student loans dont add up
james36armstrong at hotmail.com
Wed Nov 3 19:18:35 GMT 2010
It took me ten minutes to
work out , that raising student fees and repaying them at interest as proposed is
not compatible with a sound economy nor is is rational.
Repay student loan + save up
deposit + repay mortgage ?
It doesn’t work out! Or to
put it another way young high earners won’t be able to afford to buy a house or
to start homemaking and family rearing.
The new uni loan repayment kicks in when you earn
At the new student fee level you might
run up a debt of £40,000.
You’ve found a property priced at £150,000
>From your first job, you will
have to save up a deposit – of ten per cent = £15,000 . This could take you ten years at £1,500 p.a.
By then property prices will
have moved up (but so may your salary /
wage/ income.) or it may not. The trend is for the houseprice: salary ratio to
After ten years saving at
£1,500 pa you will have a deposit of
You will then have to
convince the bank of your credit worthiness
to be able to afford to repay £11,556 p.a. mortgage p.a. out of a salary
of £20,000 (that what I work out the
loan repayments for 25 years at 8% compound interest)
Here’s your case
Income £20,000 p.a.
Repay student loan + inetest £4,000 p.a.
Net salary £16,000 less
expenses, less tax, less pension contributions ..
Repayments £11,556 p.a.
Can't be done.
1 Bank refuses you mortgage.
You can’t buy a house.
2 Bank offers you mortgage (but this is now
certainly an unsound proposition ). There’s a trade name for this – “ sub prime
mortgage? You can’t buy a house
even if offered a mortgage.
salary isn’t big enough . You will have to rent.
4 You and all the other
priced-out generation now form the
‘reserve house-needy army ', which
landlords rely on so they can now
exploit by rent increases.and
house-builders rely on so they can push up house prices.
5 House prices fall
because of the fall in demand
6 Repossessions increase as struggling owners go into negative equity.
7 Following the 2008/9 crash Government is
forced to bale out banks
2021 crash govt is forced….and after the spending review, student fees
10 Because of the worry of such a life time- debt
level hanging over your head for thirty five years you have a nervous
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