I have to say using the calculator you shared helped a lot as it has lots of ways of testing different variables. It's a lot better than the other link (IMO). Great video - This comes at a very timely moment as partner is just graduating with £30k of student loan debt. And to your point the should you / shouldn't you debate is often so difficult. Notably on a £35k graduate role then it makes no sense to repay (if you never get a promotion and just inflationary payrises). But if you then reenter the salary with say a payrise up to £40k then opting into paying off the loan makes sense for us. That all being said as the Student Loan has a variable interest rate - it is possible that it swings back in the favour of not repaying but once you've committed to putting in additional payments you so kind of need to stick with that plan... that would be the big caveat, you really have to be sure that overpaying is better for you long term.
It's kind of crazy that we let people at the age of 16/17/18 make financial decisions that are now going to impact them for 40 YEARS!!! It's actually wild! I personally view it as a tax, I don't think I am ever going to actively overpay. Just wanted to add the graphics looked really good in this!
It’s kind of crazy that we let people who are 60/70/80 make decisions for a society that they don’t participate in in the same way they did when they were younger and will soon be leaving.
I earn £80k and my wife earns £50k. Once I had paid off our cars and other debts, and saved a few grand, I paid off both our Student Loans, with a remainder of £23k between them. That feels extreme, but the extra £550 a month in our combined monthly pay cheques felt extremely worth it. We would have paid the £23k in 3.5 years anyway, but todays interest rate at 7% would have meant paying £550 for a whole further year, costing over £6.5k in interest alone.
Interesting. Seeing that you paid off the student loan and increased the amount in your pay check. How did this workout in the amount of tax on your salary. Was the saving on the student loan worth it after the additional tax that you would of paid, especially if you were a higher rate tax payer. Thanks
Uni wasn't remotely worth it. Nothing I learnt is applied in my job, the only thing it got me was my foot in the door for a job (no one has even asked to prove I have a degree). I'd always recommend apprenticeships now
Same. I haven't met an employer that cared enough to check. It's the new debt employers seek out because an indebted employee is a trouble-free employee.
its a big tax though, 7% is very significant considering most young men have to deal with rising insurance costs and rising rents, barely able to scrape by. Yes the 7% is paid above a 25k threshold but keep in mind that full time minimum wage is close to 24.5k, and if you do some overtimes you easily break past the 25k barrier
@@Maksimszzyes 7% is alot. But after threshold of your example £25k a year is monthly pay of about £1,700 a month. So a overtime of £100, £7 will be student loan repayment. In the grand scheme of things £7 in student loans repayments is fairly small of a monthly income of £1700-1800
When somebody tried to barnd it a "Graduate Tax" they were told to shut up. From what I can see from the younger people at work, that's exactly what it is. Like most other systems in this country nowadays, it is broken and each individual must think or themselves. Groupthink is the way to fail nowadays. Plus Martin Lewis is crap.
@@mightymike2192 Martin Lewis knows his audience though. I don't find him particularly useful but my 60 year old mother does, just for keeping informed on the basics.
I decided to go for a change of career in 2007, as a mature student (40) . I went for it; I graduated with a first class honours; I worked in my chosen field for five years. I am now an HGV driver , earning over £64 k pa. University ? One of the biggest mistakes I’ve made 🤗
Mines is similar, I went to uni, got a degree in youth development, i worked as a youth worker for 15 years earning £21k and ended up losing my job to because of council cuts, became a long haul driver and earn £30-40k. Why did I ever get a degree?
@@WhiteManInAVanthe issues isn't with degrees it's with the degree you chose to study of you had gone and studied computer science or financial economics your story would have been different so just saying degrees in general aren't worth it lacks nuance it's about the the degree the university and the salaries that combination of factors could return
@@nguene i agree, educating our young people is not as important and transporting goods around the country and therefore doesn't pay as well. Also transporting goods doesn't require as much learning as educating our kids so driving doesn't need a degree. I 100% agree with you. Also given that computer science is relatively new, compared to education, its not surprising that there are a larger proportion that earn better atm. However, what happens when the market is saturated? Also lets not forget the number of people losing thier jobs in the industry already to AI. But i guess at that point you'll just name another degree that people can waste a whole lot of time and money on to re-train...
@@WhiteManInAVan Not everyone can drive, but most can. Everyone can study "computer science", but most will find it impossible to understand. The jobs in "science" are changing, I know quite a few "scientists" who now drive for a living. I also have a relative who drives HGV/LGV, he threatened his daughter that she better not even think about following that career. So... want a degree? Maths, Physics, Law and Medicine (including opticians and dentists). Anything else, you must ask yourself if you can get by without a degree.
If the state paid for uni the rich guy's parents would have given him the money instead This university system is not why that rich guy is richer than you
@@huguesjouffrai9618The point is that they are paying more than the person with more money, just because that person has more money. Which is, like as said, inequality built into the system.
@@Samuelbce this is no different that the fact that a guy who inherits a flat doesn't have to pay rent. That's basically saying "this thing is not free so a rich Guy Can get his parents to buy it for him" and that's true of everything that's paid for in life. But this system is actually not too Bad considering most rich people go to uni (it makes sense to make them pay) and most people who go to uni will end up rich (si it makes sense that they pay for their education once they get rich). The alternatives to this system are: - free uni: everybody pays for the education which is a huge wealth transfer towards the richest in society, and which usually creates a big temptation for governments to cut uni budgets - everybody pays their loans entirely (barrier to entry for the poorest and if you don't make tons of money of the bat you have a huge Financial burden when you're young) - people pay based on their parents income (in the long term it's similar to the current system with the richest paying most except it's an income tax proportional to the number of kids)
How is it a huge wealth transfer to the richest? If it was free it would be paid for by taxes and the tax burden is highest on the richest in society so the wealth would actually be transferred down to those who were poorer but got a free education
Damian: An interesting subject would be the different ways parents can support their children onto the housing ladder, without compromising their own financial security in retirement. ATB
You can legally avoid paying your student loan on earnings you contribute into your workplace pension under salary sacrifice, which is great if you never plan to pay it off
Uni is only worth it if you take a STEM or specialised degree that leads directly into a high paid career. I now work in project management and anyone can do a pm course for a few hundred. I have a life time of debt. Maybe it did get me better opportunities but i didn't get a career. Had to jump from job to job for more money. So to anyone young watching this, please think hard about it, getting a degree does NOT guarantee a high paid job. It used to in the 90s or early 2000s but that changed in the last 15 years.
At the beginning of your discussion, you posed the question, "What value should we place on education?" Undoubtedly, education deserves immense respect and value-it's essential for our national progress and critical thinking. However, the more pertinent question might have been, "How much value should we place on a university degree?" It's important to differentiate this from the broader concept of education, which is fundamentally invaluable. We should never underestimate the importance of education; a society lacking in education is at risk.
Id disagree a little on the 'society lacking in education is at risk' line. We teach people to think at school. Thats the dangerous thing. The way that we teach children to conform and to not take risks is risky. The modern schooling system was born in Tsarist Russia for docile factory workers. University tries to break conformist thinking, but only does it with conformist methods, eg many uni students find Marx and think how wonderful he is as example. The historic English thinking was done by the few highly regarded positions (church and state) that you could seek to be a part of through competence but the masses don't typically use their critical discernment. most people are happy to comply, as school/church/state has taught them. Recent COVID lockdowns were a perfect watershed for if you comply or not. Schools are to learn to read and write and be a part of society (tax forms, interpersonal relations, sports and cooking). the specific knowledge should be sought out by the potential students themselves directly, especially with the internet. Society functioned quite well in the dark ages. I've never needed to identify an oxbow lake, nor to use iambic pentameter in general life. I have needed to google how to sew a button or wire a plug. I have needed to learn CPR on pregnant women but had to seek this elsewhere from standard education systems.
What value does a Dance degree bring to society? Strippers with a degree are not more valuable than strippers with a degree. Both provide a valuable, essential service to society
Not even close the be worth while. Currently a tax for the rest of your life. I barrowed around 40k and currently owe 78k, i earn £60k per and still not even close to paying the interest down. By the time the debt is wiped i would have paid my 40k 3 times over absolutely scandalous.
I'm in a similar boat with a lower amount to repay. I had a scholarship (courses paid for). But I still had to take out a maintenance loan to survive. I've been paying it back since 2017. The courses I studied for allow me to make a salary of about 40k. So far I've paid about 30% of what I borrowed back in tax. I would be better off applying for a bank loan to pay off the remainder as the interest rates are much lower than 8 or 9%
This was a great video that I think a lot of people would find helpful, looking at a student loan as a higher education tax is, I think, a much better way of visualising the true cost of the loan.
