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Student Loan interest rates (WAS:Re: NS&I rates)

Family, children, advice, schooling, finance for children, all things kids.
Bouleversee
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Student Loan interest rates (WAS:Re: NS&I rates)

#341715

Postby Bouleversee » September 21st, 2020, 2:01 pm

I haven't heard that the outrageous interest on Student Loans (5.6% IIRC) is going to be reduced. Why not?

scrumpyjack
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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341718

Postby scrumpyjack » September 21st, 2020, 2:07 pm

Bouleversee wrote:I haven't heard that the outrageous interest on Student Loans (5.6% IIRC) is going to be reduced. Why not?


It's like credit cards - most of the 'interest' is to cover bad debts. With Student Loans I'm sure 5.6% goes nowhere near covering the bad debt ratio!

Still maybe some students can take out a misselling case against HMG for encouraging them to incur huge debt to get a near worthless 'degree'

Bouleversee
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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341723

Postby Bouleversee » September 21st, 2020, 2:18 pm

Is there an appropriate board for discussing the pros and cons of taking the loan rather than paying the fees/living exes. if there is money sitting in bank accounts earning next to nothing? My daughter tells me that the "experts" advise the former but I suspect that advice is somewhat out of date.

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341726

Postby scrumpyjack » September 21st, 2020, 2:22 pm

If the student expects never to earn more than £27,000 then take the loan as it won't need to be paid back!

On the other hand one questions what the quality of the degree is if the likely earnings power is so low?

Bouleversee
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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341732

Postby Bouleversee » September 21st, 2020, 2:57 pm

scrumpyjack wrote:If the student expects never to earn more than £27,000 then take the loan as it won't need to be paid back!

On the other hand one questions what the quality of the degree is if the likely earnings power is so low?


Quite. So why are people like Martin Lewis advising taking the loan? It doesn't make sense to me when interest is calculated and compounds from day 1 of getting the loan.

richlist
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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341733

Postby richlist » September 21st, 2020, 3:06 pm

What's this got to do with ns&I rates ?
If you want to talk about student loans open up another thread, please.

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341735

Postby swill453 » September 21st, 2020, 3:07 pm

Bouleversee wrote:
scrumpyjack wrote:If the student expects never to earn more than £27,000 then take the loan as it won't need to be paid back!

On the other hand one questions what the quality of the degree is if the likely earnings power is so low?


Quite. So why are people like Martin Lewis advising taking the loan? It doesn't make sense to me when interest is calculated and compounds from day 1 of getting the loan.

Because most graduates won't pay it off before it gets written off. So the interest rate, and to a certain extent the amount, are irrelevant.

Which is also why, if a typical graduate gets a windfall inheritance or whatever, the worst thing they could do with it is pay off the student loan. It would be like throwing money away.

Scott.

swill453
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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341736

Postby swill453 » September 21st, 2020, 3:09 pm

richlist wrote:What's this got to do with ns&I rates ?
If you want to talk about student loans open up another thread, please.

Yeah fair comment.

Scott.

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341739

Postby dspp » September 21st, 2020, 3:24 pm

swill453 wrote:
richlist wrote:What's this got to do with ns&I rates ?
If you want to talk about student loans open up another thread, please.

Yeah fair comment.

Scott.


Bouleversee wrote:I haven't heard that the outrageous interest on Student Loans (5.6% IIRC) is going to be reduced. Why not?


Moderator Message:
and lo a thread was split in response to the request, and the students were rehoused into Family Matters, dspp


Moderator Message:
And subject renamed so people (like me) looking for posts about NS&I don't get here by 'mistake' :) (chas49)

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341751

Postby didds » September 21st, 2020, 4:37 pm

Bouleversee wrote:
scrumpyjack wrote:If the student expects never to earn more than £27,000 then take the loan as it won't need to be paid back!

On the other hand one questions what the quality of the degree is if the likely earnings power is so low?


Quite. So why are people like Martin Lewis advising taking the loan? It doesn't make sense to me when interest is calculated and compounds from day 1 of getting the loan.



because if you never earn the threshold it gets written off eventually and you never pay a penny. The debt is then only a paper one and theoretical.
If you self fund etc then youve paid all that money and still arent earning the threshold and have spent all those savings.


The debt IS an issue when taking out mortgages etc as it is counted against income when assessing the level of mortgage reayment and thus mortgage level. But frankly if you arent ever in a position to earn enough to pay the debt off, you are unlikely to get a mortgage high enough to buy anywhere anyway. And if you self funded to avoid having the debt, you dont now have those savings to use as a deposit etc.

