Student Debt

RE: Student Debt

Bob Russell — Mon, 24 Apr 2017 14:44:54 GMT

I don't know why new graduates are not valued in the way we were! It was accepted that we would be considered very green about the gills but the lower earnings in the early years (not really that bad considering the tax free accommodation, car, phones etc) was expected to be balanced by good earnings as a partner. Many practices also had quite a property portfolio that became a part of the 'pension' pot.

New graduates in 'sweatshop' practices working long hours to get through a stream of low paying clients might be part of it!

Businesses with more apparent value linked to growth rate, compared to real value practices that grew at a steady rate!

Anyone with very high exam grades, slogging for 5 years at university, leaving with massive debts must be pretty unhappy to find out what the actual return is on that investment!!

My eldest son is already on a similar salary to me (25yrs old) and has prospects that outweigh almost any veterinary surgeon. No degree!

RE: Student Debt

Martin Hamilton — Mon, 24 Apr 2017 14:03:50 GMT

[quote user="robloxley"]

Government statistics put the 80th percentile for pre-tax income salaries at £38,500 for 2014-15

For interest, I dug out my first full month's payslip (from 2004) which equates to annual salary of just over £26k. With RPI inflation (avg 2.9% annually since) this would equate to £38k today; average wage inflation over the same period is less at about 2% but still equating to over £33k today.

[/quote]

Exactly. My payslip is a fraction more than yours was 13 years ago, and whilst wage inflation should mean I am paid £38k, I am paid £28k per annum. I have peers who are paid £20k per annum but have accommodation included, the highest I know of is £30k and that's in London, excluding accommodation. So you kind of just proved the point both Neil and I are highlighting. Wages should have risen like they have in most other jobs, but in our industry they haven't, and therefore I have far less disposable income than you would have.

As for SPVS surveys, thanks for that, I'll look into it next time they have one.

As for stopping the whinging, going into profession with eyes open etc, this is fine if vets want to tell the little work experience student how much they earn, but to be realistic when you are younger, still live at home etc a £20k + salary sounds like an insane amount of money, and that's if a vet will tell you how much they earn in the first place. As Neil says debt is variable, and is exacerbated by Brexit/falling value of the pound.

It shouldn't be too much to ask the question of "why haven't veterinary wages increased over the last 25 years at the same rate as inflation/in line with other jobs?". Do we value ourselves less now than what we did, do the public etc? This was one of the main "take home" points in our veterinary economics and business lectures at university, and is a serious issue when looking towards the future. Like it or not pay does affect the number of graduates going into practice - when you see friends finishing university after a 3 year degree earning more after two years of work than you ever will as a first opinion vet it is very difficult not to be demoralised. It isn't just a problem for recent graduates either - people in the profession wonder why the drop out rate in the first 5-10 years of practicing is so high, and I'm pretty sure being overqualified for your pay has some influence on it, as well as working conditions etc. Just turning a blind eye on these issues because "thats the way it has always been" or "I was paid that much when I graduated so it's a suitable wage 15 years down the line" are not addressing or discussing the underlying issues and reasons

RE: Student Debt

Neil Wheadon — Mon, 24 Apr 2017 13:49:16 GMT

[quote user="David Mills"]You know how much debt you're going to accrue[/quote]

You don't though do you.

We have a vet student here and he said his interest had been increased and backdated, let HSBC, Lloyds try that with your loan

With a mortgage provider you can swap about but with this you are at the whim of government fiscal policy.

[quote user="David Mills"]If you don't go into it with your eyes open you've only yourself to blame.[/quote]

In an ideal word yes. Our 19 year old is doing a 4 year engineering course, he started last year and reckons on a £50.000 debt. However his earning potential is far higher than that of a vet. We have lots of engineering friends and I'm not shy of asking 'How much are you paid' and all are higher than me.

With tuition fees rising, choices are being made which should be a warning to the profession as we want quality don't we?

Neil

RE: Student Debt

David Mills — Mon, 24 Apr 2017 09:31:13 GMT

I just don't get the psychology.

You know how much debt you're going to accrue. You know what your salary is likely to be. If you don't go into it with your eyes open you've only yourself to blame. What I can't stand is people taking it in then moaning about it after with cries of "something must be done". Why? It is the way it is and fees are only going to go one way.

