The Sutton Trust and Institute for Fiscal Studies have just released a report on student loans: Payback Time?.
The key points from this report are that:
Only 5% will pay off their loans by the age of 40. In fact, under the new system, 73% of all graduates will still be making repayments into their fifties.
The typical student will leave university with more than £44,000 in debt under the system of higher fees and interest-bearing loans introduced in 2012
In cash terms the average graduate would repay £66,897
Graduates repay loans at a rate of 9% on all income above £21,000 in 2016 making a tax and NI rate of at least 54.8% on their marginal income (including hidden NI payments).
There is little doubt that no adult would take out a loan agreement with these terms. It means that there is a life of penury and worry ahead.
The graph below is taken from "Payback Time?" and neatly summarises the fact that the loans are unrepayable for most graduates:
So what is the government trying to do? It is trying to implement a "graduate tax" on graduates who obtain higher incomes, whether or not these incomes are related to obtaining a degree:
This tax is specifically targetted at those with incomes in the range from around £21,000 to £60,000 a year. Under £21,000 and there is no repayment and over £60,000 the repayment is just a flea bite.
The rationale for this tax seems to be that people who didn't go to university should not be subsidising students. Those who got the benefit of a higher education should pay.
When only 5-10% of the population went to university this rationale could, perhaps, be justified. Although with a small, elite, graduate population it might have been argued that the benefit of this elite to society justifies the expenditure on them. If 30% or more of the population goes to university this argument is undermined. Many of the graduates will be leaving university to take jobs that were previously offered to non-graduates. So all that university has achieved is an extra tax on the workers who take these jobs so that the UK can have a large university sector.
As can be seen from the graph above, half of graduates can only expect to get less than a middle manager's salary during their working life and plenty of graduates will earn very little. Only 10% of modern graduates are truly "high flyers".
The report considers teachers to be relatively prosperous compared with most graduates:
This means that most graduates can expect relatively low incomes compared with public sector workers like teachers. Most graduates have gone to university to earn less than teachers.
All that has happened is that previous non-graduate jobs, jobs that were occupied by able non-graduates have become reserved for graduates. This is a sort of addiction to qualifications in the economy. We are creating a sort of Ancient Chinese economy where advancement is dependent on exams. You might be "able" but without the paper qualification you will be excluded from whole areas of work. The non-graduates who are resentful of graduates should ponder on this achievement of the mantra "education, education, education".
In some ways the universities have pulled a "fast one" on the rest of the population, convincing it that we will all be better off if they are expanded. Of course, Labour, who expanded the university sector, were actually hoping that institutionalising more people would lead to greater support for collectivism.
It is high time that the myth of high wages for graduates was exploded. When only 7% of the population were graduates they got high wages and ordinary people could become accountants with 6 O levels - yes, you could be an accountant without a degree - and why not? When 25% of the population have degrees you need a degree to be an ordinary office manager.
What happens when there are too many graduates is that employers offer ordinary jobs, jobs that really do not need a degree, to graduates so it appears as if the "top jobs" require degrees and there is a graduate bonus. But look more closely. These "top jobs", like office managers, are not paying any more than they used to pay non-graduates, they still pay peanuts. All that has happened is that whereas you got the office manager job for free 15 years ago it now costs £66,897 to earn £30,000 a year at age 30. When there are too many graduates degrees become no more than a way of stopping ordinary people from getting even mundane jobs. Blair, Brown and the other members of the political elite did this so that their privately educated, fully paid for, children were guaranteed first choice of jobs before the kids from the estate who might be clever but never go to university.
Yes students, you have been hoodwinked and screwed and you just go along with it. Its the socialists who did it to you and the Tories who continued it - don't vote for them ever.
Still don't get it? The hilarious truth is that if mum and dad can't pay for you to go to university you will never get those top 10% of jobs anyway, they are reserved for the privately educated see: Education in Britain.
