The Political Thread

[Peter Wolf]

I have to correct myself here as the interest rates payable on the loan by the better off are higher than those who are worse off.

Off again:

The catch here is that the govt have created a cash-cow with this no fees upfront system and what is worse than that is the fact that the interest rates are linked to the RPI [retail price index] and the interest rates can go up as well as down and at todays rates you would be paying 7.6 percent interest [4.6 percent [RPI] + 3 percent] on a 30,000 loan on an income over 41,000.

They cant even offer/guarantee a fixed rate of interest.

What happens if you default on the loan payments ?

Why charge interest when they could simply charge the ex-student on 41,000 PA an extra £1000 per year [£19.23 pw] in tax to pay back a govt loan of 30,000 without interest @7.6 percent [£2,280 pa - £43.84 pw - £68,400 over the life of the loan which is 30 years] on top of the loan therefore paying back the actual costs they incurred to the taxpayer ?

The taxpayer is refunded so what is the problem ?

Student Loan:

total amount repayable :

Loan = 30,000 + Interest repayable at todays RPI [4.6 percent plus 3 percent = 7.6 percent pa over 30 yrs = 68,400 = 98,400.

£3,280 pa over 30 years.    



Since when did the Govt become a moneylender ?

Because the govt has created the Student Loan Company with unattractive/punitive rates of interest and there is no other way for a student to be able to borrow 30000 so its the SLC or nothing.Companies exist to make money and its immoral for a govt to set up a company to make money out of those who cant afford to tuition fees and top up fees rather than making adjustments to the taxation system.

Where does the revenue generated by the SLC go to ?

This company will almost certainly be registered as a private company in Dunn and Bradstreet so does it pay taxes on its earnings ?

I should think not.

[House of Usher]

Why charge interest when they could simply charge the ex-student on 41,000 PA an extra £1000 per year [£19.23 pw] in tax to pay back a govt loan of 30,000 without interest

Why have a loans system at all? Why not make higher education free and restrict it to the best 20% of school leavers, and make higher rate taxpayers foot the bill? If there were such a thing as a graduate earnings premium, which is looking increasingly marginal all the time, then the higher rate tax band/s (we should have more than one!) would capture anyone whose higher income was due to having gained higher qualifications. We don't need a tax system that distinguishes between graduates and non-graduates, only between high earners and low earners.

Since when did the Govt become a moneylender ?

This is what free market economists always wanted, and they had the ear of Conservative government in the 1980s and '90s. I'm sure it was Patrick Minford I saw on a Channel 4 opinion segment once advocating scrapping free schools, the NHS and welfare benefits and replacing it all with a welfare loans system. That way only people with children would pay for schools, and they could borrow from the government if they couldn't afford school fees, and if you were out of work you could become indebted to the government for life instead of getting a state handout.

Because the govt has created the Student Loan Company with unattractive/punitive rates of interest and there is no other way for a student to be able to borrow 30000 so its the SLC or nothing.

I agree that the SLC is pretty much the only means most students have of borrowing a 5-figure sum, but I don't know what you consider a punitive rate of interest. Typical APR on a lot of high street borrowing is around 18% currently.

Where does the revenue generated by the SLC go to ?

To the Student Loans Company, I suppose. It's not their own money they're lending, is it? Considering repayment of the loans is contingent upon earnings and can be written off after a certain time, no private bank could afford the risk of non-repayment. The SLC exists just to administer the scheme for the government, and was set up in the first place because a) the Conservatives love the myth that the private sector can deliver everything better and cheaper than the public sector, and b) they like to set up public services to generate profit for the private sector wherever possible. Compare rail privatization with British Rail. What's the difference? The difference is that a large chunk of revenues, including public subsidy, goes to rail franchise shareholders rather than being spent on improving services.

[The Legendary Shark]

Of course, if the government went back to creating its own money supply instead of paying someone else to do it, all education would be free. Pre-school, primary school, secondary school, college, university, apprenticeships et al. Everything paid for by society and not lent by private central banks to make a profit on.

We can't have rich people not making profits out of the rest of us though, can we? That'd never do.

[Peter Wolf]

Where does the revenue generated by the SLC go to ?

To the Student Loans Company, I suppose. It's not their own money they're lending, is it? Considering repayment of the loans is contingent upon earnings and can be written off after a certain time, no private bank could afford the risk of non-repayment. The SLC exists just to administer the scheme for the government, and was set up in the first place because a) the Conservatives love the myth that the private sector can deliver everything better and cheaper than the public sector, and b) they like to set up public services to generate profit for the private sector wherever possible. Compare rail privatization with British Rail. What's the difference? The difference is that a large chunk of revenues, including public subsidy, goes to rail franchise shareholders rather than being spent on improving services.

Tesco are offering loans @7.9 percent or thereabouts at present.


Whos money is it that they are lending ?

Who exactly is lending students loans ?

I was and still am working under the ass-umption that its taxpayers cash that is being loaned but perhaps it is a PFI instead as you say ?

What private financiers would allow those on a low income to escape paying anything at all apart from the welfare sector of UK private limited Company ?