First world problems.

RE: Student Debt

Rob Loxley — Sun, 23 Apr 2017 23:15:25 GMT

[quote user="Neil Wheadon"]

[quote user="David Mills"]3. Stop whinging. You'll have more in your pocket end of the month than >80% of people. [/quote]

Easy for you to say that sitting on a zero or lower student debt David. Wages are stagnant in this industry, I dug out a wage slip from 25 years ago, I was earning more than Martin a quarter of a century ago as a newish graduate, and he's brave to highlight his earning capacity

[/quote]

Government statistics put the 80th percentile for pre-tax income salaries at £38,500 for 2014-15

[quote user="Neil Wheadon"]how many new/recent graduates actually fill out that SPVS survey?[/quote]

This can be filled out without being a member, Martin

RE: Student Debt

Martin Hamilton — Sun, 23 Apr 2017 11:19:00 GMT

Thanks Neil, nice to hear someone who can empathise with us recent graduates!

Don't get me wrong, I love my job, but there are issues that need to be addressed that seem to be shoehorned to the side by many older members of the profession. For context, I work in private practice, work OoH 1 in 6 and weekends 1 in 3.

As for SPVS, I'm not even a member because I couldn't afford the membership fee when my student membership ran out. I may join soon however as I've finished paying off a personal loan, so have a little more cash spare. As far as I know nobody in my practice is a member either - it doesn't seem very representative of the profession as a whole, at least locally.

RE: Student Debt

Neil Wheadon — Sun, 23 Apr 2017 10:45:20 GMT

[quote user="David Mills"]1. It's like an extra 9-10%tax[/quote]

Look at the 1% NI fiasco recently, it's 10%!!

[quote user="David Mills"]2. Pay it off slowly if at all. You'll never get a commercial loan at such rates.[/quote]

It's RPI + 3% in an economy where inflation is rising and we are at an all time low in interest rates. You can get a mortgage at 0.89% at the moment. The Coventry are offering a fixed rate until 2027 at 2.39%

[quote user="David Mills"]3. Stop whinging. You'll have more in your pocket end of the month than >80% of people. [/quote]

Neil

RE: Student Debt

Martin Hamilton — Sun, 23 Apr 2017 08:48:32 GMT

[quote user="David Mills"]

1. It's like an extra 9-10%tax

2. Pay it off slowly if at all. You'll never get a commercial loan at such rates.

3. Stop whinging. You'll have more in your pocket end of the month than >80% of people.

[/quote]

1 - 9-10% additional is quite significant when you'll have that for 25 years - imagine the press if income tax jumped up that much, there would be pandemonium

2 - That's exactly what this thread is discussing, as well as how this affects younger vets, influences their ability to save, buy into practice etc

3 - I don't know how much you think most vets earn but I earn a fraction more than the UK national average salary of £27650 and therefore earn more than 50% of people, not 80%. And considering that the top 5% or so of high school students are the ones getting into vet school, they could easily peruse careers that renumerate them far better than this career, which anecdotally I believe has some part to play in the lack of young, experienced vets. Heck, you can become an Aldi store manager with a vet degree straight out of uni and get paid £40k with a company car as well...Shows how much we value our profession. Student debt just puts more and more off staying in the profession as they realise how difficult it is to save for any kind of future

RE: Student Debt

David Mills — Sun, 23 Apr 2017 03:32:12 GMT

1. It's like an extra 9-10%tax

2. Pay it off slowly if at all. You'll never get a commercial loan at such rates.

3. Stop whinging. You'll have more in your pocket end of the month than >80% of people.

RE: Student Debt

Neil Wheadon — Sat, 22 Apr 2017 21:34:02 GMT

Interesting that none of the examples are from the £9000 cohort, seemingly £3000/annum is bad enough and it's sneaked up again to £9250 this year

Neil

RE: Student Debt

nikki — Sat, 22 Apr 2017 21:08:21 GMT

[quote user="peter chalkley"]

I'm nearly 10 years out now, my debt was "only" £25k when I came out. I've cleared very little off mine so far. I'll be honest, I'm not that fussed.

If you don't pay it back, you don't pay it back. it's taken at a sensible rate and had I been given the option of do this or rinse the parents for the whole amount, I would have chosen this.

