It’s no secret that student debt is on the rise, with so many loan providers distributing schemes left, right and centre, applications are piling up and so are repayment pressures.
Fixating on the current state of university education in the UK, this informative report takes a microscopic look at the dilemmas of debt and the return of investment for certain university degrees.
Ridiculous tax rates for graduates
As the report highlights, “Graduates face some of the highest marginal tax rates of any taxpayers in England and Wales”, which causes “compounding imbalances of wealth between the generations.”
Bearing in mind that graduates are already lumbered with the stress of their debt, high tax rates add immediate pressure to their earnings and alter their job expectations.
For example, the paper notes that young graduates pay an additional “9 percent of their salary above the relevant earnings threshold.”
As a basic rate taxpayer trying to pay back your loan, this added tax will weigh you down and the money will start adding up. Some students may even argue that this high tax rate is unfair and should be lowered for fresh employees with crippling university debt.
Since the average graduate salary in the UK is £30,000, this won’t leave employees with much money to save for their future…
A low rate of return
Did you know that in 2016/17, 40.6 percent of graduates were studying subjects with expected median earnings of less than £25,000 after five years?
Despite investing thousands of pounds into their degrees and years of hard work, graduates’ earnings are not living up to their expectations.
For creative art students, the result is even worse.
As the report explains, “Ten years after graduating, the median creative arts graduate does not earn above the £25,000 repayment threshold and is not paying anything back.”
So, if you’ve signed up for a creative course in the UK, keep an eye on the current rates of return.
Neglected loans are left unpaid
It may be easy to take out a hefty student loan of your choice if you have the right credentials, but is it easy to pay it all back?
“A combination of high fee levels, a relatively high repayment threshold, and the level of interest levied on student loans means that, in most cases, they will not be fully paid off before being eventually written off at a cost to the taxpayer,” A Question of Degree states.
Now imagine the number of unpaid debts there will be in the future and how future taxpayers will feel after finally paying off their student debt, only to find out they have to pay off other students’ debts, too!
Obviously, this news will cause outrage and leave many hard-working individuals empty-handed. With a mountain of overwhelming debt, how can so many universities promise their students a ‘bright future’?
— Onward (@ukonward) January 7, 2019
Like a fly helplessly trapped in a spider’s web, will international students with exceptionally high tuition fees face the same challenges while studying abroad?
And with so many warning signs, how will the UK government redeem its current and future graduates from this sticky circle of debt?
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