Our gift to our legacy; University Debts.

What do you want to be when you grow up?
A classic question posed to most children.
Well at the ripe old age of 21 I was still asking myself this question. ‘What do I want to do?’ I had many interests and talents but even before anyone asked me about my career aspirations it was some-what drilled into my head from a young age that to get anywhere in life you had to go to university and you had to get a degree.
Why?
There was a girl in my year at high school who I sat on the same table as in French and she had always wanted to become a midwife. She somehow knew when she was just a kid what she wanted to do in life. But she really was one-of-a-kind, simply because I’ve never met anyone else who knew what they wanted to be at such a young age and never questioned it. She became a midwife… probably one of the best.
Back on track… Why are we ushered towards universities? I’ve never ever even been remotely interested in being a student. Not because I’m not smart, I got A’s and B’s at GCSE’s and 3 A-levels, I’m just not driven to academics. I always did well in compulsory education because I was smart enough to know that there was no getting out of it and competitive enough to want to be the best. I wasn’t the best but I must have been one of the most consistent. I worked had in all my subjects, including my worst (English) and I actively participated in after school activities like sports and drama.
My down fall came during my second year in College. Choosing to go to college was more like being on a country road with no turns, no lay-by to stop and think and certainly no manoeuvring room to turn around. I didn’t fit in at the sixth form I went to and if it wasn’t for a few really special people who I made friends with I think I would have just dropped out and become a full-time waitress (or waster). It must have been compulsory to apply for university because heaven knows why I would have. I remember struggling to decide what I wanted to apply for or where I wanted to go. I had my heart set on Falmouth University after finding a prospectus but that was out of the question when I told my parents. I thought about an arty course, tailoring, fashion, none of the above. I think the pressure must have been too much because I don’t recall being all too happy at that point in time. I didn’t want to be at college anymore and I only went because it was the only time I got to see some of the greatest people I’ve ever known. That sounds extreme but I lived 14 miles from college and on the opposite side of Preston to my 3 best friends.
I loathe the pressure that was put on me; onto every 16/17 year old, to decide what their future is going to be. It makes me angry I think it’s cruel. I didn’t feel like I could stand up and say ‘slow down I’m not ready yet’ I wasn’t given a list of my options, and even if I was I doubt one of them would have been ‘A break!’.
I know we were probably told that we didn’t have to go to university. That once we’d applied we could decline, but everyone was going and like I mentioned earlier it seemed like the only option. Rumours circulated that it didn’t matter what degree you got, or how well you did to get it, so long as you had a degree you were better equip to get a job. Well look at us now. Tuition fee’s tripled, less jobs for graduates, fewer jobs for everyone and a country in debt.

 

You know you’re not actually expected to pay back your student loan? Not that the government would use that as a tagline to get you to go but here’s the theory. If you began university this year you wouldnt start paying money back to the Student Loans Company (SLC) until you’re earning above £21,000paaprox (that’s £1,750pm or £404pw). You pay 9% of what you have earned over the threshold. For example if you’re paid weekly and in one week you earn £445 you’ll pay back £3.69, paid monthly you may have earned £1980 so you would pay £20.70 back to SLC. In theory if you’re lucky enough to earn £24,760pa you’d only pay back £338.40.

Say you started university before the tuition fee increase and the average debt of a student was £26,100, if you earn £20,000pa it would take you 55.5 years to pay back your student load (before interest). You might not live that long, I’m sorry to say, even though the threshold for re-payments is lower for students who began university before 2012 (£16,000). But the good thing is after 30 years the debt is written off anyway! That therefore leaves the tax payer to pick up the bill… You can imagine how many years it would then take to pay back the average loan of a post 2012 student (£53,400) impossible!

