Graduates 'could pay back double their student loans'

Dinomania · 17 Mar 2011 at 15:48

Oh, for pity's sake.

http://www.bbc.co.uk/news/education-12767850

And then they have the nerve to snuggle this little quip into the main body of the text:

The figures do not account for the way the value of money will change because of inflation over the period during which the loan is paid off.

THAT'S THE WHOLE POINT - IT SHOULDN'T INCREASE IN REAL TERMS!

Over 20-30 years, the real-world value of the nominal amount will change HUGELY.

The idea is that if we could buy a nice car with the money we owe student loans - then by the time we've paid it off, we could still only buy a nice car with that which we paid back - not a small house.

Gilly · 17 Mar 2011 at 15:49

I'm confused by your comment. It shouldn't increase in real terms?

Russinating · 17 Mar 2011 at 15:50

She means in relative terms. Over the same period a loaf of bread will cost double what it does now, etc.

matt_fsr · 17 Mar 2011 at 15:51

Given the truly appalling standard of reporting by the BBC over the Fukushima incident happening at the moment, this is no great surprise.

Makes me wonder how much utter rubbish they actually write, and pass off as 'journalism'

Gilly · 17 Mar 2011 at 15:54

sara said:
The idea is that if we could buy a nice car with the money we owe student loans - then by the time we've paid it off, we could still only buy a nice car with that which we paid back - not a small house.

So you don't think interest should apply? You think it should only track inflation?

Why should that be the case? Who is supposed to subsidise this?

Zid_ · 17 Mar 2011 at 15:57

God forbid anyone that's outraged by this actually look at how much mortgages cost you overall.

Gilly · 17 Mar 2011 at 15:58

Zid_ said:
God forbid anyone that's outraged by this actually look at how much mortgages cost you overall.

I've just paid my deposit today. Student loans are pittance, and if you take longer than 30 years to pay are written off!

edscdk · 17 Mar 2011 at 15:59

i imagine that assumes someone earning 50k a year will still only want to pay the minimum amout back each month - which would be silly?

Dinomania · 17 Mar 2011 at 15:59

Gilly said:
I'm confused by your comment. It shouldn't increase in real terms?

Aye. That's what I meant.
http://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics)

Gilly said:
So you don't think interest should apply? You think it should only track inflation?

Why should that be the case? Who is supposed to subsidise this?

My main beef with the story is that they're getting all uppity about the students paying back rather a lot more than they borrow but COMPLETELY ignoring inflation. That's just ludicrous.

Whether I think the students /should/ pay back a little more than inflation isn't something I was thinking about. Maybe they should.

I know my own student loan will only increase in real terms or not too far off - as it tracks either RPI (I think, might be CPI, cannae remember which is which), OR the base interest rate + 1% (again, I think), whichever is /lowest/. Which is nice.

Dinomania · 17 Mar 2011 at 16:01

edscdk said:
i imagine that assumes someone earning 50k a year will still only want to pay the minimum amout back each month - which would be silly?

Well, given the way my own loan works (I realise they're changing/have changed), should I ever want to borrow for a mortgage or get a loan for a car - it'd be a complete waste me paying off my loan - I'd be paying back a cheap loan only to take out another one at a higher rate of interest.

Also, if I stick my money into (even the more rubbish) savings accounts, I get more interest than my loan is currently growing by.

Gilly · 17 Mar 2011 at 16:04

sara said:
My main beef with the story is that they're getting all uppity about the students paying back rather a lot more than they borrow but COMPLETELY ignoring inflation. That's just ludicrous.

Ah, that's not how I read the story. I'll have another skeg.

NathanE · 17 Mar 2011 at 16:07

Does this affect people that graduated years ago? Or just new students?

Stretch · 17 Mar 2011 at 16:39

NathanE said:
Does this affect people that graduated years ago? Or just new students?

Oh my, where have you been?

If you graduated before 2012 they come round and reposes your house, wife, car, children and dog.

Brookert · 17 Mar 2011 at 16:46

I feel sorry for my sister. She will be the first year to get charged the new rates.

So we will come out with similar degrees. I will have about 25000 ish to pay off. She might have well over double that.

Gilly · 17 Mar 2011 at 16:49

Brookert said:
I feel sorry for my sister. She will be the first year to get charged the new rates.

So we will come out with similar degrees. I will have about 25000 ish to pay off. She might have well over double that.

Yeah.

She doesn't have to be at Uni...

dymetrie · 17 Mar 2011 at 18:01

Gilly said:
Yeah.

She doesn't have to be at Uni...

She does if she's following a career which requires a degree...

craptakular · 17 Mar 2011 at 18:06

ahahaha I only got a £9,000 loan in 2001

Al Vallario · 17 Mar 2011 at 18:08

sara said:
Well, given the way my own loan works (I realise they're changing/have changed), should I ever want to borrow for a mortgage or get a loan for a car - it'd be a complete waste me paying off my loan - I'd be paying back a cheap loan only to take out another one at a higher rate of interest.

Also, if I stick my money into (even the more rubbish) savings accounts, I get more interest than my loan is currently growing by.

I don't quite understand your gripe with the BBC News article.

Interest rates on student loans under the new system will vary, as the article explains, from inflation to 3% above inflation. The debt will increase in real terms, even when we account for inflation? :confused:

Edit: I see the problem; the figures being quoted aren't inflation-adjusted.

Dolph · 17 Mar 2011 at 18:17

I love the way this article forgets to mention that it's still a better deal than the system Labour left, or than the system proposed by the labour commissioned review, for the students involved...

Kutter · 17 Mar 2011 at 18:22

Oxy said:
ahahaha I only got a £9,000 loan in 2001

Lucky you, i only got £450 back in 91/92 because it was my final year, i dont know if they started it the year before, because i was on my placement year.

My wifes mother is 51 and shes only just paid off her nursing degree this year. God knows what its going to cost my daughter to goto college :eek: