Student loans inquiry finds many did not understand terms
https://www.bbc.co.uk/news/articles/cn9pejwj0xxo
Posted by Rewindcasette
Student loans inquiry finds many did not understand terms
https://www.bbc.co.uk/news/articles/cn9pejwj0xxo
Posted by Rewindcasette
32 Comments
Hard to understand when they change them retroactively
I had no idea it’s that bad, my student loan is 3.2% and I’m in the final stages of paying it off. 9% is an insane number…
The idea of introducing some new graduate tax instead worries me… I worked hard to pay mine off and would then have to pay again (forever)… grim.
Also ironic given we’re talking about not understanding the terms of a loan… then introduce a new term. I definitely didn’t sign up for a graduate tax when I was a lil nipper
When we were told its lower interest than the banks the lowest interest loan you will ever get, but some how 11% interest ?
We need triple lock and we need it backdating on all plans
Of course they don’t. How many 17/18 year olds know the ins and outs of contracts, the law, and their rights? All they hear is “Funding for Uni and i get to pay it back over time – awesome.”
I guess I’m fortunate that I did largely understand what I was signing up for, but that’s useless now they’ve changed the repayment threshold.
Also, some of the slides and scripts they used are terrible in the comparisons they’re making. I completely get why some people didn’t understand what they signed up for: https://www.bbc.co.uk/news/articles/cy5706ep1l3o
It really doesn’t help that my sixth form also told us straight lines about them to get us to go to uni. I was definitely told that you could pause payments if you say had a baby or wanted to start a business and that was fine.
Using RPI for the interest was a joke, but then to add another 3% on top for good measure was disgraceful.
Does it matter? They changed the terms, so understanding them is moot.
It’s a tax for doing education but it’s wasn’t sold as that
There’s something seriously wrong with the system if I have to earn 125k for over 20 years to pay off a loan which is realistically never going to happen
edit: I just want to add, i graduated with 45k debt 2018 and it’s sitting on 80k now. Even if the interest rate was 0%, i’m never paying it off with my current salary
I understood them at the time of signing the agreement. 14 years and 2 retrospective agreement amendments later, I’ve no clue
Whoever designed this system should be in jail no exaggeration it is so illogical. 90% of people will never pay it off so instead of the government paying £40k or whatever they will have to pay £200k 30 years later.
Since wage inflation everyone will be paying an extra 9% tax on a wage that is now barely above living wage
No surprise. I think you’d find if you did an inquiry into almost any standard day to day contracts that most people who signed don’t actually have a clue what they signed. Just like how there are so many misunderstandings regarding laws in this country in general. Most people either couldn’t comprehend a legal document in its entirety or be arsed to sit down and read it. Nor does it help with how student loans are pushed.
At the same time though, uni shouldn’t be free. It’s the definition of a regressive tax that most uni students love to disparage. It forces those who are/were unable to go to uni to pay for someone else to go to uni and subsequently outearn them.
When i applied aged 18 i was told there was 0% interest (2008) im still paying it, i was only in uni for a year before leaving due to ill health
To be fair, as someone who teaches in higher education, this should be painfully obvious.
I once had an English student in my statistics class complain that it was too complicated in the first lesson because “since when did maths have foreign letters in it?”.
We also routinely have students that don’t know what a folder is on a computer, or zero understanding between the differences of a local save vs the cloud. I could go on and on, but the general point is a loan is generally much more complex than the long list of relatively simple things they don’t understand.
Yeah I battle with a few things
1) it’s 100% my fault I wanted to extend adolescence and have fun
2) Schools and college genuinely made it feel like
You are a brain dead moron who will grow up to be homeless if you don’t go. We were never deeply
Told about the terms. Yes I should have read them better
3) I pay between 500 and 800 a month every month and will do forever.
The idea of capacity to consent requires that the individual can receive the information , weigh it up , understand the outcomes and then communicate their preferences .