Thank you for making this and creating a conversation! As a high earner i am devistated by the impact of this student loan - i pay £4k per year post tax and it doesnt even pay off my interest. I know i should pay it down but who wants to use their hard earned savings to do this when you cant predict the future? University was the biggest mistake i ever made and i really think something needs to be done as it just makes you not want to work! I already pay enough taxes, so why can't i just pay my loan off and get on with my life. There's honestly not much point in working, when it takes away the spare amount of money that you'd have to enjoy. It rewards low earners and punishes middle to high earners heavily - i don't get it, isn't that the point of University? To get a well paid job.
I went to uni which allowed me to pursue a career in Geotechnical Engineering. I get involved in the best projects around the world. I work with gifted people. I earn over £100k. Without a degree it would never have had such a great life. Its really important to know how to use your degree to best advantage. If your degree does not directly lead you to a career job you should question its value.
Overpay your postgrad, leave your undergrad. Ultimately, advise people to not go to university. Opt for apprenticeships and specialist qualifications for the field you want to go into. These loans significantly affect your ability to buy a house …. Which is already near impossible.
It doesn't really... its not the degree that harms it... its the work you do post the degree.. With a joint income of 60k a year (assuming both partners earn 30k), buying a decent home is very possible.
@@madma11 No, because although you may on paper earn 60k as a couple, your fixed expenses are subtracted from your permitted mortgage amount. So what you think you’re able to afford, isn’t actually what you’re able to afford because of your student loan repayments.
@@versaceviper9798if you are earning £60k joint then it's £70 per month for the loan (under plan 5). Normally doesn't wreck a mortgage offer, considering the options available.
I agree with what others have said. It could do with rebranding as a ‘graduate tax’ over the years after uni, rather than a loan. Especially since such a high percentage of people will never pay their loan off in full. I can say with certainty that I will never even get close to paying my student loan off by 2050 (unless I win the lottery!). Great video as always Damo.
Great video Damien, for me one of the most important you have made to date. As someone who went to University and left circa 2017 I've watched my balance increase until I have hit £60k in debt. Despite moving to a good job a couple of years ago and more than doubling my income, I have never been asked to prove anything relating to my degree and I've held 3 jobs in the financial services industry. Currently I pay around £200 pm plus more when it comes to bonus time, this year I lost £2k out my bonus. I've considered chucking my entire bonus towards reducing the debt but as you point out my monthly payments would not change until the balance is paid in full and I could better utilise the money (just bought a house). I wish someone had highlighted the downside of university to me, looking back I wish I had joined an apprentice scheme instead which would have allowed my to start earning some 5 years earlier, taught me financial independence at an earlier age and develop good habits. Not to mention I would be thousands better off that went towards paying SLC that could have been invested. When it comes to it I will make sure my kids are aware.
Paying off my student loan early was one of the best decisions I’ve made, as it improved my credit score dramatically enabling me to obtain a mortgage, which can be difficult when you’re self employed. It’s a catch 22 problem, you need to pay off loans responsibly to get a high credit score but no one will lend you any money until you have a high enough credit score.
@@Drian12_1-pn3oi unlike other unsecured loans not being able to pay it back doesn’t adversely affect your credit record, in fact I don’t think it appears on your record at all, as it’s taken from your income at source if your earnings meet the threshold to pay it. Paying it off does.
It doesn’t affect your credit score. It is not classed as debt in that sense. What it does affect is the affordability criteria for a mortgage though, I.e. a student loan will reduce your take home pay which will reduce the amount of money you can borrow for a mortgage
I'm 32 and recently paid off my loan in full. But most of my peers don't even think about their student loans. But I'm in that very small group of people locked in to 3k a year costs and with a decent salary. I never overpaid it. Just came to a natural end and did the last payment myself. To avoid nuisance overpayment.
I'm on that same path, just 12-18 months left of repayments at 31. Playing with the idea of paying it off a little quicker now the interest rate has risen in the last year or two. Think I might overpay a little (a halfway house between the minimum, and paying it off in one go). In some ways it doesn't really matter for the last 4-5k, I guess. Interested in your thoughts.
@@jakestewart8784 I'd not worry about it. I'm quite lucky with where I am in my career and I chose the right career at the right time. But if you do want to check, and since everyone's position is different. I'd suggest looking at salary calculators online and looking at the student loan calculator to get an idea.
@@georgec2894 yeah, the interest is higher but the amount is small. Just make sure you give them a call in your last six months or so and arrange paying the last bit yourself.
Managed to pay mine off by my 30th Birthday. There was something insanely satisfying about seeing it no longer appear on my payslips. My advice for anyone now, is more to make sure they REALLY want/need to go to University given how expensive it will be. I'm hoping by the time my kids are at Uni age, that the system will have been reformed to make it make sense again.
I did the same. I got very lucky in a career, that was completely unrelated to my Uni course, and ended up paying it off by my 30th too. The satisfaction in seeing that ~£400 in my pocket instead of theirs was superb.
I was raised on the Offspringand did just that... just got a job. We all take different paths but this is still really practical information Damien, well explained as usual!
It’s always an interesting topic. I’ve been to uni twice, BSc then later an MBA and used SLC both times. After finishing my MBA I started paying down the student loans @ £2k /m until they were gone - which took years. But now I’m free and that feels good. The loans helped me get the degrees as my family aren’t wealthy, but it’s what you DO with the degree that earns the money to pay them off. If I’m ever asked to advise a youngster thinking of going to uni, the whole chat would focus on goals, plans and aspirations. How they pay for it is nearly irrelevant when compared to their plan to leverage or derive value from the investment - I see it like going out and purchasing loads of raw materials to get rich, without any idea of what can be done with those materials to actually generate profit. Would I go to university again if I were 18/19, probably not. I would have been able to land my lucrative role in IT without degrees for sure, but the soft skills and confidence I’ve gained from the experience has been helpful - are those worth a total cost to me of £62k though? No.
If you want to be a doctor, nurse, lawyer or any other profession that requires a degree, definitely go to university. If not then get an apprenticeship, its a ridiculously good deal.
I paid mine off last year, with the interest rate increases I noticed the balance wouldn't reduce at the rate it had been. Was paying £120 a month but the total wasn't dropping below £10k. I'm glad I worked and saved over the years to pay it off in one go. I'll make the money back in saving payments and earning the interest instead of accruing it.
When I was at University (mid 2000s) I worked part time and paid all my tuition fees myself. It was about £1500 a term back then. It seemed like a monumental task at the time as I was only on minimum wage. The idea of doing that just a few years later is plain ridiculous. I feel bad for teenagers these days.
You must always pay your student loan as soon as possible. If you pay the minimum payment for the rest of your working life you'll pay a fortune (more than the principal loan). The interest is crazy! Also, who wants debt hanging over their heads..no one!. For your mental health, just get it paid. You never know what will happen in the future with government rules etc. There is no such thing as a free lunch. Governments give with hand and take the other...UK is in massive debt...they will want this back!
A sneaky thing they do is apply the highest rate of interest while you study, it’s only the year after you graduate that you can access the minimum interest rate (depending on your graduate role’s salary)
It's crazy that this is a system 18 year olds have to navigate all while studying for their exams, going through end-of-year break-ups, looking for a uni, looking for housing, and working on extraordinarily little information (who knows what the job market looks like 20 years later, nevermind what your own life goals end up being). It'd be hard for me as a full grown adult with a stable life and income, let alone as a child.
Wow, you have a weird system. My student loan is just like any other loan. I pay it back with interest and pay until it is all paid back, no forgiveness after a certain time, no earning tresholds for how much to pay. You just get a payment plan and pay it.
I'm a Plan 2 and postgraduate loan repayer. From experience the post-grad loan repayments are the kicker due to the lower earnings threshold from which you start repaying
Im at the end of a 4 year apprenticeship in industry. I have no student debt and am educated up to hnc level. I stand a good chance of earning 40k+ starting wage. My boyfriend went to uni, has debt and works as a delivery driver. Its not a bad job but his degree hasnt got him anywhere career wise.
I graduated with a STEM degree from a decent uni in 2015. Given I also worked part time throughout, in 2016 I had enough for a deposit on a small flat outside London. I focused on working and spent very little. After 5 years, I had paid off both student loan and mortgage and was on ~£70k/y. If I had not overpaid anything, I would have paid so much more interest. Today, 9 years later I can comfortably retire and live off dividends, though choose to work anyway. My main advice is to avoid renting at all costs. It is hard to get out of that trap. Buy a £10K house up north and work remotely or live in your car. Just long enough to take the first step on the housing ladder. Some people at my uni used to sleep in the library, but now work in Canary Wharf. Best of luck everyone!
Man, I wish I was in a position where I could have done that. I guess it will take be a few years longer to get to the same point, although house prices these days are insane.