 uni_10uni_1

I received a letter through the post this week detailing my debts to the Student Loans Company. In 2010 I completed a foundation course in Art & Design. I paid £1612.50 in both February and May of that year resulting in a £3225 loan from the SLC. Since my ‘graduation’ (there was no graduation I swiftly left for a summer working at a camp in America, missed the deadline for the post-graduate Fashion course and essentially passed on a place I didn’t really want or deserve) I have been charged interest every month. I don’t understand the rates of interest, see below (bottom of the post) if you’re interested in the maths. I have however calculated that I have added £168.31 to my debt. A very remedial debt compared to some students who maybe did three or four years and had accommodation to pay for.
In the time since my ‘university’ experience I have paid back a total of £113. I am lucky to have a job that didn’t require a degree, doesn’t involve any paperwork, and I get paid very well to do. I therefore every now and again earn above the threshold to pay back some student loan. But even you can see in the last year I haven’t paid back enough to cover the interest that has been added. What chance is there for students laden with tens of thousands of pounds worth of debt if I, £3000 in debt, can’t even pay off my interest? Ha! It’s a joke; it just has to be a joke. Whilst students are riddling themselves with debt they’ll never pay, our country is falling further into an economic disaster that I don’t think we’ll climb out of all too easily and Mr Prime Minister is still telling the ‘Youth of Tomorrow’ to go to University- Go Get That Education! Better yourself!
So I beg the question once more, why do we grow up with the idea that university is the last stop on the way to success? Why are the government putting pressure of the youth to be graduates?
There are obviously a lot of jobs that really do depend on the success of universities; I certainly wouldn’t want to be seen by a doctor with anything short of a medical degree. But a lot of young adults are going to university for the wrong reasons. They’re looking forward to living away from home, to partying all night every night and not waking up to their parents asking ‘where’ve you been!?’ they’re looking forward to the maintenance loan that they can spend on a holiday with their friends to have even more time away from home, they’re doing what some people call ‘Mickey Mouse’ subjects.
Obviously there’s a lot to learn from living away from home for the first time and that is a really good experience to have but why not learn that travelling? Many students find moving out of their family home emancipating, but a very large majority of them will be right back home when their time at university is up because it’s just too damn expensive to continue living on your own. You’re used to the life style that you could upkeep when SLC were giving you £2000 every semester but now you have to pay for your partying and expensive meals out whilst paying your rent and trying to find a fulltime job that you think you deserve because you graduated with a 2:1.
IT JUST DOESN’T MAKE SENCE TO ME.
My parents wouldn’t let me get a car on finance when I was 19 because I would be paying that debt back for at least 5 years, they wouldn’t let me take a loan out for a part-time college course I wanted to do, they wouldn’t even let me get a credit card so I could have a bit more money. They were right about not letting me do any of those things because I didn’t understand the implications any of them would have on my future (I have since learned the benefits of having a credit card provided you use it sensibly and pay it back in full every month but that’s another post for another day). So why do we all then passively agree to let our children be buried under thousands of pounds worth of debt from university. I know it seems like it all makes sense ‘They’re getting a degree’ it’s a proud moment in any parent’s life; I just implore you to think about the consequences especially if your son or daughter doesn’t really know why they’re going to university.
A loan in any other sense of the word is something that you pay back over a specific period of time. So why not a student loan? £50 a week for 10 years and you’ve paid back £26,000. No. It just doesn’t work like that. Make university more affordable? Make it an elitist system? I wouldn’t even know what to suggest to Mr Prime Minister if he asked.
In short if you or your child are at the age of starting to think about university please exhaust all the options, including the option to postpone applying to university until you really know what you want to do. There are apprenticeships, college courses that are just as revered, working holidays (Camp America, Australia, skiing etc). I urge everyone to consider the debts you’ll have hanging over your head, and not to look at it like a free education because you won’t pay it back in the 30 years before it’s written off. That debt will hang over your head forever because if you can’t pay it off the government will have to increase taxes. And the reality is (if we continue the way we’re going) that we will never pay back our student loans, the 30 years will tick passed and not a dent will be made. But the harsh reality of that is it is our children, grand children and great grand children that will be footing the bill. When the country is debted up to its eyebrows they can say ‘Thank you’ with their middle fingers to us. That’s something that makes me feel sick. And guilty.

 Rambling over.

 

 

13. Students who began their course prior to 1st September 2012 are on Repayment

Plan 1. Payments for Repayment Plan 1 loans are at the rate of 9% of income above

the income threshold which was £10,000 until April 2005 and then £15,000 until April

2012 when it changed to £15,795. From April 2013, the threshold was £16,365 and

from 6th of April 2014 the threshold is £16,910.

14. The Repayment plan 1 interest charge is affected by a cap at the bank base rate

of +1%. From 1 September 2013 until 31 August 2014, the interest rate for the Plan 1

Income Contingent Repayment Loans will be the lower of the Retail Prices Index (RPI)

in March 2013, or 1% above the highest base rate of a nominated group of banks. As

the RPI for March 2013 was 3.3%, the rate of interest charged between 1 September

2013 and 31 August 2014 is 3.3%. However, due to the low interest rate cap, the rate

from 1 September 2013 will be 1.5% until further notice. The interest rate does not

affect the monthly repayment amount of Income Contingent Loans; it will affect the

time taken to repay.

REPAYMENT PLAN 2

15. Students who begin their course on or after 1st September 2012 are on

Repayment Plan 2 and are subject to a different income threshold for repayment

which will be £21,000 from April 2016. They will make repayments at 9% of their

income above the threshold. Borrowers will normally be liable to make repayments

from the April after they leave their course, but for administrative reasons repayments

will not be taken through the tax system until April 2016.

16. The Repayment Plan 2 interest charge whilst studying is RPI+3% and remains

so up until the student becomes liable to repay. The current rate, which is applied from

1 September 2013 – 31 August 2014, is 3.3% + 3 % = 6.3%. Once borrowers are due

to repay, interest will be variable and income contingent. Those earning £21,000 or

less will be charged at the rate of inflation (RPI), interest rates for those earning

between £21,000 and £41,000 will be on a sliding scale from RPI to RPI+3%; and

those earning £41,000 or more will accrue interest at RPI+3%.

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