Finances and happiness

RE: Finances and happiness

Rob Davis — Sat, 12 May 2018 14:55:28 GMT

[quote user="rhmrcvs"]can i politely ask why you couldn't work during term time? [/quote]

When I was at University students were not allowed to have paid jobs during term (Cambridge 1990-97), though things may have changed.

RE: Finances and happiness

Thomas Johnson — Sat, 12 May 2018 14:50:49 GMT

[quote user="Anthony Dennison"]

[quote user="Thomas Johnson"]

[quote user="Scarlett Creasey"]Student debt doesn't affect being able to get a mortgage.[/quote]

Except it does, it may not affect your credit score like other loans, but it does affect the affordability assessment as they look at your net income and expenses to decide whether you can afford the mortgage.

[/quote]

I don't think so, because those calculators use your monthly take-home pay to decide affordability and student loan repayment comes out of your wages before you get them.

[/quote]

That's why I said net income, if you didn't have the loan your take-home pay would be higher and they would lend you more money.

RE: Finances and happiness

Rob Loxley — Sat, 12 May 2018 08:51:09 GMT

[quote user="Iain Richards"][quote user="Elisabeth Knappett"]PS: My student loan owing was taken into account, both for mortgage affordability and when I was assessed for my business loan - didn't change the outcome though![/quote] Really- I thought it wasn't supposed to, or was it just what you could pay back?[/quote]

The amount you owe isn't really taken into account, but your repayments are since they reduce your take-home pay and hence the affordability of a mortgate. ie. don't just put your gross pay into one of the online mortgage calculators without taking student loan repayments into account.
I did look at paying off the bit of student loan outstanding to reduce the payments and improve affordability, but it wasn't that close a call.
When my bank looked at affordability they looked at net income but also all your outgoings e.g. car finance, child support, 'extravagant' lifestyle etc.

RE: Finances and happiness

Elisabeth Knappett — Fri, 11 May 2018 23:17:42 GMT

I don't think it is meant to be taken into account, but both my affordability assessments were taken from gross pay, ignoring any deductions for pension/student loan etc. Not really sure why but the explanation was that all borrowings, no matter how they arose, needed to be considered. Our mortgage advisor did show me an application with and without our student loan borrowings and there was no real difference, so maybe it was just the way they calculated it?

RE: Finances and happiness

Elisabeth Knappett — Fri, 11 May 2018 23:12:39 GMT

[quote user="rhmrcvs"]can i politely ask why you couldn't work during term time? Also as far as i remember ems was 26wks over the course so only a small part i thought of our huge holidays.[/quote]

It was 'made known' that if you had a term-time job and performance slipped, your place at Uni would be at risk - while there was no hard and fast written rule to this, I wasn't prepared to risk it. I had evening tutorials/lectures which were both assessed and attendance monitored and Saturday morning lectures. On top of this, yes, I wanted to take part in some of the social aspects of uni, like sports clubs etc. I did do some student support work which was paid at minimum wage for the contact time, but not the preparation time. We had to complete 26 weeks of clinical 'seeing practice' but also had a similar amount of preclinical 'seeing practice' to do - working on a dairy/pig/sheep unit etc. I did do lambing work, which was paid, but again as a token amount as opposed to what could have been earned stacking shelves or office temping.

When applying for temp jobs, I found that unfortunately, my attendance at university some distance from my parents house put paid to that, most companies wanted workers who could be called back. Having no personal transport and relying on public transport to get to where I needed also cut out certain aspects of working. Like you say, often these temporary or part time positions are filled with students and with my parents house being less than 20 miles from 2 very large university cities and from an area where students were actively encouraged to live at home and commute into uni, competition was high for jobs - so were generally given to students who could continue to pick up shifts during term time - not me as I was at uni 200 miles away!

I was lucky enough to continue to be able to work as a cover receptionist at one of the vets I had work experience at, but earnings hardly covered basic food costs for the next term.

Maybe I could have been braver and risked the wrath of the high and mighties at uni, or done the absolute minimum of seeing practice, but I wanted to expand my abilities to hopefully make me a better 'day 1' vet - I made choices that I stand by, but understand others would have made different ones. It meant that I started out slightly more financially unstable than others in my year group, but that would have happened anyway!

