Half of graduates will be paying off loans in their 50s – with middle class students ‘to be hardest hit’

Half of graduates(in U.K.) will be paying off loans in their 50s – with middle class students ‘to be hardest hit’


By Laura Clark, Education Correspondent

UPDATED: 23:12 GMT, 8 July 2012

Most students starting university this autumn will be paying off their loans into their 50s, a think-tank has revealed.

Those from middle-income families earning £43,500 a year will graduate with the highest level of debt, which will take longer to pay off.

Some 56 per cent of all graduates will take so long to repay their loan that they will qualify for it to be written off after 30 years, when they are at least 52.

These students will effectively pay an extra ‘tax’ via payroll deductions for 30 years, according to a report from the Institute for Fiscal Studies.

Concern: More than half of graduates will be paying debts 30 years after graduatingConcern: More than half of graduates will be paying debts 30 years after graduating

The findings are part of the most detailed research yet into the new university funding regime, which comes into effect in September.

Under the changes, maximum tuition fees will rise to £9,000 and a real rate of interest will be charged on student loans.

The report warns that seven in ten students will be worse off over their lifetime than under the current system, with average debts due to rise to £37,658 – up from £22,127 this year.

Middle-income students will be worst hit, in a quirk des-cribed as ‘strange’ by the IFS. This is because they may need to take out the maximum loan for living costs and no longer qualify for student grants  which would reduce their need for loans.

They are also less likely to  be eligible for reductions in fees.

Students from the poorest families will graduate with the least average debt, £34,848, partly because they are less likely to go to universities charging the highest fees. Debts for the richest students will average £37,433, because most will be able to finance some of their education and so will not have to take out a full loan.

The analysis by the financial think-tank also shows the extent to which funding for universities has shifted from the public purse to graduates.while taxpayers will save £3,000

Tough future: Average graduate debts are due to rise to £37,658 

Tough future: Average graduate debts are due to rise to £37,658

After university, ‘the average graduate will be significantly worse off over their lifetime’,  per student. Universities are actually better off under the changes, despite deep cuts to their direct public funding.

Analysis of the fees charged by 90 universities shows most will ask for more than the £7,500 the Government first estimated.

In September, the average  fee will be £8,660 a year, while  64 per cent of students will be charged £9,000 a year.

The report claimed that students would be ‘significantly better off while they study due to the increased generosity of student support’.

However, once they graduate they face paying back bigger loans for much longer.

Graduates repay their loan through the tax system at a rate of 9 per cent a year on any income above £21,000. Someone earning £25,000 would therefore repay around £30 per month.

Universities Minister David Willetts said: ‘This analysis from a highly respected organisation vindicates our reforms.

‘Students still at university, institutions, taxpayers and poorer graduates will be better off under the new system.

The poorest 30 per cent of graduates pay back less, public expenditure is saved, and universities gain more funds.’

A family friend graduated from the British University system in the early 1970’s now retired ( Fascinating person a great soul….funny stories…her sister was a bit of a rock groupie ,..and knew many famous rock groups…..had the Everly Brothers and other famous stars  stay overnite .)  
Back then ,and until recently, University Education was free. No longer. However, it seems that the student will be debt slaves early and for a major part of their lives. So what is going on?……is there something between the lines to be read ?
IMHO, the increased fees are a TAX, to pay off the corrupt Banking system aka the National Debt. Previous to this, it seems clear the system could afford to cover the cost of post secondary education. Where does this money now go….or taxpayer will “save money” and thus Gov’t caters to “bribe” this voting block ?.
In addition, the majority of the students will be forced out of the housing market , and hence renters….hence the Global Elite have herded them into the “Human Ranches” called Hi density cities, and thus have even more control over them. You see, hitting the youth early with high debt basically enslaves them for life. In addition, the Universities are really no different than the developers… they provide an overpriced product based on false hope and dreams. The siren call is “get an education get and education “…….BUT ARE THEY LEARNING ANYTHING ? or keep them suspended in some surreal twilight zone.
In other words…a TRAP.
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