code & rock

I’m 25 years young. Finished high school, college and university and am currently working. I have just finished paying of my University student loan which was a measly £2,000. Recently the office got talking about the new student loan system coming into force for students who start their course in 2012. The more I look into it the more mind boggling I find the debt they will be coming out with.

As the kids say ‘lets’s break it down man’. Here’s what we think the major typical costs for a student starting in 2012 will be.

• £9,000 per year course fee
• £3,000 – £4,000 per year for cost of living
• £3,690 average cost of accommodation (£90 per week for 41 weeks)

Lets start doing our sums. I’ll base the figures on a typical 4 year university course.

• £36,000 total course fees
• £14,000 total cost of living (based on £3,500 per year)
• £14,760 total cost of living

This gives us a grand total of – £64,760!

Now some you you might be screaming about various grants and sliding scales this and that and minimum thresholds, so let me discuss these. Before I do however I have to say that quickly researching the costs before writing this piece has left me not a hell of a lot clearer on exactly what the rules are. Many articles I and others have read have left us with contradictory or inconsistent views on what happens. So the points below are what i have gleaned from my research.

• There is a sliding scale means tested grant available starting from £500 from cost of living. I couldn’t find an upper limit. Lets say this averages £1500. So that’s a potential £6000 to deduct from the above total.
• Then you may say not all universities will charge £9000. Well firstly on that I can bullshit! After looking around the least you will get away with is £8500. So lets deduct a possible £2000 from the above total.

New grand total – £56,760

So these guys and girls are leaving university at the age of about 22 in debt to the sum of around 55 grand! Does that seem fair? Well it’s not like they have to pay that off in one lump sum right? Let’s look at the monthly repayments the government are so kind to offer.

• The new payment threshold will be £21,000 meaning a student wouldn’t pay anything until earning this. Well to be fair myself and many friends I went to college with expected to earn at least that straight out of university. So we’ll base the upcoming calculations on this assumption.
• From £21,000 to £41,000 students would pay back 9% of their monthly income with 0% real interest, only inflation. If we take £30,000 as an average that means £67.50 per month is repaid.

Now you may be looking at that figure and saying ‘What’s the fuss about!’. Well I guess it comes down to how you view having a lifelong debt? If you haven’t paid your debt off after 30 years then it is wiped clean. If you leave university at 22 and start paying it off from the first year then if you haven’t paid it off you will be free of your debt at the grand young age of 52!

You are of course not going to be on one static wage throughout your career. However for the sake of simple calculations for this article we’ll assume an average earning of £30,000 per annum. Now lets look at that £67.50 repayment over that maximum 30 year duration. £67.50 paid every month for 30 years equals a total of £24,300.

For the sake of simplicity I have based it on the static £30,000 per annum earnings but let me tell you everyone coming out of university will be expecting to surpass this at some point in their career. So what if we were to say the average was £40,000 per annum. That would mean the monthly deductions would be £142.50 per month. This gives you a total payback amount over £30 years of £51, 300.

If you want to work out the calculations for yourself you can do so here http://www.118student.co.uk/finance/loan-calculator.html

Another point to consider is that if you earn over 41,000 then you will for the first time be charged real interest on the loan. Or how about if your degree is longer than 4 years. Want to be a nurse. Long university course but how much do nurses make on average per year? Not any where near what they should especially to cover paying back this kind of money.

Let me ask you. Whatever your take home pay is dear reader would you be happy if I were to take £142.50 of it for the university education you had? Let everyone know in the comments!

What you get

These figures I’m throwing about here and that real people just graduating from university will actually have to live with are very large. I want to draw attention to that! They are large sums of money. Full stop. So lets inspect what you get for this large sum of debt you will be straddled with.

What you get = A bog standard university degree where every other man and his dog has one as well. The days are past where a degree was something to be extremely proud of and which set you apart from your peers. Today it is a base requirement for many jobs.

University Vs real work experience

I’m fully aware in the preceding section I said a degree is a base requirement for a job. Well there are some exceptions I think and in this last paragraph or two I want to discuss whether it could be better for a young person to bypass a degree completely and go straight into work from college.

Now as I said only some jobs may be applicable. For instance you wouldn’t accept a nurse if she didn’t go through the proper training. Would you! But take a look at my industry. Web development or more generally programer. If a student has a talent for programing which they notice through high school and college I think it could be a viable strategy to go to a development house along with a portfolio of as many jobs as possible that they have already done and try and start at the bottom of the ladder and work their way up in the intervening 4 years.

I believe it would be completely realistic for that person after four years to be at the same position as or just below their counterpart who went through university. The one major difference being that they are not saddled with a life long debt.

Paying for university is a big question but I just can’t reconcile how much the government is allowing universities to charge with the value that I got from going to university. But sense the quality of teaching in universities is another entire article I will stop here.

I’d love to hear if you think the same. If you think differently… well I suppose you may as well leave a comment as well ;)

richard@richardjohnashe.com