RE: Finances and happiness

grumpyoldman — Fri, 11 May 2018 22:46:54 GMT

The final 2 years with SEEING PRACTICE as it was then did push lots of people into overdraft but until then summer and holiday work covered the borrowings, driving taxis cutting the grass in parks ,building site labouring, bouncing on nightclub doors, you did what you needed to do to make ends meet. Including not buying new clothes and eating beans on toast.

Reminds me of a quote from David Jason on 1966 and all that, talking about Moore Charlton Banks etc , "different kind of men different times". The gist was some people were prepared to try harder for less reward .

RE: Finances and happiness

rhmrcvs — Fri, 11 May 2018 20:57:06 GMT

[quote user="Elisabeth Knappett"]

I qualified in 2006 with approximately £50K of debt as my family were not able to support or assist me in any way and with their earnings I didn't qualify for additional support (non-loan bursaries etc). A 6 year degree course with no ability to work part-time during term and the majority of holiday time taken up with obtaining the required amount of EMS meant no holiday jobs either.

Now, almost 12 years on, I have saved and paid for my wedding, saved and own over 50% of my house, have my own car and own most of my business (loans still outstanding to the bank!) AND my student debt is paid off. Things were tough in the first couple of years and no, I don't have many of what others may consider life's luxuries (multiple foreign holidays, brand new car every few years) but I am happy and more than satisfied with my lot.

My concern is now for those students who look at the 9K annual fees and decide an extended course isn't for them as they see it as a debt that needs paid off - I know that's exactly how I felt and honestly, if I hadn't paid it off then I would have felt as if I'd failed in some way, I've obtained a professional degree and wasn't able to pay back the monies owed - why not? This is very much a personal position and not one I expect many to share, and probably not one I should put myself into either!

As Scarlett said, it's very much to do with your mental approach to it - is student 'debt' a real debt or just an extra tax? In which case, ignore it and the 'extra' debt you put yourself into for holiday/car loans etc is a normal amount.

PS: My student loan owing was taken into account, both for mortgage affordability and when I was assessed for my business loan - didn't change the outcome though!

[/quote][quote user="Elisabeth Knappett"]

PS: My student loan owing was taken into account, both for mortgage affordability and when I was assessed for my business loan - didn't change the outcome though!

[/quote]can i politely ask why you couldn't work during term time? Also as far as i remember ems was 26wks over the course so only a small part i thought of our huge holidays.

I did bar work / waitressing at weekends, triple pay for working xmas day , boxing day, new year etc , in hols drove a van doing deliveries, worked in a supermarket on evening shift, christmas hols in the sorting office , had great fun with often lots of otger students.

RE: Finances and happiness

Iain Richards — Fri, 11 May 2018 19:42:46 GMT

a) Well Done you!

b) [quote user="Elisabeth Knappett"]PS: My student loan owing was taken into account, both for mortgage affordability and when I was assessed for my business loan - didn't change the outcome though![/quote] Really- I thought it wasn't supposed to, or was it just what you could pay back?

RE: Finances and happiness

Martin Atkinson — Fri, 11 May 2018 14:03:46 GMT

[quote user="robloxley"]But student loans are repaid on an income contingent basis, above a certain minimum income threshold. They're really more of an extra income tax in that regard.[/quote]Nothing has really changed from 'my day' when we received a grant for our everyday expenses unless our parents were rich enough to pay for us (I think mine had to pay about half). The government paid for university fees which were of course funded from taxes. Now you will now pay for your tuition fees from your own tax when you earn enough. If you don't earn enough it is written off and guess who pays - the taxpayer. Plus ca change.

RE: Finances and happiness

Elisabeth Knappett — Fri, 11 May 2018 12:34:31 GMT

PS: My student loan owing was taken into account, both for mortgage affordability and when I was assessed for my business loan - didn't change the outcome though!

RE: Finances and happiness

Iain Richards — Fri, 11 May 2018 12:18:26 GMT

As others have said, it's not debt, it's tax. A poorly managed, badly handled, stupidly introduced tax, but still a tax. I did a rough calculation based on my starting salary £8.5k plus house/car, personal allowance in 1988 (£2605) and starting tax rate (25%) comparing it to today's allowance and tax rate (£11800 and 25%). Using mean SPV graduate pay, the take home isn't a lot different.

