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The government student loan system in England effectively uses an income sharing agreement: with the most recent version, you pay 9% of your income over £25,000
by pxeger1 2y ago
The government student loan system in England effectively uses an income sharing agreement: with the most recent version, you pay 9% of your income over £25,000/year and if you haven’t finished paying it back within 40 years, it gets forgiven. This scheme doesn’t pay for itself though. (it costs the government money).
- Suppafly 2y ago>This scheme doesn’t pay for itself though. (it costs the government money). That's ok though. Any civilized country is generally OK with spending taxes to educate people.
- rahimnathwani 2y agoImagine you go and work for a hedge fund straight out of university, have a great year, and earn £1m. Does the government get 9% of that? Or is it capped at the outstanding loan amount? If the latter, and someone earning $1m pays the same as someone evening $500k, it doesn't seem like an income share agreement.
- golergka 2y agoI suspect the government gets much more than that, because it also taxes it.
- rahimnathwani 2y agoOf course, but this isn't relevant to the consideration of whether UK student loans being are equivalent to an income share agreement. If the point were relevant, then we might as well consider government spending on K-12 schooling the same way. But general taxation is obviously not what we're talking about here. We're talking about the extra money someone pays in return for the government supporting their degree.
- valzam 2y agoIn Australia you have a loan balance based on your degree etc and pay it back with a similar % of income. I assume in the UK it's the same, if you earn 1mio you will probably not have to pay 9% (or do but can claim it back) and be done with any student loans.
- youngtaff 2y agoIt's capped at the outstanding loan balance (principle plus any interest due)