Where else does this happen ?

So i could presume that taxpayer revenue is involved but your comment about the Lender of the loan wanting to not risk non-repayment of the loan doesnt quite add up because they have already given students the option of non-repayment. 

Unless of course its offset by the higher rates of interest payable by high earners but there wouldnt be enough high earners for this to happen.

This is what i want to know as we have at present a private company with connections to BP lending cash to students and profiting from it.It cannot be taxpayers money that is being lent out to a private business as that would be totally unnacceptable [although it has already happened] so what you are saying is that the loaning of tuition fees has been privatised ?

Thats certainly possible but i dont recall any formal announcement of this but its what you expect in a corrupt and morally bankrupt political system and country.

There are always plenty of opportunities and cash to be made out of bankrupt countries through Private Finance Initiatives.

Why dont students study for degrees in how to be fucked over by the system ??

They are going to need it.

[The Legendary Shark]

One of the most compelling 9/11 documentaries I have seen to date:  http://www.citizeninvestigationteam.com/nsa.html

[COMMANDO FORCES]

Where are the Porsche's?

[House of Usher]

I could presume that taxpayer revenue is involved but your comment about the Lender of the loan wanting to not risk non-repayment of the loan doesnt quite add up because they have already given students the option of non-repayment. 

Unless of course its offset by the higher rates of interest payable by high earners but there wouldnt be enough high earners for this to happen.

It cannot be taxpayers money that is being lent out to a private business as that would be totally unnacceptable [although it has already happened] so what you are saying is that the loaning of tuition fees has been privatised ?

To be honest, I found your query quite hard to follow. As I understood things, the Student Loans Company didn't have any money of its own to lend out. I thought it was administering loans on behalf of the government, and the government had contracted out the collection of repayment to the Student Loans Company. That way the Student Loans Company loses nothing when students get their loans written off by going most of their working lives without earning more than 80% of the national average (mean) income. As far as I know, the Student Loans Company makes its money out of keeping a percentage of the interest built up on any proportion of loans that are paid off; the government gets back the rest. Therefore there's an incentive for the company to be efficient about collecting as much repayment as possible from students who are earning enough to pay or don't get their deferral forms submitted in time, and that happens a lot. Incidentally, there is now more than one company administering student loans. Thesis Servicing Limited is one.

[Emperor]

Ush, am I right in saying that, under the proposed new system, you won't be able to pay your student fees up front?  Also, if "wealthy" students want to pay their student loans off early, isn't there going to be a penalty charge?  Or have I got that wrong?

Sorry, not certain. As far as I know, wealthy students are allowed to just pay cash up front for their fees if they want to. And no, there's not usually a penalty charge for early payment of student loans. You can pay off as much as you like as soon as you like. However, to my knowledge, it's not in any student's interest to pay off any portion of their loans before they absolutely have to.

It is though - the sooner you pay off the loan the less you owe because you've accrued less interest. This was flagged as being one of the changes that favours rich students and the government have said they'd impose extra fees for anyone trying to pay off their loan early so it balances out. However, I can't see how you can come up with a simple scheme that would make the system fair. Because of this, I have to assume they'll not allow people to pay the fees up front as that would definitely favour the wealthy but that would mean people would all be forced to take out loans from the Student Loan Company (when some people might be able to find a better deal by shopping around).

I still think that a Graduate Tax is the best option, the better a graduate does the more they pay - but that'd mean the rich pay more and God forbid that'd ever happen.

[House of Usher]

It is though - the sooner you pay off the loan the less you owe because you've accrued less interest. This was flagged as being one of the changes that favours rich students and the government have said they'd impose extra fees for anyone trying to pay off their loan early so it balances out.

Told you I wasn't certain!  
The trouble is they keep changing the terms under which students loans are given. I think that since they were introduced in 1990, there have been about four different types of students loans - the terms relating to my undergraduate loan and my PGCE loan are quite different. In 1990 the deal was that you repaid at a standard rate as soon as you began earning 80% of the mean average; the first change they made was to lower the earnings threshold of repayment to £15,000 - regardless of wage inflation - which was manifestly unfair.

still think that a Graduate Tax is the best option, the better a graduate does the more they pay - but that'd mean the rich pay more and God forbid that'd ever happen.

I am really not in favour of a graduate tax. If it only kicks in at a given level of earnings that means the graduate is on better than average pay, in which case they should be paying more tax because of their higher earnings, not because of the qualifications they had to earn to get into a better paid job in the first place.

[The Legendary Shark]

It's not just the student loan. People will also have to find cash for accommodation, transport, food, books (?), clothing, electricity, gas, beer...

[House of Usher]

It's not just the student loan. People will also have to find cash for accommodation, transport, food, books (?), clothing, electricity, gas, beer...