I remain impressed with my daughter (many reasons) but she is doing pub work to save enough to pay for her masters next year.

RE: Finances and happiness

Anthony Dennison — Fri, 11 May 2018 11:36:30 GMT

[quote user="Thomas Johnson"]

[quote user="Scarlett Creasey"]Student debt doesn't affect being able to get a mortgage.[/quote]

[/quote]

I don't think so, because those calculators use your monthly take-home pay to decide affordability and student loan repayment comes out of your wages before you get them.

All financial advisers I have spoken to have said to ignore it.

RE: Finances and happiness

Niall Taylor — Fri, 11 May 2018 10:46:55 GMT

[quote user="Jo Dyer"]Martin Lewis (Moneysaving Expert) has written a really good explanatory article about student 'loans' here https://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes[/quote]

Excellent article, very reassuring - I've sent the link to my daughter, currently at Cardiff Uni. Thanks, Jo!

Niall

RE: Finances and happiness

Thomas Johnson — Thu, 10 May 2018 08:31:48 GMT

[quote user="Scarlett Creasey"]Student debt doesn't affect being able to get a mortgage.[/quote]

RE: Finances and happiness

Jo Dyer — Thu, 10 May 2018 08:03:38 GMT

[quote user="Scarlett Creasey"]The way I see it is I will pay it back as a "graduate tax" which really won't be a large amount out of my pay check. I am never going to pay it off with the interest rate it is currently increased to, it will be written off in the end. Student debt doesn't affect being able to get a mortgage.[/quote]

Exactly this. Martin Lewis (Moneysaving Expert) has written a really good explanatory article about student 'loans' here https://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes

He explains that you pay 9% of your salary above the threshold (now £25k I believe?) so it is effectively a graduate tax, not a loan which affects your credit score and has to be paid off at some point. A large percentage of people will never pay it off, and it is cancelled after 30 years. The most damaging effect of it is psychologically, when people call it a loan and feel it hanging over them, especially the 6% interest rate. The best solution is to encourage them to ignore the statements that come through! But personality factors play a part in how much they are able to do this. If I had enough money to pay off my childrens' student debt, which I don't, I still wouldn't because I think it is of more value to give them any spare capital towards the deposit on a house.

I agree though that children should be given lessons at school in living within a budget, investments, the dangers of credit cards and loans, and other financial literacy. Far more important than much of the other stuff they are taught.

Don't despair of the younger generation though, many of them have a lot of financial nouse. My 27-year old daughter already earns far more than I ever did or could as an employee, and has accumulated a very comfortable sum to put towards a house deposit, despite little financial education from me or anywhere else. She also spends a lot of time socialising and having fun. I think this generation have probably got life sussed!

RE: Finances and happiness

Jill Butterworth — Thu, 10 May 2018 06:33:02 GMT

[quote user="Gillian Mostyn"]What I worry about is students thinking ' I already owe £85k, what's another £20k.... Etc. Personal debts can get out of control very quickly...whereas student loans don't.[/quote]

[quote user="robloxley"]Is there evidence of vet students thinking this? The vet student responder seems to have a reasonable handle of things?[/quote]

I would say there is. I've been working at a practice near the RVC for many years and we have a lot of students pass through, and they seem no different to anyone else with heavy debt: they have accepted it and 'just a bit more' doesn't seem to register. Many definitely do not understand compound interest, despite obviously all being very bright, and that they are likely to owe double what they have borrowed.

If you hope to be a high earner, then it makes sense to pay the loan off as early as you can by whatever means (as currently the Student Loan Co are charging 6%). If not, then swim in treacle all your working life in effectively a 49% tax bracket, if you are on PAYE.

The viable alternative, in my view, is to aim never to pay it back and remain below the earning threshold (currently £25K), pay 25% tax, remain part time, keep your mental health, have a good work life balance and look after your own children....But in some ways that's a disappointing aspiration.

Unless your parents are very wealthy, all of these choices require a decision to exert financial self discipline (which I have found only comes after a light bulb moment) and to find other ways to reward oneself.