If you can afford to fund someone through, go for it, it will be cheaper in the long run and will save inheritance tax etc later on after life.

University has to be paid for (unless you are Scottish), you are going to better yourself to try to earn more money with the livelihood of your choosing. So paying back is either going to be taxed as graduate tax, or paid back as a loan (that comes out in the same way tax would!)

If you stop working for what ever reason the debt sits but doesn't chase, if you go part time and earn under the threshold same deal, so far better than any bank would ever give and you don't sell your sole to a corporate to stay there until your debt is cleared.

Its not pleasant getting an annual debt summary, but university was financially comfortable, I love my life as a vet and if the cost of that is a percentage of everything I earn for the rest of my life, well so be it. With no loan I would have no vet degree.

We were told by an IFA who did a talk at uni for us to not pay it back unless you came into a small fortune and it bothered you!

[/quote]

Gosh I'm 10.5yrs out and finished paying mine off in January. It was 20k in total and I've never paid more than the minimum. So glad to be free of it! £250 better off each month now.

RE: Student Debt

Bob Russell — Fri, 21 Apr 2017 17:42:49 GMT

Is it treated in the same way as other loans should someone be declared bankrupt? Bet it does not go away as other loans do!

RE: Student Debt

Edward Jones — Fri, 21 Apr 2017 16:54:40 GMT

[quote user="robloxley"]

If you don't get paid it then you can't use the money for paying a mortgage, hence the effect on affordability assessment. However the lump sum debt is treated differently to other debts in that if you lose your job you don't earn so stop paying it back, so it is less of a worry for lenders.

[/quote]

Exactly, you can't default on a student loan. Default on most loans and the entire outstanding amount will become due for repayment.

RE: Student Debt

Bob Russell — Fri, 21 Apr 2017 16:39:35 GMT

[quote user="Harriet Nicholson"]

Thats the problem, so your headline salary of £x isn't taken into account without also assessing your 'affordability' for mortgages - and that look at your net pay so after this has been taken. It's effectively taken as an outgoing you cannot change rather than a debt.

I was the first year of £3000 fees, have a massive debt still and has interest (although only 1.25%) for me. Newer loans have an RPI +3% interest rate. It just sin't worth it going to vet school to graduate with £80-90k of debt (in my opinion)

[/quote]

I could not agree more! Why on earth would someone take on such a loan with so little earning potential?

Even if someone trains how do they compete with a graduate from overseas that has a debt that is a fraction of theirs?

RE: Student Debt

Rob Loxley — Fri, 21 Apr 2017 15:59:05 GMT

[quote user="Anthony Dennison"]

[quote user="robloxley"]

[quote user="Martin Hamilton"]I know it doesn't affect mortgages[/quote]

It does, your monthly repayments both reduce your ability to save for a deposit and are taken into account regarding the affordability assessment of a mortgage

[/quote]

Actually, as it's taken out of your monthly salary before you get it, the mortgage calculators won't see that as an outgoing (compared to utility bills etc), would that not be right?

[/quote]

[quote user="Anthony Dennison"]My other half had a lump sum given to her by family, was going to pay off a load of her student debt (about a third), and was told not to by a financial advisor[/quote]

Sounds like good advice, since you could use the capital to pay off more expensive debt - old-style student loans were very cheap even compared to mortgages, new ones less so - and old-style loans are sufficiently cheap that currently inflation also erodes them to an extent.

RE: Student Debt

Harriet Nicholson — Fri, 21 Apr 2017 15:52:00 GMT

RE: Student Debt

Anthony Dennison — Fri, 21 Apr 2017 15:44:51 GMT

[quote user="robloxley"]

[quote user="Martin Hamilton"]I know it doesn't affect mortgages[/quote]

It does, your monthly repayments both reduce your ability to save for a deposit and are taken into account regarding the affordability assessment of a mortgage

[/quote]

Actually, as it's taken out of your monthly salary before you get it, the mortgage calculators won't see that as an outgoing (compared to utility bills etc), would that not be right?

My other half had a lump sum given to her by family, was going to pay off a load of her student debt (about a third), and was told not to by a financial advisor. Didn't affect us getting a mortgage that we were pushing ourselves with when we applied in 2012.