@@michaildzigajev6848 I'm assuming remote work is not an option for you, as that would make finding a flat or even a small house a lot easier. I suggest googling IMD CDRC map and looking into commutable suburbs that are coloured in red, as these will offer the best value in £/sq metre.
I spent 3 years at university in scotland for a cyber security degree, along side the lock downs unable to get a chance for summer experiences with companies, working 2 jobs along side studying. I could of easily got my honours but it was too much especially when having a dependant aswell. My Degree is useless for being in a high demand industry nobody cares about the degree or the effort put in. I honestly hope less people go to university and just spend a year studying as you'll learn more and have more time to actually gain experience unless it's to be a lawyer or a doctor
I think pricing should change, essential courses should be free but require a strict selection criteria this would work for courses that lead to people going into teaching or the public services (there should be a contract stating you will work x amount of years in the industry such as NHS or teaching) then courses should be charged based on how full they are. For example philosophy, it’s a pointless degree and I don’t know a single person who got a job in the field so that should be charged far higher and the payments back should also be the same, have pointless courses pay back 10% of your salary over 25k instead of what it currently is. Next I think universities should be more elitist and reward intelligence, anybody who leaves college in the top 5% shouldnt have to pay a penny in tuition fees. All fees should be paid off in full before you can retire also.
A bigger disincentive to social mobility i cannot find the rich obviousely find the cash available easy and those in mega well paid careers easiy pay it. The course pricing is completely haywire no way does a history degree cost as much to supply as a medicine or engineering degree. The Unis all jumped on the maxcharge bandwagon.
If you study in the uk then its likely you will work in the uk so you will get taxed in every way, shape or form. So the government gets their money back like that. I think student loans in the UK are not a big deal compared to something like the US.
I don't think University is a bad investment (speaking with a £105k Student Debt), its the fees/"Tax" coupled with the really bad UK Pay relative to alot of the Western countries that make it a bad investment. I still always recommend Apprenticeships or Sponsored Uni, via work schemes over going yourself. I don't regret going to Uni, I regret not leaving the UK after graduating and finding a job elsewhere. (Or going into accounting like about 75% of my cohort.)
For longer degrees the interest whilst studying is massive. If you do a placement and a masters, the increase due to interest will make it so hard to pay off over the course of your career... Somethigb else to think about for placements, which I am not convinced are worth it but students often get pushed onto
The problem with the system as I see it is the point that you raised when you said you’ll never know whether it was worth repaying the loan until the loan repayment longstop date has passed. It turns repayment into a gamble, which is unlike any other loan. It’s the shifting interest rates that are the issue. That said, I’m all paid off now, so selfishly I wouldn’t be in favour of a graduate tax that I pay until the end of my days.
Couldn’t believe the timing of this; after 20 years, I actually just received a letter from the SLC to inform me I should finish repaying my (1999-2003) debt this year..
Im on plan 2. I was the first year to have the cost go from £3,000 to £9,000. Its been like 8 years and I still dont earn enough to start paying it back yet. Last time I checked it was at £77,000. I would imagine im gonna hit the cap maybe over the next few years with minimun wage rises. They can slap all the intrest on that bad boy if they want. I wont ever pay it back in full. I love my small company warehouse job even if they pay is rubbish. Work doesnt feel like work. Thats something money cant buy.
The travesty of education affects non university educated people as well. Rather than people working their way up in a company and proving themselves to become a manager, those roles are pretty much a given to people with a degree if they apply, and then they need training to even do their role. Seen it loads. One very reputable company i worked at had a manager role. 3 team leaders who had worked for the company for around 15 years went for the role. A woman with a degree went for an interview for it and she got the role. She was then trained for 2 years to do her job by the team leaders. All 3 left and it left a huge skill void, and the new manager took the years of expertise she'd learnt and left too. It was a net detriment to the company and it still hasn't recovered. This is the UK HQ for this company.
I get why it's labelled a loan, as you can ultimately pay it back, but it potentially puts some off going. It really should be seen of as a tax for those who's investment in university allows them to earn more, so, for many, it still makes economic sense. Bigger issue is the maintenance side, as parents are expected to contribute and I wonder how many normal earners can't afford to. If your household income is £50k, which wouldnt be huge in the SE, and youve got 3 kids, the eldest going to uni, youd be expected to give them over £3k a year. You can see how many couldn't afford that, meaning either the child doesn't go or needs to pay their own way through uni, potentially impacting their grades. If it's a loan/tax on the student, they should be able to borrow everything they need and dont penalise the less well off. 🏆🏆🏆🏆
I’m one of the lucky bunch who will likely pay off the amount I owed, plus interest, but still owe a fair amount after 30 years. I graduated in 2021 with £76k of debt, that number is now almost £90k. The best answer to this is to do a level 6 apprenticeship so a company pays your loan but you still end up with a degree
Even for high earners it may be better for them to not pay it off. As if you loose your job your payment to drops to 0. If you have children and you go part time again better not paying it off all at once.
My one piece of advice is do not be misled by statistics, even though going to uni will guarantee higher earnings. It also heavily depends on the course you are taking so for example an accounting or financial degree will have way more value than an art degree or something similar. It is very important to differentiate between this before making the commitment to go to university. Not to also mention that some of those figures could be very skewed towards top universities bringing up the average earnings in comparison to lower ranked.
Another factor is, if you die it is written off. It doesn't come out of your estate. Morbid, but if I die I would rather my dependents get that money rather than having made a massive overpayment to the government.
I just looked in my student loans account, I got like 64.000 to repay. And about 300 pounds a month is being added, at 7.8% inflation per month and growing. Haven't had a job in 2 years but even if I earned 5-9 k a month it wouldn't be enough to over turn how much interest is being added. Crazy.
I did a biomedical science degree. It wasnt even accredited despite bring from a top 20 uni meaning I had to do a masters to practice as a biomedical scientist. If it wasn't for my masters in physician associate studies, my first degree would have been a total waste of time.
Almost all of my repayments on the capital for the last few years have been wiped out with the interest rate rises. Im in the position of definitely paying it off but not quickly, so i just say goodbye to £200 every month that i cant use for a house or would get me a decent car.
My degree wasn’t worth it in terms of what I learned, it just allowed me to slap a well known Uni onto my CV which got me a good job. I’ve never been asked to prove my degree.
As you say the "loan" is a graduate tax. The issue is if you earn a modest amounts in your early career and then your income sky rockets in late thirties you will pay high amount each month - it could easily be the same as a mortgage. I modelled that an average career salary of 72k was the real tipping point. Whilst £72k may sound huge ask your parents what thier starting salary was . Chances are thier incone has gone up at least four fold in 30 years.
I am British and have studied in the UK and the Netherlands. The Dutch have much lower fees, but a system that encourages you to study for much longer so some end up with significant debt, some not so much. This has to be payed off in full. This stress of having to pay it all off by a deadline even with lower fees makes for, I think, a much worse system.
A higher education is sold to us like it is the only way, it is not, I am paying back £159/month to student loans for a job that I didnt need the degree for. the kicker is that the amount I owe is still growing, and I am only 25 so I will keep paying this back for a very long time (I went to Uni for 4 years) my mates that didnt go to uni get to keep a bigger chunk of their paychecks and have been working for 4 years longer and so make more money as they have more experience (not to mention lost income in those 4 years) this is noone's fault but my own. I made a badly infomed decision. But Just flagging that I think University is Not the way to go
however the amount you were earning was taxed too, so your take home increases by 7%. Easy numbers below for simplicity: Salary 10K - take home 8K after 20% tax. Boss gives you a 25% pay rise. Salary 12.5K - take home 10K. Thus take home has had a 25% boost. you are paying 25% more tax too.
Damien, the quality of your content is getting better and better. Nice work and thank you for helping lots of people make some sense of the complicated and senseless!
Spot on. Although the optimal thing for most people in the UK right now is not to get the loan in the first place imho, and simply to do an apprenticeship
Another key consideration is the uncertainty around future government policy. For example, the government could decide to reduce the age that outstanding debt is wiped and this could be a bitter pill to swallow for those who opted to pay down the debt by more than the statutory requirements.
If the banks designed a loan product which the average person will never pay off (because of the default design of the product) they’d be hauled before the regulators and fined.
The real travesty of this system is that it used to be worth getting niche degrees and you could really make a difference but now you are "taxed" highly for doing so and therefore take a generic degree that prioritises income over your preferred career.
And the debt being wiped off is why there is so much debt... they should lower the threshold to start paying it back to £25,500 then people will really think is going to uni worth it, DONT forget alot of people to who study never get a job in the area they studied ending up working in mcdonalds
I took £10k postgraduate loan and pay back £100pm (£1200pa). Technically, I will pay back the money I borrowed in 8 years BUT the interest rate is growing quicker than I pay, so I will actually never manage to pay what I own, even though in 30 years when they will sign my loan off I will pay them back £36000. So repayment in full ASAP is my only smart option. And no, quality of my studies was not worth it.