Lets face it, only about 5% of jobs (1 in 20) actually require a graduate level of education. If more than 5% of the labour force are graduates they will be disappointed. What is needed is high quality, free, vocational training, preferably "on the job".
The key points from this report are that:
Only 5% will pay off their loans by the age of 40. In fact, under the new system, 73% of all graduates will still be making repayments into their fifties.
The typical student will leave university with more than £44,000 in debt under the system of higher fees and interest-bearing loans introduced in 2012
In cash terms the average graduate would repay £66,897
Graduates repay loans at a rate of 9% on all income above £21,000 in 2016 making a tax and NI rate of at least 54.8% on their marginal income (including hidden NI payments).
There is little doubt that no adult would take out a loan agreement with these terms. It means that there is a life of penury and worry ahead.
The graph below is taken from "Payback Time?" and neatly summarises the fact that the loans are unrepayable for most graduates:
So what is the government trying to do? It is trying to implement a "graduate tax" on graduates who obtain higher incomes, whether or not these incomes are related to obtaining a degree:
The rationale for this tax seems to be that people who didn't go to university should not be subsidising students. Those who got the benefit of a higher education should pay.
When only 5-10% of the population went to university this rationale could, perhaps, be justified. Although with a small, elite, graduate population it might have been argued that the benefit of this elite to society justifies the expenditure on them. If 30% or more of the population goes to university this argument is undermined. Many of the graduates will be leaving university to take jobs that were previously offered to non-graduates. So all that university has achieved is an extra tax on the workers who take these jobs so that the UK can have a large university sector.
As can be seen from the graph above, half of graduates can only expect to get less than a middle manager's salary during their working life and plenty of graduates will earn very little. Only 10% of modern graduates are truly "high flyers".
The report considers teachers to be relatively prosperous compared with most graduates:
This means that most graduates can expect relatively low incomes compared with public sector workers like teachers. Most graduates have gone to university to earn less than teachers.
All that has happened is that previous non-graduate jobs, jobs that were occupied by able non-graduates have become reserved for graduates. This is a sort of addiction to qualifications in the economy. We are creating a sort of Ancient Chinese economy where advancement is dependent on exams. You might be "able" but without the paper qualification you will be excluded from whole areas of work. The non-graduates who are resentful of graduates should ponder on this achievement of the mantra "education, education, education".
In some ways the universities have pulled a "fast one" on the rest of the population, convincing it that we will all be better off if they are expanded. Of course, Labour, who expanded the university sector, were actually hoping that institutionalising more people would lead to greater support for collectivism.
It is high time that the myth of high wages for graduates was exploded. When only 7% of the population were graduates they got high wages and ordinary people could become accountants with 6 O levels - yes, you could be an accountant without a degree - and why not? When 25% of the population have degrees you need a degree to be an ordinary office manager.
What happens when there are too many graduates is that employers offer ordinary jobs, jobs that really do not need a degree, to graduates so it appears as if the "top jobs" require degrees and there is a graduate bonus. But look more closely. These "top jobs", like office managers, are not paying any more than they used to pay non-graduates, they still pay peanuts. All that has happened is that whereas you got the office manager job for free 15 years ago it now costs £66,897 to earn £30,000 a year at age 30. When there are too many graduates degrees become no more than a way of stopping ordinary people from getting even mundane jobs. Blair, Brown and the other members of the political elite did this so that their privately educated, fully paid for, children were guaranteed first choice of jobs before the kids from the estate who might be clever but never go to university.
Yes students, you have been hoodwinked and screwed and you just go along with it. Its the socialists who did it to you and the Tories who continued it - don't vote for them ever.
Still don't get it? The hilarious truth is that if mum and dad can't pay for you to go to university you will never get those top 10% of jobs anyway, they are reserved for the privately educated see: Education in Britain.
Lets face it, only about 5% of jobs (1 in 20) actually require a graduate level of education. If more than 5% of the labour force are graduates they will be disappointed. What is needed is high quality, free, vocational training, preferably "on the job".
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