Having a son at university, one (hopefully) about to go and working in a university myself, I’m embarrassed about my lack of knowledge of the student finance system. But – I’m also pretty sure that I know more than quite a lot of my colleagues! I regularly find it strange how we (even the academics) frame the student funding as a loan/debt when the later payments are essentially linked to income and, if you don’t earn above a certain threshold, you don’t pay anything back.
In addition, I hadn’t really appreciated that the amount that a student could obtain from the funding was also means tested and that better off students (or students from better off families) will obtain lower upfront amounts from the student finance system. Their parents are expected to make up any shortfall. However, future payments made by the recipients of student finance are not linked to the amount that is “borrowed” – the analogy is hard to avoid. Martin Lewis, the consumer finance expert, wrote a piece last week explaining that
Student loan repayments are set at 9 per cent of everything earned above £21,000 for 30 years, regardless of how much you borrow. So unless you are a big enough earner to clear the borrowing and interest within the 30 years bigger “debts” don’t actually result in you repaying more
So, if the system remains in place in its current form (a big if), then students can obtain different amounts of student finance dependent on parental income and their future payments will be linked to future earnings regardless of how much they have obtained to finance their initial studies – albeit there will still be an amount to clear. Apologies if you knew all this already. I think that I might be getting there.