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>Between 2022-2023, £4.8 billion was added to UK student debt in interest alone. Students incur debt in order to pursue an education which will further their ca

>Between 2022-2023, £4.8 billion was added to UK student debt in interest alone. Students incur debt in order to pursue an education which will further their career prospects, then find themselves trapped by the interest – often necessitating more loans just to keep afloat. A very strange lie to encounter. In the UK, student debt repayment is linked to income (something like, 9% of all your income above £21k). If you don't earn, you don't pay. The interest accrues yes, but again, if you lose your job, you pay nothing. If you earn less than £21k, you pay nothing. It's nothing at all like a loan, and is more accurately, a income tax for graduate. Although, regressively, those who earn the most will pay the least. Those on modest salaries post university might pay it for their whole working lives. (one more thing, it's automatically written off after 40 years or so).

stu2b50 3y ago
I’d also note that this is how it works in the US as well for loans provided by the federal government. In addition, as long as you make payments, excess interest will not accrue and your principal won’t increase. They’re also written off in 20 years. It’s mostly with private student loans that people go completely underwater in the US
- anonymouskimmer 3y ago
  > I’d also note that this is how it works in the US as well for loans provided by the federal government. Only if you switch to the income-based repayment plan, which has to be reverified every year. Prior to December 2020 taxes were owed on forgiven debt the year it was finally forgiven. Which could be very harsh if the debt was large. https://www.nerdwallet.com/article/loans/student-loans/how-to-get-income-driven-repayment-plan-forgiveness https://www.nerdwallet.com/article/loans/student-loans/how-t... I'm not sure how it works in the UK, but in the US at least this extra debt is negatively factored into things like credit scores. And regardless of the payment, it takes a bite out of income. I couldn't afford a PPACA medical plan for a few reasons, but partly because I was paying for loans. None of these repayment plans factor in affordability for the payee, they are a straight percentage of income basis or treat the payee as some sort of national average in terms of expected affordability.
  - stu2b50 3y ago
    Sure, but the only qualification to be on IBR is that your IBR payment isn't higher than your standard repayment payment, so it's less a qualification and more a guardrail. Filling out a single form every year on a website is not the worse fate. The debt is of course on your credit report, but if you are making payments, more likely than not it's going to be beneficial, as young people are unlikely to have other debts that are considered "old". My own student loans carried the "age of credit" criteria on my credit report for a while. They are a percentage of income, but that is no different than the UK version. And to be fair to IBR, it's more nuanced that that - the income cutoff for the percentage varies state-by-state (so, someone in New York has a much higher cutoff than someone in Arkansas).
LatteLazy 3y ago
I was refused a mortgage because of my student loan payments. The articles point is not that having a student loan ruins your life, it is that it makes it harder to do things like access housing (true) and that that means education is for many a net negative for their other all wealth (true for at least some people). It's oversold, but it's still true when you get past the oversell...
- nerdponx 3y ago
  Also, the opportunity cost of student loan interest is absolutely enormous. Imagine if you graduated college in 2014 with no loans and started investing your excess earnings in the stock market instead of paying off student loans.

stu2b50 3y ago

I’d also note that this is how it works in the US as well for loans provided by the federal government. In addition, as long as you make payments, excess interest will not accrue and your principal won’t increase. They’re also written off in 20 years. It’s mostly with private student loans that people go completely underwater in the US

anonymouskimmer 3y ago
> I’d also note that this is how it works in the US as well for loans provided by the federal government. Only if you switch to the income-based repayment plan, which has to be reverified every year. Prior to December 2020 taxes were owed on forgiven debt the year it was finally forgiven. Which could be very harsh if the debt was large. https://www.nerdwallet.com/article/loans/student-loans/how-to-get-income-driven-repayment-plan-forgiveness https://www.nerdwallet.com/article/loans/student-loans/how-t... I'm not sure how it works in the UK, but in the US at least this extra debt is negatively factored into things like credit scores. And regardless of the payment, it takes a bite out of income. I couldn't afford a PPACA medical plan for a few reasons, but partly because I was paying for loans. None of these repayment plans factor in affordability for the payee, they are a straight percentage of income basis or treat the payee as some sort of national average in terms of expected affordability.
- stu2b50 3y ago
  Sure, but the only qualification to be on IBR is that your IBR payment isn't higher than your standard repayment payment, so it's less a qualification and more a guardrail. Filling out a single form every year on a website is not the worse fate. The debt is of course on your credit report, but if you are making payments, more likely than not it's going to be beneficial, as young people are unlikely to have other debts that are considered "old". My own student loans carried the "age of credit" criteria on my credit report for a while. They are a percentage of income, but that is no different than the UK version. And to be fair to IBR, it's more nuanced that that - the income cutoff for the percentage varies state-by-state (so, someone in New York has a much higher cutoff than someone in Arkansas).

LatteLazy 3y ago

I was refused a mortgage because of my student loan payments. The articles point is not that having a student loan ruins your life, it is that it makes it harder to do things like access housing (true) and that that means education is for many a net negative for their other all wealth (true for at least some people). It's oversold, but it's still true when you get past the oversell...

nerdponx 3y ago
Also, the opportunity cost of student loan interest is absolutely enormous. Imagine if you graduated college in 2014 with no loans and started investing your excess earnings in the stock market instead of paying off student loans.