Scared of uni fees? 20+ need-to-knows
Headlines shriek ''£50,000 student loans'', but it''s oft irrelevant. What counts is what you repay. Mythbuster time
For the first time this year, new uni starters in England face £9,000 tuition fees. So, thankfully, this Thursday is Student Finance Day - #SFD - with open days at schools & unis for students, prospective students and their parents. Check yours.
student financeNeed-to-knows. No first-timers need pay fees upfront. The Student Loan Company pays and gives cash for living money. Yet it ain''t like a normal debt. Read Martin''s full 20+ Student Finance Mythbusters for 2012 and prospective 2013 starters including...
1) After uni, you will repay 9% of any income above £21,000/yr. Earn less, repay nowt.
2) The loan wipes after 30 yrs. Many on low or mid incomes won''t have fully repaid by then. So, while you can pay fees upfront, for many it risks throwing £10,000s away.
3) The oft-quoted "£50,000 student debt" figure is mostly irrelevant. What really counts is the cost to you, which depends primarily on earnings. Use the updated www.studentfinancecalc.com to see your real cost over 30 years.
Free booklets and video guides. Free booklets for 6th formers | part-timers | teachers. Video guides: Martin''s 30 min briefing | 3-min cartoon. Got a question? Tweet it to @MartinSLewis on Thurs using #SFD and he''ll answer.
I agree with Mathsisfun. You should not think of the student loan as a debt as such, but more an obligation to pay more tax for the next 30 years (or until the loan amount is paid off, whichever comes first).
Under the old system (~£3000 fees), you would start repaying the loan when your income hit £15k, while under the new system you only repay when your income hits £21k. That means if you earn over £21k then you get to pocket £540 a year more than you would under the old system.
Under the older system (~£1000 fees) the loan is only cancelled when you retire (or it''s paid off) which means that you might be paying the increased tax burden for 15 - 20 years longer than you would under the new system.
I know that £9000 a year sounds extortionate, it really is, but in reality it is likely that your children will pay only a fraction of that back unless they go on to be very high earners.
I would much rather be on the £9000 system than the £1000 system I''m actually on.