I graduated in 2012 with £28k in student loan on plan 1. I paid it off in full this month, May 24, without any overpayment just paying the 9% each month. What’s great is that this is now basically a £700 take home pay rise (even more in bonus months) which is pretty handy. University was definitely worth it for me.
'm on that same path, just 12-18 months left of repayments, graduated 2014. Playing with the idea of paying it off a little quicker now the interest rate has risen in the last year or two. Think I might overpay a little (a halfway house between the minimum, and paying it off in one go). In some ways it doesn't really matter for the last 4-5k, I guess. Interested in your thoughts.
@@georgec2894 I thought about paying it early but I got married, bought a house and took 5 holiday last year instead haha. Other than the wedding the house renovations was where most of the money went. When you only have 12 months left to pay they switch you to a direct debit rather than taking from salary to avoid over payment. This worked out well for me as it meant during sales commission months I was still only paying the 9% of my basic salary rather than of the full amount including commission (which was always very depressing). I think if you are able to and want to get the extra monthly income quicker you could pay it off early, but for me it made more sense to pay it off monthly as I had the extra income from commission anyway.
Those of us who have moved abroad are getting shafted even harder, as the re-payment thresholds are significantly (and arbitrarily) lower, as well as the exchange rates used to calculate their value in the local currency being basically made up. I moved from the UK to Spain this year and, at the same salary, will have to pay 3x what I was paying back in the UK!
Loved that Damo! Brilliant video and something I’ve wondered about for a long time. I was the first year to go to university with £9000 tuition up from a much more affordable £3000. I did it largely because my school pushed university and nearly all of my mates were going. I did an employable degree (Engineering) which is definitely more helpful than a lot of degrees but I now don’t use my degree specifically and work in a different career. Potentially for me, it wasn’t totally worth it as I didn’t follow my original plan and become a chartered engineer. However, I had such a fantastic time at university, where I played loads of sport, made fantastic friends, generally just had a brilliant time, I almost see it as worth every penny. I couldn’t buy that experience again for all the money in the world, so I feel (despite the debt / graduate tax) that it was well worth it. I’d do it all again in a heartbeat!
I've had this debate with 100s of people, who said 'why should I pay for someone else's education' when Corbyn was saying about abolishing university fees. I told him the fast majority of students don't completely pay off their student loan, and who pays for that shortfall? The government so you pay for the vast majority of university tuition anyway 🤷♂️
Letting the student debt compound over the years can nicely illustrate to anyone what could have happened if they did the opposite in terms of savings.:) Btw, dont think the video mentioned it but my experience from having a student loan and seeing it as this bit of extra tax, it made me incentivised to go for bigger salary sacrifice options at work which I suppose could be a nice side effect from all this.
I have a Plan 2 and a postgrad loan, so my graduate tax is a much higher 15+%. I probably wouldn't have gotten my 'in' without the postgrad, but on balance could have avoided it if i'd gone for that subject undergrad. Hindsight works like that though, and early life decisions unavoidably impact your future. Can't kick yourself for decisions a younger, less informed you made based on what was available at the time. The real kicker is the interest rate, and only institutional investors are laughing as the universities clearly don't seem to benefit from this fee structure, and neither do the working people.
Very useful video, not just for your usual great insight, but I used the loan calculator and worked out I’ll have mine paid off in around 5-6 years without overpaying and had no idea!
Funny I replied to someone commenting on BOE rates not going down the other day saying if it did they'd overpay their debt away. Too many people get a education but don't seem to know the basics of money or spend the time to understand what they get into.
No point getting a degree now unless you’re 100% sure there’s a high paying job at the end of it… and you’re going to stick with that career choice.. e.g. doctor, surgeon, lawyer, etc. Even then, you need to see if there’s alternative ways to get into your chosen field that won’t cost you £60k+ interest. i.e. professional qualifications and/or apprenticeships
Don't think I've ever had a year where my payments were higher then the interest added. Well, 10 years down 15 to go until it's written off and I'm debt free from it.
Same here, just over 10 years down and I think this year I may have paid a little more than the interest. Not sure the degree was worth it if I'm still sat in a job paying under 30k tbh...
I was shocked when I looked at mine earlier this year, 6.5% interest and I still have £18,000 left. I'm on a good salary now, but the interest rate is so high that I'm barely paying it off.
University was never ‘free’ Damien, the postman, barman, lorry driver etc, paid for others to go and earn more than they would ever earn. As you rightly say, 87% have the debt wiped out so it doesn’t matter what you interest rate is, or how big the debt gets, the monthly payments remain unchanged
It would be slightly palatable if the government didn't take your tax and send it abroad in the guise of (select as appropriate) foreign-aid/military-assistance/development-programs which results in foreign thieving governments buying themselves nice houses away from the war/misery/poverty.
Uni isn’t worth loans. Grants sure, loans never. At least in the USA, my loans have caused me so much hardship that it put my whole life on pause for what feels like a decade.
I was in the first year that had to pay 9k a year starting 2012 on a 4 year masters course. Recently took an inside IR35 contract role on and am paid well weekly. Automatically having £128 a week student loan taken out of my pay, hate that it takes so much now and still likely will never pay it off anyway! Still find it worth it overall as I wouldn’t have the job I have now as quick as I have and see it as a bit more tax. Not to mention them 4 years of life were easy AF compared to now.
I paid mine off in May 2023. I had about 5k left and saw the interest rates were climbing rapidly from 1.5% to the 7.5% now and knew that the 5k would eventually get paid off anyway so I just overpaid it then instead of paying more overall. Happy with my decision and was able to park the extra income into my pension.
I was incredibly lucky to be sponsored through uni by a private company. It worked both ways as I became more knowledgeable in my subject etc and made more money for my employer. 15 years later I use maybe 5% of the university teaching. The uk education is not for the working classes.
I can't help feeling that we're not talking about the real problem, a large fraction of the people that go to university probably shouldn't have. I graduated from a highly technical degree in a class of about 120. Only about 10% of my classmates went on to use their degree in their career. The degree wasn't a total waste but the skills could probably have been learnt more quickly and for less while working.
Here is a link to a good calculator.
studentfinancecalculator.co.uk/
I have to say using the calculator you shared helped a lot as it has lots of ways of testing different variables. It's a lot better than the other link (IMO).
Great video - This comes at a very timely moment as partner is just graduating with £30k of student loan debt.
And to your point the should you / shouldn't you debate is often so difficult.
Notably on a £35k graduate role then it makes no sense to repay (if you never get a promotion and just inflationary payrises).
But if you then reenter the salary with say a payrise up to £40k then opting into paying off the loan makes sense for us.
That all being said as the Student Loan has a variable interest rate - it is possible that it swings back in the favour of not repaying but once you've committed to putting in additional payments you so kind of need to stick with that plan... that would be the big caveat, you really have to be sure that overpaying is better for you long term.
@@DamienTalksMoney hi, thanks but this doesn’t answer the question
It's kind of crazy that we let people at the age of 16/17/18 make financial decisions that are now going to impact them for 40 YEARS!!! It's actually wild!
I personally view it as a tax, I don't think I am ever going to actively overpay.
Just wanted to add the graphics looked really good in this!
Especially as the part of the brain that actually deals with personality and decision-making isn't even fully formed until about 25 years of age.
@terranaxiomuk it is 25 years on average, but it can be earlier or later
They won't let you take a mortgage as a student but will allow you to take on a massively scammy student loan
It’s kind of crazy that we let people who are 60/70/80 make decisions for a society that they don’t participate in in the same way they did when they were younger and will soon be leaving.
But you think you're responsible enough to drink when you get to college!?!?😂
I earn £80k and my wife earns £50k. Once I had paid off our cars and other debts, and saved a few grand, I paid off both our Student Loans, with a remainder of £23k between them. That feels extreme, but the extra £550 a month in our combined monthly pay cheques felt extremely worth it. We would have paid the £23k in 3.5 years anyway, but todays interest rate at 7% would have meant paying £550 for a whole further year, costing over £6.5k in interest alone.
Interesting. Seeing that you paid off the student loan and increased the amount in your pay check. How did this workout in the amount of tax on your salary. Was the saving on the student loan worth it after the additional tax that you would of paid, especially if you were a higher rate tax payer. Thanks
@@mrumbug student loans are calculated gross but deducted net, so it makes no difference
Uni wasn't remotely worth it. Nothing I learnt is applied in my job, the only thing it got me was my foot in the door for a job (no one has even asked to prove I have a degree). I'd always recommend apprenticeships now
may i ask what career you pursued?
I'm curious too. What Subject did you study?