The idea that 16/17 year olds fully understand what they are getting themselves into with a student loan and understand the impact of an extra 10% tax is laughable .
I appreciate the idea of ‘capacity’ as I am using it is normally restricted to medical procedures but I think it’s an appropriate way of evaluating/scrutinising the process of this state backed mis-selling .
Not to mention the terms can be changed after the fact ( which is a fucking disgrace )
Doesn’t really matter when they constantly change the terms to suit. The current rate of interest being charged is a disgrace.
Christ is there a bloody inquiry (that never finishes) for everything : Covid inquiry, Grenfell enquiry, Post Office inquiry, Student loan inquiry, Lampard inquiry, Youngsters in work inquiry, Dawn Sturgess inquiry.
And that’s not all FFS.
Edit: Apparently there’s 27 inquiries ongoing
I graduated in 2015 with 50k worth of student loan debt and have being paying off around 200-400 per month for 10 years.
IIRC my latest statement balance was 42k
In hindsight i’d have gone into a trade and be far better off than I am now
Why would anyone expect 17year olds – many of which have never worked, to understand this!
I went 2002-2006, was made to believe that it was 0% interest however I paid back a lot more than I borrowed
I was one of the few who knew most of it.
My parents didn’t have £27k for tuition and rent + living expenses money to give me as my dad’s job was lucrative but volatile so they needed that cash to pay their own mortgage when he was out of work for months at a time.
It was take the (minimum due to dad’s on-paper salary) maintenance loan and tuition loan and deal with the consequences later.
Whilst I had done the maths on what would be my repayment at certain wage thresholds.
It’s still insane to me that I’m earning just above U.K. average but I’m not even touching the interest on the loan.
So there is absolutely no incentive for me to pay it off any quicker because I don’t have my entire pre-tax annual salary lying around to throw at it. And my priority would be my mortgage first anyway.
I mean, it wasn’t so much I didn’t understand the terms. More like I didn’t care, I was 18 and all my friends were going to uni. Any other path was never highlighted to me and I felt like I’d let my parents down if I didn’t go.
It’s nuts that they increase the interest if you earn more. 3% at £29k but 6% at £50k, it’s almost like they don’t want you to pay it off…
For every £50 I pay off my loan each month I receive £46.41 interest. It’s literally impossible to pay off my student loan before I die.
Looking at my statement I paid off £916 last year and got £897 interest haha. Fucking disgusting.
Unless mummy and daddy can pay for your schooling, the options were;
* Apply for student loan to actually go to school
* Don’t go to school
I’m pretty sure most teens don’t have the tens of thousands stashed away to pay for it all, and a bank will laugh you out the door.
Unless you had a solid option of Apprenticeship or alternate entry into your chosen field, that was basically it. And that’s even if you fully knew what kind of career you actually wanted, it’s not like you could pick and choose what works best for your life path since you get one choice and have to full send it (or suffer the consequences if you change your mind).
I mean, most terms are seemingly made confusing on purpose so you don’t understand them. So, if this really a surprise.
> Graduates with Plan 2 loans have been paying back 9% of everything they earn over the repayment threshold which currently stands at £28,470.
> This threshold will remain frozen at £29,385 from 2027 to 2030, rather than rising with inflation.
Even putting aside understanding of the terms, how is this acceptable? Years of freezing that threshold is unacceptable. Inflation screwing people over in every cost and then of course they decide it doesn’t apply to a repayment threshold wtf…
I got downvoted for saying before that the reality is any private company trying to give 18 year olds loans like this would be tried in court for it, if they even dared to do so. It’s rather insane the SLC can do whatever the fuck it wants in this regard.
You cant tax your way to growth. Wondering why pub culture is dying, its because the young dont have enough disposable money to spend
It also kind of sucks that even if you fully understood the terms, there weren’t many other options unless you had rich parents. There is far greater availability of apprenticeships etc now, then when I was in sixth form.
For most people in my year group, it was uni or find a retail job.