“It’ll be just like a phone contract!” they said. I can still hear my teacher’s voice brushing off our forthcoming debt like it was a Spotify bill. But just a hop, skip and a move to Sheffield later, I was in Uni halls with a few thousand quid from the Student Loan fairy tucked safely under my pillow, my worries of debt all but a distant memory.
Now on the other side of my degree, my souvenirs include the word ‘graduate’ on my CV, a recovering liver, a couple of friends for life and a mere £50k of debt. Even now I’ve graduated, it still hasn’t quite sunk in that I owe SO much money. To me, it’s never felt like a real financial commitment. But is it ok to have our heads buried so firmly in the sand?
Obviously everyone’s debt is different based on how much was borrowed, but many graduates do face owing around £50,000. The general attitude of our generation seems to be, ‘If I don’t have to deal with it now, it doesn’t really exist’ – and who would blame us? If you really sat and thought about starting your young life with that sum hanging over you, you probably wouldn’t even get out of bed. The most hilarious thing is that the interest rates on our loans are so much higher than on mortgages; mortgages we would almost certainly fail to be eligible for. We’re lured into a student loan like it’s no biggie, so is it irresponsible to treat it that way?
The short answer is... no.
In April this year the threshold to begin repaying your student loan will go up to £25,000. This means that if you earn anything under this, you don’t pay a penny. Yay! The announcement was made at the end of last year after a huge backlash over George Osborne’s (somewhat sneaky) decision to freeze the threshold at £21,000 for five years, despite the previous promise that it would go up in line with inflation. So, you can take a deep breath and relax for a little longer – or forever, if you don’t ever earn more than that. Feeling less scared yet?
The general attitude of our generation seems to be, ‘If I don’t have to deal with it now, it doesn’t really exist’ – and who would blame us?
Another reason to breathe easy is that even when you’re earning over £25,000, you only pay back 9% on the amount you earn over that. ie. if you earn £26,000 a year, you only pay 9% on the £1000 above the £25,000. So, just £90.00 over the whole year. The key thing to remember is that repayments are dependent on your earnings, not on the amount you owe, so even if you owed a million pounds, you’d pay the same back per month as if you owed £10,000. That’s also why you also shouldn’t get too caught up about the interest being added on, or bother trying to pay your debt off early. And the debt is wiped after 30 years so it’s likely you’ll never pay the full amount back anyway! Personally, it’s this realisation that makes it much less daunting. I’m beginning to feel justified in treating the loan like fake cash.
So we know that being scared doesn't solve anything, but how should you view your student loan?
Thinking about Uni?
If you want to go to uni, GO! The worst thing would be for the fees to put you off applying. The change in cost to university fees was bound to discourage some disadvantaged people, especially when maintenance loans replaced grants in 2015 – a double whammy for the underprivileged. “Maintenance loans penalise poorer students by saddling them with higher levels of debt,” says NUS Vice President Amatey Doku. “The issue of education funding is vast and hugely divisive.” But allowing the loan issue to stop young people from getting an education plays straight into the ‘haves and have nots’ debate, and will only widen the gap. It’s 2018, ffs.
At uni?
Enjoy your money and your education. Fully apply the ‘I’ll deal with it later’ attitude and remember, don’t feel guilty about the increasing interest. As financial expert Martin Lewis genuinely says: “Ignore it, and it'll go away.” Do, however, remember that you are paying a lot of money and make sure you know your rights. The 2017 Student Academic Experience Survey revealed that only 37% of students in England thought their degree was worth the money. If your teaching isn’t what it should be, do something about it. This isn’t school anymore, so put less emphasis on the debt and more emphasis on getting value for money. At the very least, it might get your hungover arse out of bed and to a lecture… maybe?
Finished with uni?
If it feels like fake money – let it. That's honestly ok. Even Lewis says that the debt is really a “meaningless figure”. Think of it as logical ignorance, or healthy denial. Your debt won't be used against you (it’s not on your credit files), so don’t use it against yourself! Emotionally, it’s understandable that it’s quite difficult to pretend a debt so large doesn’t exist, especially if you’re someone who’s pretty good at keeping on top of your day to day finances. “The word ‘debt’ is so evocative, the psychological effect puts many off due to the fear of it hanging over them” says Lewis in his blog. You will notice it, no one can deny that, but hopefully it’ll feel like a worthwhile investment, and when it does kick in you will be earning enough for it not to make a significant dent in your lifestyle. In short, it’s no win, no fee. So wipe it off your conscience!
And finally, let’s cut the crap here: plenty of people feel student fees shouldn't exist at all. Education is arguably a fundamental right, and everyone should have the opportunity to go through the degree system if they want to – free of charge. If you agree then do your bit to change this; we’re young enough to still have hope, and old enough to make a difference.
But for now, we are where we are. When life gives you lemons, you make lemonade. But we don't have to pretend it’s not bitter.
Image: Abigail Low via Unsplash
