Did you know that new students in the UK (plan 2) are now charged 5.5% on their student loan from day one of their course?
Thought you didn't.
Did you know that compound interest is also chargeable from day one so that students pay interest on the interest?
Thought you didn't.
Did you know that to stop your student loan spiralling out of control, due to interest, a post graduate salary of £48,000 is needed before you begin to even chip away at the balance.
Even our beloved MPs would be faced with ballooning student debt if they became an MP at aged 40 on a wage of 65K and a modest earnings history.
Why is this not in the papers? Why are students not rioting in the streets?
I am curious.
This is how I think the government have 'got away with this". By sharing the effects over three groups of students.
1. Most graduates will pay 9% of their salary, with no prospect of paying off the loan until it is written off after 30 years. But the £21K threshold reduces payments to reasonable levels. A grudging tax dressed up as a loan bought off by knowing the debt will disappear in the end.
2. Higher earners will pay a lot more, the same 9%, but still no hope in clearing the debt. The general public have little sympathy for higher earners, hence the silence in the press.
3.The moneyed classes will pay off the debt early to become even more moneyed. Maybe we have run out of energy to try and argue with them.
The worst bit about all this is the defeatist message it sends to students about debts and borrowing. It says: Dont worry, this debt will never be paid off. What effect does this have on other debts such as credit card and borrowing in general.
Many will see it as a challenge to them to earn below the threshold or move abroad or go sneakily self-employed to cheat the system. Some will pay small amounts on the "never never" like paying off a loan shark for that washing machine debt you can't quite clear.
There is one positive for students about all this. Borrow as much as you can from the student loan system, change courses if you need, rack up as much debt as you like, because the debt will never be paid.
Of course governments are used to insurmountable long term debts, it's how they roll. Maybe their message is: Now you know how it feels.Suggest a correction