OK. So suddenly I’m having to get my head around a whole new area. We’ve had a form to fill in from “Student Finance” and not only am I thoroughly confused but I’m mildly alarmed. It’s all changing from next year owing to the fact that the Government are letting universities put up their fees – as far as I can see, although the cap was at £3.5K last year, most universities have chosen to increase them to the new cap of £9K per year (which I assume are just the fees?). Just like that.
SO. What do I know? Not much. It’s all a little bit dry and boring, so ignore unless it’s relevant to you. If there’s anybody out there who can help clarify this murky area then please let me know. I think some information gathering is required.
My son has been offered a loan of £3375 to be paid directly to his university for his tuition fees for the first year. They are also going to pay him £3564 directly to cover maintenance.
So, what happens to the shortfall of £5,625 for his tuition fees once the price has gone up? Where are they all going to find that sort of money from? What about the additional costs like food, books, entertainment, travel and so on?
Apparently the loans themselves have recently changed and will no longer be interest free (or just a small percentage). They are going to be index linked which could therefore mean they will be paying back 7% interest a year. Apparently the loan is to last 30 years and cannot be redeemed early in order to allow all students to start work on an equal footing. IS THAT TRUE? Whilst they don’t have to start paying it off until they are earning a salary of 21K – 40K per year they will be saddled with SO MUCH DEBT. Before they’ve even started. Their tuition fees alone will amount to £27K in three years and that is not including their accommodation and food etc. What if they become high income earners and end up paying 50% tax? In addition to another almost 10% interest per year and they’ll be taking home 40p in the pound. I wouldn’t blame our future generation of workers to leave the country in disgust. Who wants to work for that? I thought the Government were aiming to encourage entrepreneurs? Hardly.
How are most students going to be able to afford to go to university at all? None of them will be able to afford their first home and that situation is already bad enough.
Would it be cheaper to somehow find a way to lend them the money from a separate loan at a lower rate of interest and without all the tie ins?
I thought the idea, in our austerity times was to stop encouraging people to borrow more than they can afford and the government are about to force our students to have to do just that. For years and years. They are pricing our children out of a tertiary education and other richer countries will fill the spaces no doubt. It’s probably not much more expensive to educate our children in the States now – at least there are scholarship options there.
IT’S AN OUTRAGE. Any ideas on what to do about it?
Muddling Along
June 27, 2011I hadn’t realised that it worked out like that (have pushed the idea of the cost of university to the back of my mind) but if that is the case then surely there is a case for parents (if they can) taking out the amount against their mortgage (assuming interest rates are better) and then putting in place an agreement with their child for interest payment and early repayment? Being forced to keep the loan in place seems ridiculous
Family Affairs
June 27, 2011Thats what I think – might be better to do it entirely separately so you’re not obligated for so long. Lx
Expat Mum
June 27, 2011Please bear in mind that I’m only stating facts here. I don’t want anyone else yelling at me and blocking me on Twitter, but:
In the States, wherever possible, parents start a college fund almost as soon as the child is born. There are lots of tax incentives, usually as long as the eventual fund is used for education. It’s just the way it is and no one even thinks that the government should be paying for college education, even if it is through taxes paid by citizens.
In addition, many colleges have huge endowment and scholarship funds which means that they can attract good students by offering full and partial scholarships. My daughter got a 30% per year scholarship and we didn’t even apply for anything! Her friend, whose parents simply cannot afford fees, got a ‘full ride’ to a great university for all four years.Obviusly it’s going to take British universities time to build up this sort of money, but they’ve already started which is why graduates now are noticing that their old uni is now ever-so-friendly and contacting them all the time. They want your money.
And of course, most graduates in the States spend years paying off their college loans. It’s just how it is and they just get on with it.
Family Affairs
June 27, 2011Oh. OK then. Maybe we’ll just have to start getting used to it BUT in the meantime, I wish somebody had suggested a fund 18 years ago! Lx
Karin
June 27, 2011Sadly, it sounds as if you’ve moving more toward the messed up US system. Here, parents are pretty much expected to pay all they can, and eligibility for government loan programs is based on household (i.e., parents’) income. Students still end up with loads of debt (including more expensive private loans) because it all just costs too much.
Family Affairs
June 27, 2011Hmmm. Looks that way L x
Jon Storey
June 27, 2011We have been assured by the SLC that loans can be repaid at any time. Hope that helps a little. For those on medicine or veterinary courses in the future, the fees will be staggering. In the nightmare scenario the Lauren has to reapply next year the the projected cost is around £80k………that’s one hell of a lot of TB testing!
Family Affairs
June 27, 2011Holy crap. That is astronomical Lx
louise
June 27, 2011A lot of my friends are sending their children to university in Europe with the Leonardo or Erasmus scheme – much more interesting, much cheaper and often they can get home for the weekend quicker than in England (when they want to come home that is!).
Family Affairs
June 27, 2011Really? Thats a good idea – might look into that for next child option Lx
fd
June 28, 2011Or send them to Ireland. Its still English speaking, its much the same system – 3 or 4 year degrees, classified the same way, fees are way lower (but no guarantee they’ll stay that way).
Family Affairs
June 28, 2011Oh. Didn’t realise that. Not the same in Scotland – don’t think they want us there anymore! Lx
saz
June 27, 2011it just is what it is Lu….my daughter goes to leeds this year…and I havent been asked of involved any way shape or form, l only know cos our son tells me….He on the other hand is going next year to uni…and I have all the forms to fill…
absent father and single low income mum…apparently will attract bursuries, scholarhips and/or grants, the tutition loand at £9K a year for three years are to be repaid…
I have friends of 40 still paying £25 a month…..at 50 yrs old they are written off again apparently…
Obamba entered office with $28K still to repay…as l said it is what it is….
scary l know…..
oh and WTF! to boot!!
saz xxx
Family Affairs
June 27, 2011It really is very worrying……LX
Jon Storey
June 28, 2011I found the phone number we used to query the early repayment thing: 0845 300 5090
Get you forms in asap, really important!
Family Affairs
June 28, 2011They’ve gone in already! Thanks x
Blods
June 28, 2011Hi There,
Your son’s fees will never be 9K, that sum will only apply to students commencing their university career in 2012, those who start this year will continue to pay the 3k+ fees.The loans fpr your son’s intake will be written off after 25 years and start to be repaid when a salary of 15K is earnt. Martin Lewis on Moneysavingerxpert.com has some brilliant info on student loans covering this year’s entry and next.
When the fees go up to 9K (for your daughter)the student loan company will lend the whole 9k, paid directly to the university.
Hope this helps.
Sorry to hear about all the trouble with your ex but I guess it was inevitable.
Love Blods x
Family Affairs
June 28, 2011Thank you – very helpful information L x