Same. I haven't met an employer that cared enough to check. It's the new debt employers seek out because an indebted employee is a trouble-free employee.
Same. When I'm recruiting I even kinda look down on them.
Uni was a bad investment at 3k per year. Choosing to go at 10k is bad judgement.
@@daspeed198 studied risk finance investment management, got a first and now work in banking.
UK student loans need rebranding, its basically a tax on income but branded as scary debt.
actually our corrupt goverment who created student loans want you to live a miserable life
its a big tax though, 7% is very significant considering most young men have to deal with rising insurance costs and rising rents, barely able to scrape by. Yes the 7% is paid above a 25k threshold but keep in mind that full time minimum wage is close to 24.5k, and if you do some overtimes you easily break past the 25k barrier
@@Maksimszzyes 7% is alot. But after threshold of your example £25k a year is monthly pay of about £1,700 a month. So a overtime of £100, £7 will be student loan repayment. In the grand scheme of things £7 in student loans repayments is fairly small of a monthly income of £1700-1800
When somebody tried to barnd it a "Graduate Tax" they were told to shut up. From what I can see from the younger people at work, that's exactly what it is. Like most other systems in this country nowadays, it is broken and each individual must think or themselves. Groupthink is the way to fail nowadays. Plus Martin Lewis is crap.
@@mightymike2192 Martin Lewis knows his audience though. I don't find him particularly useful but my 60 year old mother does, just for keeping informed on the basics.
I decided to go for a change of career in 2007, as a mature student (40) . I went for it; I graduated with a first class honours; I worked in my chosen field for five years. I am now an HGV driver , earning over £64 k pa. University ? One of the biggest mistakes I’ve made 🤗
Mines is similar, I went to uni, got a degree in youth development, i worked as a youth worker for 15 years earning £21k and ended up losing my job to because of council cuts, became a long haul driver and earn £30-40k. Why did I ever get a degree?
@@WhiteManInAVanthe issues isn't with degrees it's with the degree you chose to study of you had gone and studied computer science or financial economics your story would have been different so just saying degrees in general aren't worth it lacks nuance it's about the the degree the university and the salaries that combination of factors could return
@@nguene i agree, educating our young people is not as important and transporting goods around the country and therefore doesn't pay as well. Also transporting goods doesn't require as much learning as educating our kids so driving doesn't need a degree. I 100% agree with you.
Also given that computer science is relatively new, compared to education, its not surprising that there are a larger proportion that earn better atm. However, what happens when the market is saturated? Also lets not forget the number of people losing thier jobs in the industry already to AI. But i guess at that point you'll just name another degree that people can waste a whole lot of time and money on to re-train...
@@nguene I studied Economics and Finance at a red brick university. Still not a good investment.
@@WhiteManInAVan Not everyone can drive, but most can.
Everyone can study "computer science", but most will find it impossible to understand.
The jobs in "science" are changing, I know quite a few "scientists" who now drive for a living.
I also have a relative who drives HGV/LGV, he threatened his daughter that she better not even think about following that career.
So... want a degree?
Maths, Physics, Law and Medicine (including opticians and dentists).
Anything else, you must ask yourself if you can get by without a degree.
My marginal tax rate is now 9% larger than the rich guy sitting next to me whose parents paid their student loans.
Yep inequality built into the system in that sense
If the state paid for uni the rich guy's parents would have given him the money instead
This university system is not why that rich guy is richer than you
@@huguesjouffrai9618The point is that they are paying more than the person with more money, just because that person has more money. Which is, like as said, inequality built into the system.
@@Samuelbce this is no different that the fact that a guy who inherits a flat doesn't have to pay rent.
That's basically saying "this thing is not free so a rich Guy Can get his parents to buy it for him" and that's true of everything that's paid for in life.
But this system is actually not too Bad considering most rich people go to uni (it makes sense to make them pay) and most people who go to uni will end up rich (si it makes sense that they pay for their education once they get rich).
The alternatives to this system are:
- free uni: everybody pays for the education which is a huge wealth transfer towards the richest in society, and which usually creates a big temptation for governments to cut uni budgets
- everybody pays their loans entirely (barrier to entry for the poorest and if you don't make tons of money of the bat you have a huge Financial burden when you're young)
- people pay based on their parents income (in the long term it's similar to the current system with the richest paying most except it's an income tax proportional to the number of kids)
How is it a huge wealth transfer to the richest? If it was free it would be paid for by taxes and the tax burden is highest on the richest in society so the wealth would actually be transferred down to those who were poorer but got a free education
Damian: An interesting subject would be the different ways parents can support their children onto the housing ladder, without compromising their own financial security in retirement. ATB
50k salary and i'm still not keeping up with the interest yearly even though I took a standard 3 year course, not even masters. That's nuts
Have you made any over payments during this time to try and keep and even over exceed paying down the interest?
@@LucyI-lll No I just pay the minimum. There's no point making over payments as you will never get to a point where you pay the full thing off anyway
You can legally avoid paying your student loan on earnings you contribute into your workplace pension under salary sacrifice, which is great if you never plan to pay it off
Is there a good place I can learn more about this?
@@thomasroberts1192 Go look on the calculator linked in this video.
Not if you want to earn very much. The point of going to uni should surely be to earn a lot more than £30k.
@@ianwall9152 yeah you cant live under the minimum payment threshold forever
This works on salaries into the 100k odd range equally as well
Fantastic video, as always!
You legend Emma ❤️
Congrats on city winning the league, hope you're safe this time round, love you loads pal
You legend. Thank you for this! I stayed in doors this time 🤣
And more importantly, Arsenal didn't win it 😅😅
Manchester is blue! 💙
Don't we all love Damo? I hope no one's injured this time.
Uni is only worth it if you take a STEM or specialised degree that leads directly into a high paid career. I now work in project management and anyone can do a pm course for a few hundred. I have a life time of debt. Maybe it did get me better opportunities but i didn't get a career. Had to jump from job to job for more money. So to anyone young watching this, please think hard about it, getting a degree does NOT guarantee a high paid job. It used to in the 90s or early 2000s but that changed in the last 15 years.
At the beginning of your discussion, you posed the question, "What value should we place on education?" Undoubtedly, education deserves immense respect and value-it's essential for our national progress and critical thinking. However, the more pertinent question might have been, "How much value should we place on a university degree?" It's important to differentiate this from the broader concept of education, which is fundamentally invaluable. We should never underestimate the importance of education; a society lacking in education is at risk.
Id disagree a little on the 'society lacking in education is at risk' line. We teach people to think at school. Thats the dangerous thing. The way that we teach children to conform and to not take risks is risky. The modern schooling system was born in Tsarist Russia for docile factory workers. University tries to break conformist thinking, but only does it with conformist methods, eg many uni students find Marx and think how wonderful he is as example.
The historic English thinking was done by the few highly regarded positions (church and state) that you could seek to be a part of through competence but the masses don't typically use their critical discernment. most people are happy to comply, as school/church/state has taught them. Recent COVID lockdowns were a perfect watershed for if you comply or not.
Schools are to learn to read and write and be a part of society (tax forms, interpersonal relations, sports and cooking). the specific knowledge should be sought out by the potential students themselves directly, especially with the internet. Society functioned quite well in the dark ages.
I've never needed to identify an oxbow lake, nor to use iambic pentameter in general life. I have needed to google how to sew a button or wire a plug. I have needed to learn CPR on pregnant women but had to seek this elsewhere from standard education systems.
What value does a Dance degree bring to society?
Strippers with a degree are not more valuable than strippers with a degree. Both provide a valuable, essential service to society
Not even close the be worth while. Currently a tax for the rest of your life. I barrowed around 40k and currently owe 78k, i earn £60k per and still not even close to paying the interest down. By the time the debt is wiped i would have paid my 40k 3 times over absolutely scandalous.
What are the intrest rates and can you pay it off early?
@@SgtAndrewM there is almost no advantage to paying it off early
@@wentoneisendon6502 what about less intrest repayments? Duhh
I'm in a similar boat with a lower amount to repay. I had a scholarship (courses paid for). But I still had to take out a maintenance loan to survive. I've been paying it back since 2017. The courses I studied for allow me to make a salary of about 40k. So far I've paid about 30% of what I borrowed back in tax. I would be better off applying for a bank loan to pay off the remainder as the interest rates are much lower than 8 or 9%
This was a great video that I think a lot of people would find helpful, looking at a student loan as a higher education tax is, I think, a much better way of visualising the true cost of the loan.
That’s pretty nice you have built in forgiveness date. That makes everything pretty clear.
