At the weekend I visited Southampton University… they were holding an open day for prospective students and their parents. My son, Ed, is looking at his options right now, and Southampton is a front runner (visiting actually made me feel a bit jealous of the opportunity youngsters have now, but that’s another story).
Aside from the opportunity, one thing that struck me was the ridiculous complexity of student loans. You see, we were listening to a presentation called “fees & finance” & I was at a loss to see how students will truly understand the debt they will potentially be taking on.
Yes, the potential earnings of university graduates are higher than those who choose not to study at university…but at what cost?
Anyone that can answer that has my utmost respect…and a personal request to give me a call to explain it! With loans being based on RPI and potential earnings, there’s effectively no way to plan what your repayments will be and, importantly, what impact those repayments will have on your outstanding debt!
And while I’m on my soapbox (apologies), a bullet point in the presentation read “Your Student Loan repayments will not affect your ability to obtain a mortgage”.
Was I the only one in the audience of perhaps 150 that wanted to question that statement? For clarity, it’s absolutely untrue….most lenders take student loans into account when assessing affordability!
If you’ve stayed with me for this long, you either have a student loan…or you have a child with a student loan….or you have a child who will probably have a student loan at some point.
So, what is the point?
Well, the point is that we should absolutely understand the financial products we take on BEFORE we sign on the dotted line. Ask questions and ensure that it fits with your requirements.
And secondly, we should encourage our policy makers to SIMPLIFY the products available. I don’t think it needs to be this complex!
What do you think?