4 ms·

Reading the comments here has been really eye opening to me. I always knew that tuition was orders-of-magnitude more expensive across the Atlantic but now it's

Reading the comments here has been really eye opening to me. I always knew that tuition was orders-of-magnitude more expensive across the Atlantic but now it's a bit clearer why. Here (Northern Ireland, but it applies to the UK as a whole), students don't start to repay their loans until their earnings are over a certain threshold, then repayments are proportional to how much they earn over that level. If their annual earnings ever fall below it again, payments stop until they're back on their feet. I can't remember exactly what my interest rate was but I know it was fixed BELOW the central bank rate at the time. Standard financial advice here is to max the loan out even if you weren't in need of it and just put it in a savings account for the interest (probably not worth it these days). Lastly, if the loans aren't fully repaid by retirement age, they're written off. So yeah, you folks are really getting screwed over there.

djsumdog 10y ago
New Zealand use to have free education. Then it became interest free ... unless you left the country. They bleed a lot of talent out to Australia, so if you move for more than 6 months they start charging you interest. It turned from being a good socialist system that helped everyone to being a forced means of talent retention. In the same way, American student loans are really aimed at keeping people trapped in industry they might grow to hate. Everyone has to pay the mortgage and all that.
- elemenopy 10y ago
  I think "forced means of talent retention" is an unfairly harsh characterisation. It's a pretty reasonable policy considering taxpayers have to service the debt, and people who go overseas stop paying tax. It's all very well to propose a "good socialist system" but if people pay domestic fees and then leave NZ they're essentially getting a free ride and it's the people who don't go to uni who end up paying for it.
- crummy 10y ago
  It's not forced though, is it? You just have to pay interest.
- deleted 10y ago
  [deleted]
asmosoinio 10y ago
Coming from Finland where all schools are free, the tuitions sound crazy to me as well. However I don't think "good loan terms" is the cause for your low tuition prices at all. At least in other contexts, the reverse is usually true: When people have easy access to capital, prices go up. This happens for example in Finland with government rent subsidies (for people with trouble paying for a place to live in): When the subsidies go up, the rents go up as well, and apartment owners pocket more.
- headmelted 10y ago
  Interesting that you make the point about rent subsidies, we have those here to (but under a different name). It has a really strange effect though of putting a floor of £450/month on almost anywhere (even the nastiest dive you could think of), but the sweet spot seems to be the next 25% up to £600. The difference between a really nice, new house, and a really crappy apartment in a bad area is about £100/month, solely because of the bottom on rents provided by the subsidies. I suspect it's a really nice racket for modern day slumlords to be honest.
KennyCason 10y ago
In my case, after graduating I was 43k in debt and at 7% interest. I had to consolidate because if you don't you end up with 14 loans and having to pay around 1500 / month. Which is impossible for most new grads. You don't have to pay if your income is low after graduation by opting into "loan forbearance". However, this is a death trap as well as the loan continues to accrue interest! Needless to say, young dumb me didn't know any better until it hit 50k...
- distances 10y ago
  I don't know how long ago that was, but 7% sounds crazy high for something you can't shake off with bankruptcy proceedings.
  - 6DM 10y ago
    I was applying for more loans to finish up college when they told me my intrest would be 8% for this loan. I said, "wow" (catches breath) "isn't that a little high?" I will never in my life forget what that woman said to me. "You should be thankful, other students are getting 11%" This was in 2010, shortly before I graduated they made it impossible to ever get out of these loans with the new bankruptcy thing.
_delirium 10y ago
The U.S. is slowly moving towards tying repayments to income, though with less generous thresholds than the UK model. As of 2015, people with direct federal student loans can opt into "revised income-based repayment", which caps payments at 10% of income for a maximum of 20-25 years: http://blog.ed.gov/2015/12/your-federal-student-loans-just-got-easier-to-repaye/ http://blog.ed.gov/2015/12/your-federal-student-loans-just-g...
manarth 10y ago
> I can't remember exactly what my interest rate was but I know it was fixed BELOW the central bank rate at the time The current calculation for the interest rate on UK student loans is (RPI + X)% (where X varies from 0 for people earning less than £21k, to 3 for people earning £41k pa or more). There have been some moans about the interest rate; firstly because RPI is consistently higher than CPI, and secondly because both are consistently higher than the BoE's base rate. Still, it's a darn sight better than the other side of the pond.
bane 10y ago
When I went to school, not even two decades ago, the cost was much much lower here (in the U.S.). The recent explosion in tuition is very recent, and very troubling. As an example, I received 6 years (equivalent) of University education, earned two A.S. degrees, a B.S. degree and an M.S. degree in that time for around $26,000 or an average of around $4,400/year. It got more expensive as time went on, I switched from local community college to state school and went for my M.S., but my salary also increased rapidly during this time. Today, that amount would barely cover 2 years of education. Even with inflation this is terrible growth in expense.

