't pay it.

Inequality appears to be baked into our system. Being born into a rich family is everything.

Rather the opposite. My nephews got bursaries on grounds of their parents not being too rich.

[Hairy1305]

Rather the opposite. My nephews got bursaries on grounds of their parents not being too rich.

A bursary is a monetary award made by an institution to individuals or groups of people who cannot afford to pay full fees.

So the middle class are the ones who are being buttraped again.

So, the younger generation will have £40k of university debt, there will be fewer jobs and the jobs that exist won't pay well. On top of that they will need to find hundreds of thousands of pounds for the dream of owning their own piece of property (a studio flat in London), they won't be able to get a mortgage, they won't have enough to pay into a pension and even if they do, they won't be able to afford to retire until they are about 90. On top of that they will be paying huge amounts of rent and won't be able to afford a family. I feel so sorry for the younger generation. They really have been born into a life of economic slavery.

Not mine, we're away. As screwed up as lots of other places are, thery are far and away better than here. This place has really screwed up and we're not coming back, not unless there's collossal change.

[BorrowToLeech]

There's even a clue in your payslip and tax return: student loan repayments as a box to tick. A graduate tax in all but name.

Looked at that way, it's mildly interesting to note that even those paying it are taxed significantly less than their parents were a generation ago. It's all being printed/borrowed instead, and our economy isn't back to the '70s bust yet.

Average Tax to GDP ratio:

70-79 34.72%

80-89 36.14%

90-99 34.08%

99-09 35.44%

So no, taxes were not higher in the seventies, and have been pretty much constant for decades.

Income tax rates have fallen. Other taxes, like VAT, have risen.

[VeryMeanReversion]

When I last looked at the maintenance grant figures, it appears that above £25K, the grant reduces by ~£1K for every £5K of income => an effective increase in your effective marginal tax rate of 20% (per child at Uni).

At incomes in the £25-40K range, your EMTR is already around 40% (more with tax credits), I'll assume for 50% for now.

So with the grant withdrawal effect, your EMTR gets up to 70% (one-child) and 90% (two children).

If you have savings (built up in advance), best to take a £25K max household income for those uni years, claim everything you can, salary sacrifice the rest. It's even worth remortgaging (before you drop your salary) and living off the MEW for those uni years. Could go interest only for the mortgage for those years to minimise expenses. Pension payments are a viable repayment method.

After the uni years, switch from pension overpayments back to mortgage overpayment to rebalance.

What a silly game we are forced to play.

[Errol]

So, the younger generation will have £40k of university debt, there will be fewer jobs and the jobs that exist won't pay well. On top of that they will need to find hundreds of thousands of pounds for the dream of owning their own piece of property (a studio flat in London), they won't be able to get a mortgage, they won't have enough to pay into a pension and even if they do, they won't be able to afford to retire until they are about 90. On top of that they will be paying huge amounts of rent and won't be able to afford a family. I feel so sorry for the younger generation. They really have been born into a life of economic slavery.

Neo-Feudalism

That is all.

Edited April 29, 2015 by Errol

[porca misèria]

When I last looked at the maintenance grant figures, it appears that above £25K, the grant reduces by ~£1K for every £5K of income => an effective increase in your effective marginal tax rate of 20% (per child at Uni).

Is that up-to-date? Sounds plausible.

£25k before you start to lose grant is pretty good. At least, for those parents who aren't paying London rents.

Solution: parents split up as the kids approach Uni age. Parent on the lower earnings keeps the house and kids, and gets the money.

[Hairy1305]

Is that up-to-date? Sounds plausible.

£25k before you start to lose grant is pretty good. At least, for those parents who aren't paying London rents.

Solution: parents split up as the kids approach Uni age. Parent on the lower earnings keeps the house and kids, and gets the money.

Even better for those who can manipulate their earnings easily.

[South Lorne]

http://www.independent.co.uk/news/education/higher/sir-keith-burnett-says-9000-university-tuition-fees-are-a-disaster-financially-and-unsustainable-10196583.html

Who'd have thought this student fees depress peoples ability to take on even more debt...

.....not in Scotland where there are no tuition fees ..just part of Blair's unfinished attempt at devolution and the other inadequates who followed him driving us away from an attempt at democracy to a nation split geographically by the privileged and the unprivileged in the field of further education ....democracy finished with the last Labour government ..and nobody fixed it.....

[South Lorne]

I agree it's not a tax - if your parents are rich enough to pay the fees upfront you don't pay it.

Inequality appears to be baked into our system. Being born into a rich family is everything.

...in Scotland you don't pay tuition fees ..rich or poor ...more democracy up there......