Friday, August 15, 2008

Student Loans

This post was really meant to comment on the cost of education in England, namely because it is the time of the year when one wonders about student loans.

I'll try though, to keep to the post title, but before doing that I would just like to congratulate everyone who received their A Level results today. I would also like to congratulate the teachers for their efforts too. If any future Manchester Maths students are lurking about do say hi!

On to business then. To my relief I received my payment schedule letter this morning, which basically assures me that my tuition loan will be given and that I will get the maintenance money too. I was mightily relieved because I erm... once again applied for the loan after the deadline had passed! I have been slaving away this summer because of a necessity, but if the tuition fee loan wasn't granted I wouldn't really have the means to attend University next year! (And I don't really agree with working during term time....)

Anyway, that thankfully hasn't happened, but if I am to do four years I have to tell the loans company as soon as possible you see. (Yes, I am still debating over this fiasco, as I am over the project fiasco). I have a habit of making a fiasco out of everything and that is because I am not erm... very organised. The excuse I am currently using is my genes! (*cough my Dad*) Ha, he actually said I've gone like him today (even if it was for something totally unrelated!)

In the news, as the A Level results got an obvious mention, one man said he was surprised that not many students were commenting on the tuition fee loans. Truth be told, the loan system has been set up quite nicely. We borrow some money and then they take it out of our salary, once we are earning at least £25,000. But they only take about 6% a month so you never feel a dent in your income. Well so they say.

At the end of my third year I will have a loan of about £20,000 to repay. The tuition fees in my first year were £3000, but last year they increased and again this year too. (If I recall correctly this year they are £3150). The amount of money we are paying doesn't really became apparent until you see it down on paper. This is an interest loan as well, but I don't know at what rate.

So why this discussion on money then? Well somebody informed me that the loan will be written off once I die, which comes as a relief. That means I won't have to worry about the loan hanging around forever. If I can pay it back in bulk it will ultimately be better, and I wouldn't mind borrowing money of someone to do that (that's called a no-interest loan!) Well the teletubbies have already decided that I will be borrowing from Tinky Winky forever and ever, but that doesn't fill me with delight.

I sound like an airhead in this discussion, because I don't know the proper facts. But is that what most students do? Accept the conditions without knowing the details? There was no option but the student loans for me, and they really don't affect me as much as they affect say Milo or Tinky Winky. However today as the man spoke on TV, Tinky Winky got started again: "You could buy a car with that much money..." etc Anyway, some people are lucky and only pay £1500 a year for their tuition fees!! Once upon a time I had thought that to be such a huge amount, when my cousin had gone to university.

It's when they mention it on TV like it's an actual thing, do I ever seriously think about this loan! What a way to put a damper on things... Anyway, I don't really think there's an alternative to student loans hence why I'm not complaining. Universities are blimmin' expensive, but students don't realise this for we have paid them virtual money after all!

2 comments:

KTC said...

Been there, done it, got the tshirts (twice!). :D At least you have your decision letter already. Both my time I got paid (on the first day of term) before I got the letter. I did have an excuse for being late the first of those 2 times....

I think about it whenever I get that (annual?) summary statement stating how much in total I owe them. :D BTW, it's £15K earning, not £25K [1] before you start paying them back.

No one sane (financially) will ever repay the loan early. The interest they charge is based on the rate of inflation [2], which is usually (read: the last 27 years until just now [3]) lower than even the base rate of interest. So even if one has the money to repay early, one will make money simply by leaving it in a bank as the interest you get will cover the interest they charge on what you owe.

This is like what happened with the US WW2 loan to the UK that was only recently (2006) finally repaid [4].

Beans said...

Hi KTC,

Yeah, I'm relieved that I finally got that letter! However last year I didn't get my maintenance loan till late, so hopefully the same won't happen again. (Well I'm actually prepared if it does happen this year!)

I've only got the summary letter from the first year, which is only £6K, so it doesn't strike fear in me yet.

Thanks for the links (number four was an interesting read!), and your information on the loans. I guess I was rather silly to think about ever paying it early then!

"Nobody pays off their student loan early, unless they are a nutter. Even if you've got the money to pay it off early, you should just put it in a bank and pocket the interest."