Well, there is a maximum student grant of £2,906 for students whose household (parental) income is less than £25,000 per annum. The cut-off point is h/hold income of £40,000 which entitles you to an annual grant of £711. There's also a maintenance loan (not for tuition fees) of between £3,497 and £4,925 which again is variable depending on household income (these aren't London rates).

http://www.direct.gov.uk/en/EducationAndLearning/UniversityAndHigherEducation/StudentFinance/Applyingforthefirsttime/DG_174046

Mind you, my mate Alex's dad just pays his rent for him outright, so he's already £4,000 up on the deal before he's borrowed a penny. It goes without saying that not everyone's parents is in a position to do the same for them.

[House of Usher]

books (?)

Excuse the double posting! Books are an interesting item of expenditure. Depending on what course you're doing, books are almost a complete waste of money (with the exceptions of English and philosophy, which require close readings of classic texts, in which case I can't see how you'd manage without buying the books). For most courses you need just one or two essential text books.

An environmental biologist in the early '90s would have needed six (general biology, microbiology, biochemistry, entomology, plant physiology and plant anatomy - that's £150 to £300, total). They would probably need one on genetics nowadays, because nobody studies plant anatomy or physiology any more: nobody ever made money on the FTSE out of plant anatomy, after all!

A social science course at the same time would have required the purchase of zero books. I bought two. I must have done two dozen modules, and I'd have needed to read at least three for each one of them. Most required texts would have been relevant to my studies for about a fortnight and I'd have read each of them only once. There's no way I could have afforded to buy 50 to 100 books, so why buy any at all? That's what universities have libraries for. Of course, 8 copies of a book between 50 students doesn't go far, so we had to take it in turns to tackle the assignments, or sometimes choose our assignments based on which books were available rather than which topics were of most interest to us. The more comfortably off students just bought their own.

Rich or spendaholic students still buy dozens of textbooks, but a lot of the lazier ones won't use anything they can't find for free on the internet.

[Robin Low]

Books are an interesting item of expenditure.

And don't forget that there is a pretty rich seam of secondhand text books available to students.

Regards

Robin

[House of Usher]

And don't forget that there is a pretty rich seam of secondhand text books available to students.

There is now, partly due to the internet, and partly due to the huge numbers of students going into higher education now with unprecedented levels of credit at their disposal and a seeemingly growing unwillingness to engage with the library collection. How rich that seem is varies by subject. Classics of literature, philosophy and political theory are mainstream, enduring and widely available; second-hand social science texts, for instance, are harder to come by and only remain current for about 10 years. I don't know what the mileage is like on science text books; the structure of the cell, plant hormones and photosynthesis stay the same from one decade to the next, but technology changes quite rapidly.

Secondhand books can still be quite expensive unless out of date. Final year students rarely sell theirs for less than half price, and Oxfam and campus secondhand book shops charge two-thirds of cover price. Worth it for any books you absolutely have to have, of course.

[Peter Wolf]

I could presume that taxpayer revenue is involved but your comment about the Lender of the loan wanting to not risk non-repayment of the loan doesnt quite add up because they have already given students the option of non-repayment.  

Unless of course its offset by the higher rates of interest payable by high earners but there wouldnt be enough high earners for this to happen.

It cannot be taxpayers money that is being lent out to a private business as that would be totally unnacceptable [although it has already happened] so what you are saying is that the loaning of tuition fees has been privatised ?

To be honest, I found your query quite hard to follow. As I understood things, the Student Loans Company didn't have any money of its own to lend out. I thought it was administering loans on behalf of the government, and the government had contracted out the collection of repayment to the Student Loans Company. That way the Student Loans Company loses nothing when students get their loans written off by going most of their working lives without earning more than 80% of the national average (mean) income. As far as I know, the Student Loans Company makes its money out of keeping a percentage of the interest built up on any proportion of loans that are paid off; the government gets back the rest. Therefore there's an incentive for the company to be efficient about collecting as much repayment as possible from students who are earning enough to pay or don't get their deferral forms submitted in time, and that happens a lot. Incidentally, there is now more than one company administering student loans. Thesis Servicing Limited is one.

I still think its a racket simply because what used to be govt expenditure paid for by tax revenue has now been magically transformed into a loan which means ££££££££££££££££££££££££££££££££££££.The govt pays the universities on your behalf and collects interest.

I dont like this at all and i will not accept it.I can just about begrudgingly accept students paying tuition fees but i cant accept the interest because its unjustified.I dont pay much tax at present but in principle i resent taxes being used to generate revenue through Usury.

What i think is unless students take advantage of the non-repayment option the cycle of debt will put off a great many school leavers going into university so this in effect will result in fewer students which amounts to cutting back on universities across the board which means less expenditure.

I see it as a Trojan horse and the proof of this will be the reduced numbers of school leavers going into further education in the next 4 years.

Why go to university only to earn 21000 or less to escape the repayment of a loan ?

This is a massive dis-incentive to achieve anything at all upon graduation which makes going to university in the first place completely pointless and a waste of cash.

I wasnt betrayed by the coalition govt as i didnt vote for them and i didnt invest or place any trust in them at all and its misplaced trust on the part of the electorate which is responsible for the problems we are talking about.Another elected govt breaks just about every one its election promises.


See you in 4 years time