Reproduced from the Intergenerational Foundation site
Students graduating since 2015 have had to swallow outrageous fee hikes and eye-watering interest rates on their loans, leaving many of them with more than £50,000 of debt that they will have to pay back over the next 30 years.
Asking students to make some investment in their future is reasonable, but debts at these levels are already damaging lives. Moreover, this has happened while the government has made unilateral retrospective changes to the terms and conditions, and is trying to sell off the loans to private providers.
Universities are behaving no better by showing “disgraceful arrogance” (according to some MPs) by upping fees for 2017 before parliamentary permission has even been given.
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Take a look at the small print:
Current students face interest charges at above-market rates (RPI+3%!).
Compound interest racks up monthly on student loans from the day they take them out. This means a current APR of 4.7%, adding around £200 each and every month to a debt of £50,000!
Some institutions are already raising fees beyond £9,000 a year to £9,250.
Loan repayments at 9% of income over £21,000 on top of 12% National Insurance and 20% Basic Rate Income Tax means an effective 41% tax burden even for low-earners
The government has gone back on its promise to raise the repayment threshold in line with earnings, dragging more low earners into repayment by fixing it at £21,000 for 5 years
Top uni pay has sky rocketed by 15% on the back of our kids’ loans.
The government wants to sell its pre-2012 loan book to private finance.
Average uni halls accommodation now costs around £141 per week, a 5% increase in the last year alone.
Maintenance grants to help the poorest students have been withdrawn, forcing them now to take larger maintenance loans.
Click here for more information about all these points