Over the past few months, what with the tightening of belts because of inflation, and the growing skills gap that cannot be filled from the labour market, there has been a growing call for our 18 year olds leaving school to consider going to work as opposed to going on to study. Indeed the student loans landscape is to change – spoiler alert, but that doesn’t change the core essence of what follows… read on.

For mature adults considering career changes, it’s clearly better to look for salaried conversion courses than it is unpaid university, because the maintenance loans available are not that generous – you can read off the details here – https://www.gov.uk/student-finance/new-fulltime-students/

But for every young person (and parent) considering post 18+ study at University, this Martin Lewis talk on Student Loans Decoded is a ‘much watch video’. In it, he explains completely that student loans are not loans for students, that University fees per se for UK students are paid by the government loans company so invisible to the student, and that the monies to be paid in due course come from a graduate tax of 9% when earning more than £25,750 per annum a year past graduation (currently (£27,295).

Martin makes it quite clear why even if the post graduation adult gains a windfall, they should not pay off the student loan company, until they have considered the 30 year life span of the account, and the possibilities the luck adult might wish to consider for their windfall. In short, the graduate debt is not a millstone, but a convenient way our society has made the extraordinary benefits of higher education available to its citizens.

Some will argue that the European system works better (though none the US system), and I would certainly agree the Scottish system is best value as tuition fees are covered by the Student Awards Agency for Scotland (SAAS), though their maintenance loans are less generous and Scots usually have to spend 4 years to graduate rather than 3. Martin does not cover this element, though Which? journalist Gareth Shaw covers it well in an article published earlier this year.

So… click on the Youtube link, crank the playback speed on the cog up to 1.5 and be thoroughly entertained – it’s a really worthwhile watch, than you

Alternatively, you can read Martin’s updated article of June 2022 here – https://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/, though it does rather send you back to the video above, which includes that essential learning scenario of Martin teaching and making sense of the mire!

Spoiler alert postscript. As the Higher Education Community post here makes clear, the changes afoot see starter payback drop to £25k from , period for payback to extend to 40 years (from 30), but rate of interest to be pegged back to RPI, not RPI plus 3%.