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I think that the modern loans are a far less amicable deal than I had just a few years ago. Interest rates far higher despite an incredibly low rate environmen
by Ntrails 6y ago
I think that the modern loans are a far less amicable deal than I had just a few years ago. Interest rates far higher despite an incredibly low rate environment.
But. The repayment thresholds and the loan forgiveness period do massively reduce the onerousness, especially on those in lower paid roles who would otherwise never repay. My main complaint about the system is really how it drags on the middle.
The successful graduates pay off their loans in 6-7 years, or less. If you're earning 40-50k, you'll take more like 20 years to pay off the loan which feels like a long hard slog. I still think graduate tax would have been the right call.
- IanCal 6y ago6-7 years on standard repayments would require a salary of around £100k straight out of uni. On £40k you'd end up with them cancelled and likely repay less than you borrowed (45k typical borrowing, £38k repaid over 30 years).
- throwaway2245 6y ago1. The amount that you "borrowed" is a fake number, though, with no correspondence to the true cost of the course and is non-existant for e.g. Scottish students in Scotland. 2. Your salary will (is expected to) inflate; the repayment threshold currently does not, so the "time value of money" has something to say about how much you repay. Someone whose salary remains constant on the equivalent of £40k will find their repayments an increasing burden.
- IanCal 6y agoThe repayment threshold is expected to rise with average earnings so someone on an equivalent salary of £40k would be expected to pay back less in real terms than that calculation if wages rise above inflation. The amount you borrow is not a fake number, whether it is related to the course cost or not, just as the price of a car is not a fake number even if it was cheaper to produce. It also includes literal cash payments to you.