And come the day one may earn above the threshold, then its just a tax on a previous education. Boring but it is what it is.

Im sure its far more nuanced than that but that's how I view it anyway. YMMV.

didds
Last edited by didds on September 21st, 2020, 4:40 pm, edited 1 time in total.

dealtn
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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341753

Postby dealtn » September 21st, 2020, 4:39 pm

Bouleversee wrote:I haven't heard that the outrageous interest on Student Loans (5.6% IIRC) is going to be reduced. Why not?


What's outrageous about RPI+3% to invest in Human Capital? I reckon that's below the commercial rate of interest for that kind of lending/borrowing. Furthermore if the investment doesn't result in meaningful earning power it doesn't even need to be paid off.

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341858

Postby AlumniLawn » September 22nd, 2020, 8:31 am

My daughter will pay the whole loan back as her earning will be sufficient to do so (she qualified as a CA with EY earlier this year). Her current interest rate is 2.6% but this will increase to 5.6% in due course. She pays off the minimum required (via her employer at source) plus twice the calculated interest each month and will step this up when the interest rate increases.

The high interest rate is imposed I think so as to recover the loans that will never be fully repaid or paid at all. My son being one of these (Masters in International Politics) as he has moved to Australia. The irony of his younger sister repaying part of his debt is not lost on the family.

bluedonkey
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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341874

Postby bluedonkey » September 22nd, 2020, 9:33 am

Regarding moving abroad, the earnings are still subject to Student Loan calculations. It's just that the mechanism for collection is different.
https://www.taxguideforstudents.org.uk/ ... -go-abroad

Student Loan is a misnomer for most I suspect. It's really a graduate tax. Not many will be in a similar position to CAs at large firms.

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341877

Postby didds » September 22nd, 2020, 10:06 am

AlumniLawn wrote:The high interest rate is imposed I think so as to recover the loans that will never be fully repaid or paid at all. My son being one of these (Masters in International Politics) as he has moved to Australia. The irony of his younger sister repaying part of his debt is not lost on the family.



I thought (happy to be wrong) that if you moved away from the UK with outstanding student loan debt you had to advise the stuent loan people so they could find some way of extracting your repayments?

This from may 2020
https://www.savethestudent.org/student- ... broad.html

"It's a common myth that you can just jet off to another country and leave all your loan troubles behind.

However, the British government are taking stricter measures to catch up with graduates who aren't paying back their student debt – whatever country they're in.

Better data sharing between countries is making this easier and more effective, and the consequences can be pretty serious. The government are starting to refer defaulting students to credit agencies, implement sanctions and in some cases even prosecute.

While this might seem like a distant threat when you're in another corner of the world, it will catch up with you eventually – especially if you ever return to the UK.

Basically, it's not worth the risk."



Otherwise "everyone" couild just bugger off elsewhere and never pay anything in theory.

didds

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341886

Postby dspp » September 22nd, 2020, 10:20 am

didds wrote:
AlumniLawn wrote:The high interest rate is imposed I think so as to recover the loans that will never be fully repaid or paid at all. My son being one of these (Masters in International Politics) as he has moved to Australia. The irony of his younger sister repaying part of his debt is not lost on the family.



I thought (happy to be wrong) that if you moved away from the UK with outstanding student loan debt you had to advise the stuent loan people so they could find some way of extracting your repayments?

This from may 2020
https://www.savethestudent.org/student- ... broad.html

"It's a common myth that you can just jet off to another country and leave all your loan troubles behind.

However, the British government are taking stricter measures to catch up with graduates who aren't paying back their student debt – whatever country they're in.

Better data sharing between countries is making this easier and more effective, and the consequences can be pretty serious. The government are starting to refer defaulting students to credit agencies, implement sanctions and in some cases even prosecute.

While this might seem like a distant threat when you're in another corner of the world, it will catch up with you eventually – especially if you ever return to the UK.

Basically, it's not worth the risk."



Otherwise "everyone" couild just bugger off elsewhere and never pay anything in theory.

didds


Clearly people in Politics think that the Law does not apply to them.

regards, dspp

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341895

Postby AlumniLawn » September 22nd, 2020, 10:35 am

dspp wrote:
didds wrote:
AlumniLawn wrote:The high interest rate is imposed I think so as to recover the loans that will never be fully repaid or paid at all. My son being one of these (Masters in International Politics) as he has moved to Australia. The irony of his younger sister repaying part of his debt is not lost on the family.



I thought (happy to be wrong) that if you moved away from the UK with outstanding student loan debt you had to advise the stuent loan people so they could find some way of extracting your repayments?