Thank you for making this and creating a conversation! As a high earner i am devistated by the impact of this student loan - i pay £4k per year post tax and it doesnt even pay off my interest. I know i should pay it down but who wants to use their hard earned savings to do this when you cant predict the future? University was the biggest mistake i ever made and i really think something needs to be done as it just makes you not want to work! I already pay enough taxes, so why can't i just pay my loan off and get on with my life. There's honestly not much point in working, when it takes away the spare amount of money that you'd have to enjoy. It rewards low earners and punishes middle to high earners heavily - i don't get it, isn't that the point of University? To get a well paid job.
I went to uni which allowed me to pursue a career in Geotechnical Engineering. I get involved in the best projects around the world. I work with gifted people. I earn over £100k. Without a degree it would never have had such a great life. Its really important to know how to use your degree to best advantage. If your degree does not directly lead you to a career job you should question its value.
Overpay your postgrad, leave your undergrad.
Ultimately, advise people to not go to university. Opt for apprenticeships and specialist qualifications for the field you want to go into. These loans significantly affect your ability to buy a house …. Which is already near impossible.
It doesn't really... its not the degree that harms it... its the work you do post the degree.. With a joint income of 60k a year (assuming both partners earn 30k), buying a decent home is very possible.
@@madma11 No, because although you may on paper earn 60k as a couple, your fixed expenses are subtracted from your permitted mortgage amount. So what you think you’re able to afford, isn’t actually what you’re able to afford because of your student loan repayments.
@@versaceviper9798 Ridiculous. I earn 60k and i have a student loan and i literally bought a brand new home. So I know this is possible...
@@versaceviper9798if you are earning £60k joint then it's £70 per month for the loan (under plan 5). Normally doesn't wreck a mortgage offer, considering the options available.
@@tgillson3093 yeh but ow much are they paid? I reckon you could earn similar on an apprenticeship.
One of your best prezzos ever Damien! Superb logical construction, clear signposting, pretty unbiased presentation of choices and options.
I agree with what others have said. It could do with rebranding as a ‘graduate tax’ over the years after uni, rather than a loan. Especially since such a high percentage of people will never pay their loan off in full. I can say with certainty that I will never even get close to paying my student loan off by 2050 (unless I win the lottery!). Great video as always Damo.
Great video Damien, for me one of the most important you have made to date. As someone who went to University and left circa 2017 I've watched my balance increase until I have hit £60k in debt. Despite moving to a good job a couple of years ago and more than doubling my income, I have never been asked to prove anything relating to my degree and I've held 3 jobs in the financial services industry.
Currently I pay around £200 pm plus more when it comes to bonus time, this year I lost £2k out my bonus. I've considered chucking my entire bonus towards reducing the debt but as you point out my monthly payments would not change until the balance is paid in full and I could better utilise the money (just bought a house).
I wish someone had highlighted the downside of university to me, looking back I wish I had joined an apprentice scheme instead which would have allowed my to start earning some 5 years earlier, taught me financial independence at an earlier age and develop good habits. Not to mention I would be thousands better off that went towards paying SLC that could have been invested.
When it comes to it I will make sure my kids are aware.
Paying off my student loan early was one of the best decisions I’ve made, as it improved my credit score dramatically enabling me to obtain a mortgage, which can be difficult when you’re self employed. It’s a catch 22 problem, you need to pay off loans responsibly to get a high credit score but no one will lend you any money until you have a high enough credit score.
How? They said it doesn’t affect your mortgage!
@@Drian12_1-pn3oi unlike other unsecured loans not being able to pay it back doesn’t adversely affect your credit record, in fact I don’t think it appears on your record at all, as it’s taken from your income at source if your earnings meet the threshold to pay it. Paying it off does.
It doesn’t affect your credit score. It is not classed as debt in that sense. What it does affect is the affordability criteria for a mortgage though, I.e. a student loan will reduce your take home pay which will reduce the amount of money you can borrow for a mortgage
I'm 32 and recently paid off my loan in full. But most of my peers don't even think about their student loans. But I'm in that very small group of people locked in to 3k a year costs and with a decent salary. I never overpaid it. Just came to a natural end and did the last payment myself. To avoid nuisance overpayment.
I'm on that same path, just 12-18 months left of repayments at 31. Playing with the idea of paying it off a little quicker now the interest rate has risen in the last year or two. Think I might overpay a little (a halfway house between the minimum, and paying it off in one go). In some ways it doesn't really matter for the last 4-5k, I guess. Interested in your thoughts.
If you don't mind me asking, I'm in my second year, what kind of salary progression have you seen to have naturally paid this off.
@@jakestewart8784 for me: Started at around £46k base (plus modest bonus) but only really increased a little ahead of inflation at best since then.
@@jakestewart8784 I'd not worry about it. I'm quite lucky with where I am in my career and I chose the right career at the right time. But if you do want to check, and since everyone's position is different. I'd suggest looking at salary calculators online and looking at the student loan calculator to get an idea.
@@georgec2894 yeah, the interest is higher but the amount is small. Just make sure you give them a call in your last six months or so and arrange paying the last bit yourself.
Managed to pay mine off by my 30th Birthday. There was something insanely satisfying about seeing it no longer appear on my payslips. My advice for anyone now, is more to make sure they REALLY want/need to go to University given how expensive it will be. I'm hoping by the time my kids are at Uni age, that the system will have been reformed to make it make sense again.
I did the same. I got very lucky in a career, that was completely unrelated to my Uni course, and ended up paying it off by my 30th too. The satisfaction in seeing that ~£400 in my pocket instead of theirs was superb.
I was raised on the Offspringand did just that... just got a job. We all take different paths but this is still really practical information Damien, well explained as usual!
It’s always an interesting topic. I’ve been to uni twice, BSc then later an MBA and used SLC both times. After finishing my MBA I started paying down the student loans @ £2k /m until they were gone - which took years. But now I’m free and that feels good.
The loans helped me get the degrees as my family aren’t wealthy, but it’s what you DO with the degree that earns the money to pay them off. If I’m ever asked to advise a youngster thinking of going to uni, the whole chat would focus on goals, plans and aspirations. How they pay for it is nearly irrelevant when compared to their plan to leverage or derive value from the investment - I see it like going out and purchasing loads of raw materials to get rich, without any idea of what can be done with those materials to actually generate profit.
Would I go to university again if I were 18/19, probably not.
I would have been able to land my lucrative role in IT without degrees for sure, but the soft skills and confidence I’ve gained from the experience has been helpful - are those worth a total cost to me of £62k though? No.
If you want to be a doctor, nurse, lawyer or any other profession that requires a degree, definitely go to university.
If not then get an apprenticeship, its a ridiculously good deal.
7.80% is ridiculous!
Damo's back. Luckily my short stint in Uni is from a time before fees...
I paid mine off last year, with the interest rate increases I noticed the balance wouldn't reduce at the rate it had been. Was paying £120 a month but the total wasn't dropping below £10k. I'm glad I worked and saved over the years to pay it off in one go. I'll make the money back in saving payments and earning the interest instead of accruing it.
When I was at University (mid 2000s) I worked part time and paid all my tuition fees myself. It was about £1500 a term back then. It seemed like a monumental task at the time as I was only on minimum wage. The idea of doing that just a few years later is plain ridiculous. I feel bad for teenagers these days.
You must always pay your student loan as soon as possible. If you pay the minimum payment for the rest of your working life you'll pay a fortune (more than the principal loan). The interest is crazy!
Also, who wants debt hanging over their heads..no one!. For your mental health, just get it paid.
You never know what will happen in the future with government rules etc. There is no such thing as a free lunch. Governments give with hand and take the other...UK is in massive debt...they will want this back!
It's get wiped off anyway so who cares , it's not really debt .
A sneaky thing they do is apply the highest rate of interest while you study, it’s only the year after you graduate that you can access the minimum interest rate (depending on your graduate role’s salary)
It's crazy that this is a system 18 year olds have to navigate all while studying for their exams, going through end-of-year break-ups, looking for a uni, looking for housing, and working on extraordinarily little information (who knows what the job market looks like 20 years later, nevermind what your own life goals end up being). It'd be hard for me as a full grown adult with a stable life and income, let alone as a child.
Wow, you have a weird system. My student loan is just like any other loan. I pay it back with interest and pay until it is all paid back, no forgiveness after a certain time, no earning tresholds for how much to pay. You just get a payment plan and pay it.
I'm a Plan 2 and postgraduate loan repayer. From experience the post-grad loan repayments are the kicker due to the lower earnings threshold from which you start repaying
So glad I paid my master's off in full
Yeah i am a masters student and I know that I will have to overpay my postgrad right away.
Im at the end of a 4 year apprenticeship in industry. I have no student debt and am educated up to hnc level. I stand a good chance of earning 40k+ starting wage. My boyfriend went to uni, has debt and works as a delivery driver. Its not a bad job but his degree hasnt got him anywhere career wise.