RE: Finances and happiness

Rob Loxley — Wed, 09 May 2018 23:52:15 GMT

Is there evidence of vet students thinking this? The vet student responder seems to have a reasonable handle of things?

RE: Finances and happiness

Gillian Mostyn — Wed, 09 May 2018 21:25:34 GMT

[quote user="robloxley"]But student loans are repaid on an income contingent basis, above a certain minimum income threshold. They're really more of an extra income tax in that regard.[/quote]

Absolutely. Student loans aren't personal debt...they are just a tax liability. What I worry about is students thinking ' I already owe £85k, what's another £20k.... Etc. Personal debts can get out of control very quickly...whereas student loans don't.

RE: Finances and happiness

Rob Loxley — Wed, 09 May 2018 21:10:15 GMT

[quote user="Scarlett Creasey"]Student debt doesn't affect being able to get a mortgage.[/quote]

You'll find that it does since it affects affordability assessments made by lenders.

RE: Finances and happiness

Rob Loxley — Wed, 09 May 2018 21:08:21 GMT

[quote user="Gillian Mostyn"]

[quote user="robloxley"]If you can still enjoy life then why worry about the debt?[/quote]

Because circumstances can change very quickly....

[quote user="robloxley"]Practice owners with large loans but enough profit to service the loan and still have good quality of life likewise?[/quote]

There's a very big difference. The practice income services the loan, and if the owner has health issues then the practice will continue to service that debt regardless. If an individual suddenly loses their income, many people are only a couple of months away from being homeless. Scary.

[/quote]

But student loans are repaid on an income contingent basis, above a certain minimum income threshold. They're really more of an extra income tax in that regard.

RE: Finances and happiness

Scarlett Creasey — Wed, 09 May 2018 20:35:45 GMT

I am one of those students that will be graduating with approx £85k of debt plus the interest it has already accumulated. The way I see it is I will pay it back as a "graduate tax" which really won't be a large amount out of my pay check. I am never going to pay it off with the interest rate it is currently increased to, it will be written off in the end. Student debt doesn't affect being able to get a mortgage.

I think us millennials have just accepted that this is how things are now, large student debt and renting houses forever. I can't speak for people who always need the new phone or car but the student debt is just what it is for a 5 year degree.

RE: Finances and happiness

David Mills — Wed, 09 May 2018 20:33:05 GMT

[quote user="Gillian Mostyn"]Don't think you have a duty, as a parent, to teach them to be self-reliant? Even if that means saying no?[/quote]

This is probably the only socialist thing I'll ever say. But Atko is a baby boomer. He owes his children.

(I suspect he's as financially comfortable as my parents)

RE: Finances and happiness

Gillian Mostyn — Wed, 09 May 2018 20:28:56 GMT

[quote user="Martin Atkinson"]When I went to uni my parents couldn't afford to assist me in any real way and I learned to be prudent [/quote][quote user="Martin Atkinson"]In contrast I paid for both my daughters fees and although they now earn good money (neither are vets) they still are regular customers of this bank.[/quote]

Don't think you have a duty, as a parent, to teach them to be self-reliant? Even if that means saying no?

[quote user="Martin Atkinson"]I haven't worried too much because as I say they can only have the money once and I'd rather see them enjoying it now rather than after I've gone. [/quote]

If they haven't learned to budget, it might be a good thing that you won't be there to see the fallout when bank of mum and dad closes. It might not be pretty.

[quote user="Martin Atkinson"]unless they find rich husbands [/quote]

RE: Finances and happiness

Gillian Mostyn — Wed, 09 May 2018 20:25:29 GMT

[quote user="robloxley"]If you can still enjoy life then why worry about the debt?[/quote]

Because circumstances can change very quickly....

[quote user="robloxley"]Practice owners with large loans but enough profit to service the loan and still have good quality of life likewise?[/quote]

RE: Finances and happiness

Rob Loxley — Wed, 09 May 2018 19:59:27 GMT

[quote user="Clive Ansell"]One had student debts of £88K, and she wasn't the least bit bothered and still enjoys life, holidays and a nice car etc.[/quote]

If you can still enjoy life then why worry about the debt?

Practice owners with large loans but enough profit to service the loan and still have good quality of life likewise?