djsumdog 10y ago

New Zealand use to have free education. Then it became interest free ... unless you left the country. They bleed a lot of talent out to Australia, so if you move for more than 6 months they start charging you interest. It turned from being a good socialist system that helped everyone to being a forced means of talent retention. In the same way, American student loans are really aimed at keeping people trapped in industry they might grow to hate. Everyone has to pay the mortgage and all that.

elemenopy 10y ago
I think "forced means of talent retention" is an unfairly harsh characterisation. It's a pretty reasonable policy considering taxpayers have to service the debt, and people who go overseas stop paying tax. It's all very well to propose a "good socialist system" but if people pay domestic fees and then leave NZ they're essentially getting a free ride and it's the people who don't go to uni who end up paying for it.
crummy 10y ago
It's not forced though, is it? You just have to pay interest.
deleted 10y ago
[deleted]

asmosoinio 10y ago

Coming from Finland where all schools are free, the tuitions sound crazy to me as well. However I don't think "good loan terms" is the cause for your low tuition prices at all. At least in other contexts, the reverse is usually true: When people have easy access to capital, prices go up. This happens for example in Finland with government rent subsidies (for people with trouble paying for a place to live in): When the subsidies go up, the rents go up as well, and apartment owners pocket more.

headmelted 10y ago
Interesting that you make the point about rent subsidies, we have those here to (but under a different name). It has a really strange effect though of putting a floor of £450/month on almost anywhere (even the nastiest dive you could think of), but the sweet spot seems to be the next 25% up to £600. The difference between a really nice, new house, and a really crappy apartment in a bad area is about £100/month, solely because of the bottom on rents provided by the subsidies. I suspect it's a really nice racket for modern day slumlords to be honest.

KennyCason 10y ago

In my case, after graduating I was 43k in debt and at 7% interest. I had to consolidate because if you don't you end up with 14 loans and having to pay around 1500 / month. Which is impossible for most new grads. You don't have to pay if your income is low after graduation by opting into "loan forbearance". However, this is a death trap as well as the loan continues to accrue interest! Needless to say, young dumb me didn't know any better until it hit 50k...

distances 10y ago
I don't know how long ago that was, but 7% sounds crazy high for something you can't shake off with bankruptcy proceedings.
- 6DM 10y ago
  I was applying for more loans to finish up college when they told me my intrest would be 8% for this loan. I said, "wow" (catches breath) "isn't that a little high?" I will never in my life forget what that woman said to me. "You should be thankful, other students are getting 11%" This was in 2010, shortly before I graduated they made it impossible to ever get out of these loans with the new bankruptcy thing.

_delirium 10y ago

The U.S. is slowly moving towards tying repayments to income, though with less generous thresholds than the UK model. As of 2015, people with direct federal student loans can opt into "revised income-based repayment", which caps payments at 10% of income for a maximum of 20-25 years: http://blog.ed.gov/2015/12/your-federal-student-loans-just-got-easier-to-repaye/ http://blog.ed.gov/2015/12/your-federal-student-loans-just-g...

manarth 10y ago

> I can't remember exactly what my interest rate was but I know it was fixed BELOW the central bank rate at the time The current calculation for the interest rate on UK student loans is (RPI + X)% (where X varies from 0 for people earning less than £21k, to 3 for people earning £41k pa or more). There have been some moans about the interest rate; firstly because RPI is consistently higher than CPI, and secondly because both are consistently higher than the BoE's base rate. Still, it's a darn sight better than the other side of the pond.

bane 10y ago

When I went to school, not even two decades ago, the cost was much much lower here (in the U.S.). The recent explosion in tuition is very recent, and very troubling. As an example, I received 6 years (equivalent) of University education, earned two A.S. degrees, a B.S. degree and an M.S. degree in that time for around $26,000 or an average of around $4,400/year. It got more expensive as time went on, I switched from local community college to state school and went for my M.S., but my salary also increased rapidly during this time. Today, that amount would barely cover 2 years of education. Even with inflation this is terrible growth in expense.