Congratulations to you making it without the uni scam, I think apprenticeships are the way forward cause employers want experience not just theory
My education has been worthless to me. I got a higher paying job that was not only outside of my feild of study, but also required no degree
I graduated with a STEM degree from a decent uni in 2015. Given I also worked part time throughout, in 2016 I had enough for a deposit on a small flat outside London. I focused on working and spent very little. After 5 years, I had paid off both student loan and mortgage and was on ~£70k/y. If I had not overpaid anything, I would have paid so much more interest. Today, 9 years later I can comfortably retire and live off dividends, though choose to work anyway.
My main advice is to avoid renting at all costs. It is hard to get out of that trap. Buy a £10K house up north and work remotely or live in your car. Just long enough to take the first step on the housing ladder. Some people at my uni used to sleep in the library, but now work in Canary Wharf.
Best of luck everyone!
Wow! This is incredible! Well done!
It's refreshing to read stuff like this instead of the absurdly patronising advice telling people to become renters. Well done.
Man, I wish I was in a position where I could have done that. I guess it will take be a few years longer to get to the same point, although house prices these days are insane.
@@michaildzigajev6848 I'm assuming remote work is not an option for you, as that would make finding a flat or even a small house a lot easier. I suggest googling IMD CDRC map and looking into commutable suburbs that are coloured in red, as these will offer the best value in £/sq metre.
Congrats. Is there a £10k house up North or do you mean £100k Apartment?
Damien Talks Money, This made me laugh so much! Thanks for sharing!
Never understood the panic to pay it back. I've paid like £45 out of my wages a month for the past 14 years lol.
When you’re losing hundreds a month from your pay you may feel different.
I spent 3 years at university in scotland for a cyber security degree, along side the lock downs unable to get a chance for summer experiences with companies, working 2 jobs along side studying. I could of easily got my honours but it was too much especially when having a dependant aswell. My Degree is useless for being in a high demand industry nobody cares about the degree or the effort put in.
I honestly hope less people go to university and just spend a year studying as you'll learn more and have more time to actually gain experience unless it's to be a lawyer or a doctor
I think pricing should change, essential courses should be free but require a strict selection criteria this would work for courses that lead to people going into teaching or the public services (there should be a contract stating you will work x amount of years in the industry such as NHS or teaching) then courses should be charged based on how full they are. For example philosophy, it’s a pointless degree and I don’t know a single person who got a job in the field so that should be charged far higher and the payments back should also be the same, have pointless courses pay back 10% of your salary over 25k instead of what it currently is. Next I think universities should be more elitist and reward intelligence, anybody who leaves college in the top 5% shouldnt have to pay a penny in tuition fees. All fees should be paid off in full before you can retire also.
A bigger disincentive to social mobility i cannot find the rich obviousely find the cash available easy and those in mega well paid careers easiy pay it. The course pricing is completely haywire no way does a history degree cost as much to supply as a medicine or engineering degree.
The Unis all jumped on the maxcharge bandwagon.
If you study in the uk then its likely you will work in the uk so you will get taxed in every way, shape or form. So the government gets their money back like that. I think student loans in the UK are not a big deal compared to something like the US.
I don't think University is a bad investment (speaking with a £105k Student Debt), its the fees/"Tax" coupled with the really bad UK Pay relative to alot of the Western countries that make it a bad investment.
I still always recommend Apprenticeships or Sponsored Uni, via work schemes over going yourself.
I don't regret going to Uni, I regret not leaving the UK after graduating and finding a job elsewhere. (Or going into accounting like about 75% of my cohort.)
For longer degrees the interest whilst studying is massive. If you do a placement and a masters, the increase due to interest will make it so hard to pay off over the course of your career... Somethigb else to think about for placements, which I am not convinced are worth it but students often get pushed onto
The problem with the system as I see it is the point that you raised when you said you’ll never know whether it was worth repaying the loan until the loan repayment longstop date has passed. It turns repayment into a gamble, which is unlike any other loan. It’s the shifting interest rates that are the issue. That said, I’m all paid off now, so selfishly I wouldn’t be in favour of a graduate tax that I pay until the end of my days.
Couldn’t believe the timing of this; after 20 years, I actually just received a letter from the SLC to inform me I should finish repaying my (1999-2003) debt this year..
Im on plan 2. I was the first year to have the cost go from £3,000 to £9,000. Its been like 8 years and I still dont earn enough to start paying it back yet. Last time I checked it was at £77,000. I would imagine im gonna hit the cap maybe over the next few years with minimun wage rises. They can slap all the intrest on that bad boy if they want. I wont ever pay it back in full. I love my small company warehouse job even if they pay is rubbish. Work doesnt feel like work. Thats something money cant buy.
The travesty of education affects non university educated people as well.
Rather than people working their way up in a company and proving themselves to become a manager, those roles are pretty much a given to people with a degree if they apply, and then they need training to even do their role. Seen it loads.
One very reputable company i worked at had a manager role. 3 team leaders who had worked for the company for around 15 years went for the role. A woman with a degree went for an interview for it and she got the role. She was then trained for 2 years to do her job by the team leaders.
All 3 left and it left a huge skill void, and the new manager took the years of expertise she'd learnt and left too. It was a net detriment to the company and it still hasn't recovered.
This is the UK HQ for this company.
I get why it's labelled a loan, as you can ultimately pay it back, but it potentially puts some off going. It really should be seen of as a tax for those who's investment in university allows them to earn more, so, for many, it still makes economic sense.
Bigger issue is the maintenance side, as parents are expected to contribute and I wonder how many normal earners can't afford to. If your household income is £50k, which wouldnt be huge in the SE, and youve got 3 kids, the eldest going to uni, youd be expected to give them over £3k a year. You can see how many couldn't afford that, meaning either the child doesn't go or needs to pay their own way through uni, potentially impacting their grades. If it's a loan/tax on the student, they should be able to borrow everything they need and dont penalise the less well off.
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I’m one of the lucky bunch who will likely pay off the amount I owed, plus interest, but still owe a fair amount after 30 years. I graduated in 2021 with £76k of debt, that number is now almost £90k. The best answer to this is to do a level 6 apprenticeship so a company pays your loan but you still end up with a degree
Even for high earners it may be better for them to not pay it off. As if you loose your job your payment to drops to 0.
If you have children and you go part time again better not paying it off all at once.
Production on this video is crazy - subscriber gained
My one piece of advice is do not be misled by statistics, even though going to uni will guarantee higher earnings. It also heavily depends on the course you are taking so for example an accounting or financial degree will have way more value than an art degree or something similar. It is very important to differentiate between this before making the commitment to go to university.
Not to also mention that some of those figures could be very skewed towards top universities bringing up the average earnings in comparison to lower ranked.
Another factor is, if you die it is written off. It doesn't come out of your estate. Morbid, but if I die I would rather my dependents get that money rather than having made a massive overpayment to the government.
You don't get a choice if you earn over the threshold... Its not a loan.. it's a education tax.
I just looked in my student loans account, I got like 64.000 to repay. And about 300 pounds a month is being added, at 7.8% inflation per month and growing. Haven't had a job in 2 years but even if I earned 5-9 k a month it wouldn't be enough to over turn how much interest is being added. Crazy.
I did a biomedical science degree. It wasnt even accredited despite bring from a top 20 uni meaning I had to do a masters to practice as a biomedical scientist. If it wasn't for my masters in physician associate studies, my first degree would have been a total waste of time.
Almost all of my repayments on the capital for the last few years have been wiped out with the interest rate rises. Im in the position of definitely paying it off but not quickly, so i just say goodbye to £200 every month that i cant use for a house or would get me a decent car.
My degree wasn’t worth it in terms of what I learned, it just allowed me to slap a well known Uni onto my CV which got me a good job. I’ve never been asked to prove my degree.
As you say the "loan" is a graduate tax. The issue is if you earn a modest amounts in your early career and then your income sky rockets in late thirties you will pay high amount each month - it could easily be the same as a mortgage. I modelled that an average career salary of 72k was the real tipping point. Whilst £72k may sound huge ask your parents what thier starting salary was . Chances are thier incone has gone up at least four fold in 30 years.
I am British and have studied in the UK and the Netherlands.
The Dutch have much lower fees, but a system that encourages you to study for much longer so some end up with significant debt, some not so much. This has to be payed off in full.
This stress of having to pay it all off by a deadline even with lower fees makes for, I think, a much worse system.
Not entirely correct. The Dutch student loan pay back ruless are based on income. If there is something left on the balance you can default on it.
