On the back of the woefully inadequate apology by Nick Clegg yesterday about his party’s failure to keep it’s promise I am posting some information I have been sent on the matter. In case it helps (if not scroll straight down to funny video at the bottom). My son is heading off to university in just over a week and to be honest we are still a little unclear about all the expenses he is going to incur and how on earth he is going to pay them back.

According to the press release I was sent about Student Finance Day run by the Independent Taskforce on Student Finance Information 60% of prospective students have ‘worrying misconception’ about student finance

As students face the prospect of £9,000 English tuition fees for the first time, while others visit Open Days for 2013 entry, new research released to mark the second annual Student Finance Day, shows a high level of confusion over the new student finance system remains.

Students wrongly worry about repaying when not earning. The research found 63% of English 14-18 year olds and 60% of those starting university in 2012 are worried about how they’ll repay the loan if they are unemployed or a low earner after university – despite attempts to publicise that repayments only come into effect after graduation and provided you earn over £21,000 – and even then it’s proportionate to earnings.

Students wrongly worried about the impact on their credit file. Some 61% of English 14-18 year olds and 55% of the 2012 cohort are also worried about student loans going on their credit files – even though they don’t.

Perhaps unsurprisingly given these findings, as many as 65% of 14-18 year olds and even 33% of those starting university this autumn admit they still don’t think they understand enough about the new student finance system; with 59% of those starting university imminently and 74% of those aged 14-18 wanting more information about the system and how it might affect them.

The impact of this is that 61% of 14-18 year olds admitted that the changes had made them think harder about whether to go to university, and 91% felt that if they did, they would need to work whilst at university to financially support themselves.

Head of the Independent Taskforce on Student Finance Information (who co-ordinate Student Finance Day), Martin Lewis of MoneySavingExpert.com said:

“The tragedy is, it’s likely a good chunk of potential students are choosing not to go to university due to misplaced fear. Worse is, I suspect it’s those from non-traditional university families who are most risk averse and most affected.

“Part of the problem is there’s too much focus on the headline amount being borrowed – a mostly irrelevant figure. What really counts is how much needs repaying and that depends solely on what’s earned after university. You repay nothing under £21,000 and above that, the more you earn, the more you repay. Financially at least, it is effectively a no-win, no fee system.

“Whether you support the changes or not, we must ensure that we don’t damage a generation of students through misunderstandings. That’s why initiatives such as Student Finance Day are so important. Universities, schools, colleges, parents, politicians, and the media all need to come together to ensure we communicate the financial facts – not the fiction. After all, if young people don’t understand the true cost, how can they make an effective decision?”

The results of the survey come as universities, schools and colleges across the country join together for Student Finance Day (20 September), hosting events and disseminating information to help prospective students and their parents get clear and accessible information on student finance.

Student Finance Day 2013 – Ten point mythbuster

You don’t pay up front to go to Uni.
First time undergraduate’s fees are automatically paid by a Student Loans Company loan. There are also loans of up to £5,500 to live off (£7,675 in London) and those from families with income under £42,611 get living grants of up to £3,354.
Students don’t repay, graduates do, but only if they earn £21,000+.
You repay 9% of everything earned above £21,000 starting the April after graduation (2017 for most). This £21,000 will rise from 2017. Those who never earn over it, never repay.
Monthly repayments are the same on £6,000 or £9,000 fee courses.
As monthly repayments depend ONLY on earnings, the course fee size doesn’t impact it.
It’s wiped after 30 years.
Whatever you still owe, repayments stop after 30 years.
There are no debt collectors.
Repayments are taken via the payroll, just like tax. So you never actually handle the cash, meaning there are no debt collectors chasing.
Repayments are £470/year LOWER than before.
Those asking “how can anyone live with such debts?” may be surprised that future graduates will initially have MORE disposable income than today’s graduates as they repay above £21,000 earnings (under the old system, it was £15,795). This is also a mild improvement for building a deposit and getting a mortgage in the early years after graduation.
You will owe for LONGER and may pay MORE.
The bad news is compared to today’s graduates, 2012 starters onwards repay less each year, have much bigger loans and pay higher interest (as much as inflation plus 3%), so it’ll take MUCH longer to repay than now and depending on earnings, may cost a lot more.
Many will NEVER pay it all back.
Even many starting on £25,000 graduate salaries (and rising after) won’t repay everything owed within the 30 years (test your situation at www.studentfinancecalc.com) meaning they’ll often be repaying for much of their working life.
Many won’t pay more on £9,000 courses than £6,000.
As even many £25,000 starters won’t repay combined £6,000 tuition fees and living loans before the 30 year wipe, it won’t cost them any more to take a £9,000 fee course.
10. Paying up front could be throwing £10,000s away.
Fee fears means some parents aim to pay them upfront. For those planning to use savings, remember as many won’t repay what they borrowed at today’s prices before the 30 year wipe, you could be throwing big money away. Don’t make knee jerk decisions to pay upfront, without doing research.

ps if none of this helps or interests you – then this will cheer you up – just been sent the link by Wife In The North:-

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  1. My son goes next week to uni too…(woe is me all alone ahhh!!) and Ive told him again and again..
    it is what it is….this system..

    I’;m low income and he gets all the grants loans going etc…and has chosen an ensuite room in a lush apartment..(guilt of divorce etc wouldnt let me say NO!!)
    yet he has performed well with his amazing results an receives the bursary and scholarships…which gives him £1k every february and £2K off his accom’ and Tuition, year one…
    (lets not even think about year 2 in the windy Chicago)

    i digress..it is what it is…If we ta;lk about DEBT then we will all stress and get depressed and its going into uni with negativity and pressure…

    Ive talked about it in that I see it as an education tax…. its very little to repay on a monthly basis, many of my friends still pay in their 40’s and President Obama, has $27,000 worth of student debt l read when he was voted president…(am guessing thats been wiped now…!!)

    There is enough pressure on our kids and us…am not going to let this be a worry or discouragement, what lve learned in my 54 years..is that these things work out or they don’t…the life of hard knocks and common sense will prevail….
    l dont believe l’m being an ostrich here…I just look at it with a different perspective….money has caused many problems in my life and l still deal with the consequences of my ex’s inability to deal with money…so its still my problem, while someone else wipes his ar*e for him..enough now…

    sorry l either say little or too much…gonna have a lot of time on my hands with two away at uni…

    hope youre doing well Lu..

    saz xx

    • Family Affairs on

      Well I don’t think that’s an ostrich approach – I think it’a a realistic approach. Nothing to be done about it so might as well accept it….and forget about it. Lx

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