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> 1) Student loan plans (especially in the UK) are gonna cripple the economy and are vastly unsustainable. Why do you say that about the UK? I’m not from there

> 1) Student loan plans (especially in the UK) are gonna cripple the economy and are vastly unsustainable. Why do you say that about the UK? I’m not from there and this is the first I’m hearing about problems with UK student debt.

pmyteh 4y ago
They're backstopped by the government, in that they're written off after ~30 years if they weren't paid off in that time by the 9% marginal income charge. The scheme was designed as a backdoor graduate tax rather than a conventional finance agreement, and the government has been using them like a credit card to fund the universities off-balance-sheet. Which will be difficult to continue.
kd913 4y ago
So the current plan 2 loans are about 15k per year of study. So for a typical 4 year course, that is about 60k worth of loans. If you take a 6 year medical course, you are on your own for the 2 extra years at least from a maintenance grant AFAIK. Hence a lot of students, especially those in London struggling for their 5th and 6th year of study. Don't even get my started in regards to the junior doctor salary. The payback terms of this is 9% of everything you gain beyond a specific threshold i.e. anywhere from 20-25k. After 30 years, theoretically the loan gets wiped off (unlikely). Already there are talks of extending it for the next gen plans by another 10 years. The interest rate for this student loan is RPI + 3.5, and adjusts higher the more you earn. Effectively becoming almost impossible to pay back apart from those who are the absolute highest earners. So far, we have seen the government repeatedly change both the repayment threshold, and the time before it gets wiped. Given NI rises, I have seen effective marginal tax rates up to 60%. At the end of the day, the rich are gonna pay it off immediately and avoid the problem, the middle get loaded and pay back far more than necessary during the loan lifetime, and the bottom may get it wiped off but forget the idea of having savings or disposable cash. https://www.student-loan-calculator.co.uk/ https://www.student-loan-calculator.co.uk/ The current system basically reduces massively disposable spending for middle and low earners, doesn't affect the top earners. It also is an effective black hole given most people aren't expected to be able to fully pay back the loan. This will have a massive impact on the economy and government finances. Especially given this is an open blackhole.

pmyteh 4y ago

They're backstopped by the government, in that they're written off after ~30 years if they weren't paid off in that time by the 9% marginal income charge. The scheme was designed as a backdoor graduate tax rather than a conventional finance agreement, and the government has been using them like a credit card to fund the universities off-balance-sheet. Which will be difficult to continue.

kd913 4y ago

So the current plan 2 loans are about 15k per year of study. So for a typical 4 year course, that is about 60k worth of loans. If you take a 6 year medical course, you are on your own for the 2 extra years at least from a maintenance grant AFAIK. Hence a lot of students, especially those in London struggling for their 5th and 6th year of study. Don't even get my started in regards to the junior doctor salary. The payback terms of this is 9% of everything you gain beyond a specific threshold i.e. anywhere from 20-25k. After 30 years, theoretically the loan gets wiped off (unlikely). Already there are talks of extending it for the next gen plans by another 10 years. The interest rate for this student loan is RPI + 3.5, and adjusts higher the more you earn. Effectively becoming almost impossible to pay back apart from those who are the absolute highest earners. So far, we have seen the government repeatedly change both the repayment threshold, and the time before it gets wiped. Given NI rises, I have seen effective marginal tax rates up to 60%. At the end of the day, the rich are gonna pay it off immediately and avoid the problem, the middle get loaded and pay back far more than necessary during the loan lifetime, and the bottom may get it wiped off but forget the idea of having savings or disposable cash. https://www.student-loan-calculator.co.uk/ https://www.student-loan-calculator.co.uk/ The current system basically reduces massively disposable spending for middle and low earners, doesn't affect the top earners. It also is an effective black hole given most people aren't expected to be able to fully pay back the loan. This will have a massive impact on the economy and government finances. Especially given this is an open blackhole.