A higher education is sold to us like it is the only way, it is not, I am paying back £159/month to student loans for a job that I didnt need the degree for. the kicker is that the amount I owe is still growing, and I am only 25 so I will keep paying this back for a very long time (I went to Uni for 4 years)
my mates that didnt go to uni get to keep a bigger chunk of their paychecks and have been working for 4 years longer and so make more money as they have more experience (not to mention lost income in those 4 years)
this is noone's fault but my own. I made a badly infomed decision. But Just flagging that I think University is Not the way to go
Damien - what you fail to mention is that whatever a person earns, it is taxed. So a 7% pay rise becomes 5.6% after 20% tax.
however the amount you were earning was taxed too, so your take home increases by 7%.
Easy numbers below for simplicity: Salary 10K - take home 8K after 20% tax.
Boss gives you a 25% pay rise. Salary 12.5K - take home 10K.
Thus take home has had a 25% boost. you are paying 25% more tax too.
It’s funny but the only young people near me who have managed to get onto the property ladder are lads with white vans
Disappointed there wasn't a mighty boosh clip from them running away from the student loans company. Missed opportunity
Damien, the quality of your content is getting better and better. Nice work and thank you for helping lots of people make some sense of the complicated and senseless!
Crazy how Scottish students don’t pay any Tuition Fees studying higher education in Scotland
Spot on. Although the optimal thing for most people in the UK right now is not to get the loan in the first place imho, and simply to do an apprenticeship
Another key consideration is the uncertainty around future government policy. For example, the government could decide to reduce the age that outstanding debt is wiped and this could be a bitter pill to swallow for those who opted to pay down the debt by more than the statutory requirements.
If the banks designed a loan product which the average person will never pay off (because of the default design of the product) they’d be hauled before the regulators and fined.
yeah but the government can do it, you wanna know why? because of National debt, just keep it piling and piling
The real travesty of this system is that it used to be worth getting niche degrees and you could really make a difference but now you are "taxed" highly for doing so and therefore take a generic degree that prioritises income over your preferred career.
And the debt being wiped off is why there is so much debt... they should lower the threshold to start paying it back to £25,500 then people will really think is going to uni worth it, DONT forget alot of people to who study never get a job in the area they studied ending up working in mcdonalds
I took £10k postgraduate loan and pay back £100pm (£1200pa). Technically, I will pay back the money I borrowed in 8 years BUT the interest rate is growing quicker than I pay, so I will actually never manage to pay what I own, even though in 30 years when they will sign my loan off I will pay them back £36000. So repayment in full ASAP is my only smart option. And no, quality of my studies was not worth it.
I graduated in 2012 with £28k in student loan on plan 1. I paid it off in full this month, May 24, without any overpayment just paying the 9% each month. What’s great is that this is now basically a £700 take home pay rise (even more in bonus months) which is pretty handy. University was definitely worth it for me.
'm on that same path, just 12-18 months left of repayments, graduated 2014. Playing with the idea of paying it off a little quicker now the interest rate has risen in the last year or two. Think I might overpay a little (a halfway house between the minimum, and paying it off in one go). In some ways it doesn't really matter for the last 4-5k, I guess. Interested in your thoughts.
@@georgec2894 I thought about paying it early but I got married, bought a house and took 5 holiday last year instead haha. Other than the wedding the house renovations was where most of the money went. When you only have 12 months left to pay they switch you to a direct debit rather than taking from salary to avoid over payment. This worked out well for me as it meant during sales commission months I was still only paying the 9% of my basic salary rather than of the full amount including commission (which was always very depressing). I think if you are able to and want to get the extra monthly income quicker you could pay it off early, but for me it made more sense to pay it off monthly as I had the extra income from commission anyway.
Those of us who have moved abroad are getting shafted even harder, as the re-payment thresholds are significantly (and arbitrarily) lower, as well as the exchange rates used to calculate their value in the local currency being basically made up. I moved from the UK to Spain this year and, at the same salary, will have to pay 3x what I was paying back in the UK!
Loved that Damo! Brilliant video and something I’ve wondered about for a long time.
I was the first year to go to university with £9000 tuition up from a much more affordable £3000. I did it largely because my school pushed university and nearly all of my mates were going. I did an employable degree (Engineering) which is definitely more helpful than a lot of degrees but I now don’t use my degree specifically and work in a different career. Potentially for me, it wasn’t totally worth it as I didn’t follow my original plan and become a chartered engineer. However, I had such a fantastic time at university, where I played loads of sport, made fantastic friends, generally just had a brilliant time, I almost see it as worth every penny. I couldn’t buy that experience again for all the money in the world, so I feel (despite the debt / graduate tax) that it was well worth it. I’d do it all again in a heartbeat!
I've had this debate with 100s of people, who said 'why should I pay for someone else's education' when Corbyn was saying about abolishing university fees. I told him the fast majority of students don't completely pay off their student loan, and who pays for that shortfall? The government so you pay for the vast majority of university tuition anyway 🤷♂️
Letting the student debt compound over the years can nicely illustrate to anyone what could have happened if they did the opposite in terms of savings.:) Btw, dont think the video mentioned it but my experience from having a student loan and seeing it as this bit of extra tax, it made me incentivised to go for bigger salary sacrifice options at work which I suppose could be a nice side effect from all this.
I have a Plan 2 and a postgrad loan, so my graduate tax is a much higher 15+%. I probably wouldn't have gotten my 'in' without the postgrad, but on balance could have avoided it if i'd gone for that subject undergrad. Hindsight works like that though, and early life decisions unavoidably impact your future. Can't kick yourself for decisions a younger, less informed you made based on what was available at the time. The real kicker is the interest rate, and only institutional investors are laughing as the universities clearly don't seem to benefit from this fee structure, and neither do the working people.
I went to uni 25 yeas ago. It got wiped out when I hit 50... There is absolutely NO WAY I would go to uni today.
Why not ?😊
Very useful video, not just for your usual great insight, but I used the loan calculator and worked out I’ll have mine paid off in around 5-6 years without overpaying and had no idea!
What annoys me the most is the fact it feels like useless degrees are heavily subsidised by those with STEM/ higher earning degrees long term.
Funny I replied to someone commenting on BOE rates not going down the other day saying if it did they'd overpay their debt away. Too many people get a education but don't seem to know the basics of money or spend the time to understand what they get into.
No point getting a degree now unless you’re 100% sure there’s a high paying job at the end of it… and you’re going to stick with that career choice.. e.g. doctor, surgeon, lawyer, etc.
Even then, you need to see if there’s alternative ways to get into your chosen field that won’t cost you £60k+ interest. i.e. professional qualifications and/or apprenticeships
It's also worth noting that there's no easy enforcement if you work abroad.
Glad you chose that Offspring song. It could have ended badly 😂
Don't think I've ever had a year where my payments were higher then the interest added. Well, 10 years down 15 to go until it's written off and I'm debt free from it.
Same here, just over 10 years down and I think this year I may have paid a little more than the interest. Not sure the degree was worth it if I'm still sat in a job paying under 30k tbh...
I was shocked when I looked at mine earlier this year, 6.5% interest and I still have £18,000 left. I'm on a good salary now, but the interest rate is so high that I'm barely paying it off.
University was never ‘free’ Damien, the postman, barman, lorry driver etc, paid for others to go and earn more than they would ever earn.
As you rightly say, 87% have the debt wiped out so it doesn’t matter what you interest rate is, or how big the debt gets, the monthly payments remain unchanged
It would be slightly palatable if the government didn't take your tax and send it abroad in the guise of (select as appropriate) foreign-aid/military-assistance/development-programs which results in foreign thieving governments buying themselves nice houses away from the war/misery/poverty.
Uni isn’t worth loans. Grants sure, loans never. At least in the USA, my loans have caused me so much hardship that it put my whole life on pause for what feels like a decade.
I was in the first year that had to pay 9k a year starting 2012 on a 4 year masters course. Recently took an inside IR35 contract role on and am paid well weekly. Automatically having £128 a week student loan taken out of my pay, hate that it takes so much now and still likely will never pay it off anyway! Still find it worth it overall as I wouldn’t have the job I have now as quick as I have and see it as a bit more tax. Not to mention them 4 years of life were easy AF compared to now.
I paid mine off in May 2023. I had about 5k left and saw the interest rates were climbing rapidly from 1.5% to the 7.5% now and knew that the 5k would eventually get paid off anyway so I just overpaid it then instead of paying more overall. Happy with my decision and was able to park the extra income into my pension.
I was incredibly lucky to be sponsored through uni by a private company. It worked both ways as I became more knowledgeable in my subject etc and made more money for my employer. 15 years later I use maybe 5% of the university teaching. The uk education is not for the working classes.
I can't help feeling that we're not talking about the real problem, a large fraction of the people that go to university probably shouldn't have. I graduated from a highly technical degree in a class of about 120. Only about 10% of my classmates went on to use their degree in their career. The degree wasn't a total waste but the skills could probably have been learnt more quickly and for less while working.