I'm with Pete. Doesn't bother me, don't think I even look at the annual report sent to me anymore.

RE: Student Debt

Iain Richards — Fri, 21 Apr 2017 12:42:59 GMT

I think I have posted on here before that if I were to compare my salary in 1988 and todays average new grad salary, once you take tax into account, there isn't much difference in the percentage cash in one's pocket. My calculations need refining, so I'm grateful to Neil for raising it. The student loan is potentially best treated as tax. It's just a lousy system.

RE: Student Debt

Clive Ansell — Thu, 20 Apr 2017 11:12:08 GMT

[quote user="Martin Hamilton"] I find it funny that those who voted for a political party that was quite happy to basically increase PAYE to graduates to 29% are the same portion of the elctorate who kicked off that NI was increasing by 1% for the self employed, but thats a whole political conversation not best suited for here...[/quote]

Could be the same group, mainly consisting of the well heeled middle classes, that whilst banging on about benefit claimants and single mothers' being parasitic etc, are quite happy taking child benefit (Quite legally of course, but still a state benefit) to put in a bank account for little Rupert's private school fees.

RE: Student Debt

Bob Russell — Thu, 20 Apr 2017 09:52:31 GMT

To be pedantic it is the employer that takes the payment on behalf of HMRC and passes it on to them.

HMRC collect almost nothing. The employer does the work and most of the administration and presents the money to an ungrateful HMRC! How nice it would be to see an occasional 'Thank You' for your payment when an online submission is made!!

RE: Student Debt

Martin Hamilton — Wed, 19 Apr 2017 22:15:13 GMT

And don't I know it....well, currently trying to pay off the private loan I had to take out to relocate and pay for flat deposit etc, so mortgage deposit is a little far away. But I wasn't aware it would factor in in that respect, thanks for sharing!

RE: Student Debt

Rob Loxley — Wed, 19 Apr 2017 21:14:42 GMT

[quote user="Martin Hamilton"]I know it doesn't affect mortgages[/quote]

It does, your monthly repayments both reduce your ability to save for a deposit and are taken into account regarding the affordability assessment of a mortgage

RE: Student Debt

Martin Hamilton — Wed, 19 Apr 2017 20:50:03 GMT

[quote user="Anthony Todd"]

[quote user="Stephanie Fursland"]My understanding of it is that there's no penalty if you don't pay it back, it's taken out of your salary at a proportionate rate for 25 years or whatever it is, and is written off if you don't pay it back.[/quote]

I still don't understand.Is it automatically taken out of your wages by HMRC or is it somehow up to the "mortgagee"?

[/quote]

Automatically taken out by HMRC

RE: Student Debt

Anthony Todd — Wed, 19 Apr 2017 20:47:54 GMT

I still don't understand.Is it automatically taken out of your wages by HMRC or is it somehow up to the "mortgagee"?

RE: Student Debt

Martin Hamilton — Wed, 19 Apr 2017 20:04:25 GMT

Almsot a year out, can shed a little light on the repayment system as it is now. Currently you pay back 9% of your salary after £1400 (roughly) per month (all pre tax). Currently I pay back roughly £65 a month, so you can easily see that at that rate I won't be paying off any debt any time soon. Best way to think of it is that instead of 20% PAYE, we're taxed 29% (roughly, not exact)

Luckily I wasn't part of the £9k per year tuition group, and I know it doesn't affect mortgages etc but having almost £100k in debt at the start of your career still feels a bit imposing I'd imagine.

The small repayments also add up significantly throughout your lifetime before your debt is forgiven - I find it funny that those who voted for a political party that was quite happy to basically increase PAYE to graduates to 29% are the same portion of the elctorate who kicked off that NI was increasing by 1% for the self employed, but thats a whole political conversation not best suited for here...

In short, although it's a low repayment every month, it adds up on top of other taxes, and makes it that little bit harder to save up for a mortgage deposit or to even buy into practice. When I already have to spend 65% of my income on rent, utilities, council and road tax and car upkeep, knowing that I'll be paying increased tax to pay off a student loan for my whole working career doesn't fill me with hope...

Edit - Debt is written off 25 years once you become eligible to pay it back, or 35 years if you are Scottish