This from may 2020
https://www.savethestudent.org/student- ... broad.html

"It's a common myth that you can just jet off to another country and leave all your loan troubles behind.

However, the British government are taking stricter measures to catch up with graduates who aren't paying back their student debt – whatever country they're in.

Better data sharing between countries is making this easier and more effective, and the consequences can be pretty serious. The government are starting to refer defaulting students to credit agencies, implement sanctions and in some cases even prosecute.

While this might seem like a distant threat when you're in another corner of the world, it will catch up with you eventually – especially if you ever return to the UK.

Basically, it's not worth the risk."



Otherwise "everyone" couild just bugger off elsewhere and never pay anything in theory.

didds


Clearly people in Politics think that the Law does not apply to them.

regards, dspp


Which people would that be?

My son has been in regular contact with the Student Loan company, is in receipt of his regular statements and has paid what they instruct him to pay (which is nothing for the last 18 months) and if/when he returns to the UK, he will pay once again or if instructed to pay whilst abroad will do so but in the absence request to make payments, he doesn't.

Yet again I see broad sweeping statements made that only the certainty of ignorance can muster up.

dspp
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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341898

Postby dspp » September 22nd, 2020, 10:39 am

AlumniLawn wrote:
dspp wrote:
didds wrote:

I thought (happy to be wrong) that if you moved away from the UK with outstanding student loan debt you had to advise the stuent loan people so they could find some way of extracting your repayments?

This from may 2020
https://www.savethestudent.org/student- ... broad.html




Otherwise "everyone" couild just bugger off elsewhere and never pay anything in theory.

didds


Clearly people in Politics think that the Law does not apply to them.

regards, dspp


Which people would that be?

My son has been in regular contact with the Student Loan company, is in receipt of his regular statements and has paid what they instruct him to pay (which is nothing for the last 18 months) and if/when he returns to the UK, he will pay once again or if instructed to pay whilst abroad will do so but in the absence request to make payments, he doesn't.

Yet again I see broad sweeping statements made that only the certainty of ignorance can muster up.


Thank you. Then I am most happy to withdraw that assertion of mine in regard of your son.

Regards, dspp

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341909

Postby dealtn » September 22nd, 2020, 11:09 am

AlumniLawn wrote:
dspp wrote:
didds wrote:

I thought (happy to be wrong) that if you moved away from the UK with outstanding student loan debt you had to advise the stuent loan people so they could find some way of extracting your repayments?

This from may 2020
https://www.savethestudent.org/student- ... broad.html




Otherwise "everyone" couild just bugger off elsewhere and never pay anything in theory.

didds


Clearly people in Politics think that the Law does not apply to them.

regards, dspp


Which people would that be?

My son has been in regular contact with the Student Loan company, is in receipt of his regular statements and has paid what they instruct him to pay (which is nothing for the last 18 months) and if/when he returns to the UK, he will pay once again or if instructed to pay whilst abroad will do so but in the absence request to make payments, he doesn't.

Yet again I see broad sweeping statements made that only the certainty of ignorance can muster up.


To be fair what you said was "The high interest rate is imposed I think so as to recover the loans that will never be fully repaid or paid at all. My son being one of these (Masters in International Politics) as he has moved to Australia. The irony of his younger sister repaying part of his debt is not lost on the family."

You certainly imply that the reason he isn't repaying is because he has moved to Australia. You didn't, at least initially, say the cause was because "My son has been in regular contact with the Student Loan company, is in receipt of his regular statements and has paid what they instruct him to pay (which is nothing for the last 18 months) and if/when he returns to the UK, he will pay once again or if instructed to pay whilst abroad will do so but in the absence request to make payments, he doesn't."

You can't be immune to "broad sweeping statements" if your own contributions are so open to misinterpretation.

didds
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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341935

Postby didds » September 22nd, 2020, 12:44 pm

AlumniLawn wrote:

Yet again I see broad sweeping statements made that only the certainty of ignorance can muster up.



que?

The irony of his younger sister repaying part of his debt is not lost on the family.



Then she isnt. as he's clearly paying towards his debt as and when. Shes no more paying his off than the woman in our village that did a teaching degree with no intention of ever teaching or paying off her loan, just to take the cash [ no - I dont get it eiether ]

didds

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Re: Student Loan interest rates (WAS:Re: NS&I rates)

#341936

Postby didds » September 22nd, 2020, 12:46 pm

dealtn wrote:You can't be immune to "broad sweeping statements" if your own contributions are so open to misinterpretation.


Genau. as they say in Germany.


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