Debt - Problem facing the nation

[timbloke]

Watched Panorama last night, don't normally watch it but was quite intersting, looking at the major problem of debt that is facing the nation.

I though i'd open up a serious discussion on tMP (a new concept for my threads) about how much of a problem it is really, amongst you lot. Most of whom are well educated (you play a musical instrument, and have had the oppertunity to learn one, you use the internet with ease and have access to it etc.) but no doubt differing financial backgrounds and employment types.

Personally my biggest gripes about the economy are...

a) at University the main thing we are taught is how to get into debt, by being given (and encouraged to get) £3k + per year in student loan, totalling £12k for people like myself who did a 4-year course. Is this morally correct that these should be encouraged? Especially to people like myself who probably could have survived (just) without it.

b) it is easy to get credit cards and loans, these are heavily marketed, but the same is not true for savings and investments, not in the same way anyway as far as i can see.

c) despite earning not much less than the national average of £25k, I cannot get onto the property ladder unless i 1) live somewhere i don't want to (and i don't mean because it doesn't suit me but for reasons of high crime or poor amenities etc.), 2) by a box that is about to collapse and isn't worth anything 3) take out a 100% mortgage of 4 or 5 times my salary, (which i could easilty get - again is it morally right that i can).


however (excluding my student loan), i am probably far less in debt than a lot of people. but that is through recently tightening my belt considerably.

your comments... good people.

 

[The Cornet King]

I have to agree that debt is becoming a major issue in society these days.

I can speak from a students point of view. As Tim rightly says students are encouraged to take out a large loan, now a maximum of £4,000 per university year, thats £12,000 per degree (providing of course you are only on a 3 yr course and not planning to do an MA or PHD which has to be funded yourself without a loan!)

I probably could survive without the loan (JUST) which would leave me totally pennyless after my degree.
On top of this of course i am sent constently letters offering credit card this...better %APR credit card that! Yet another offer to further the debt!

It is fortunate that student loans do not have to be repayed until we earn £15,000 per annum and even then it is a miniscule amount a week.

More and more this country's people are becoming net Debtors and all too often people find that they are unable to pay the debt.

Personally i believe that the people are of course partly responsible but the heavy marketing seems to encourage people that debt is good...that holding off payments is easier...when in fact in the long run we all know this is not the case.

In my opinion not enough is being done to combat the debt...to stop the (over)advertising of agencies offering loans and loans to repay other loans!

I blame the Government! :lol:
p.s...the Governments policy on the university system is a complete joke...but that is another topic!

 

[Steve]

I never did University, simply because I didnt want the debt. Spent three years in work instead and have just put down a very decent deposit on my second house. People can only be encouraged to get loans/credit cards to a certain degree and no one forces you to sign, I know people who have gone through degrees and not come out in debt so it is possible but very very very unlikely! I have debts but they are all minimal compared to what I have in assets so I would say it is managable. It is essential though that you go to Uni with a good financial understanding as I have friends with degrees that still come to me for financial advice, I would much rather have my experience in the 'real' world of work than have a student loan hanging round my neck.

(THAT DOESNT MEAN I DISCOURAGE FURHTER EDUCATION, JUST THAT IT WASNT RIGHT FOR A LAZY ALCOHOLIC LIKE ME)

 

[lynchie]

I'm taking my year out working, simply so that when I go to university I have some money to fall back on already. It wont cover me for very long but it means I'm slightly less reliant on a loan and so hopefully will come out the other side with a little less debt. I have 2 housemates from sweden who not only do not have to pay for university tuition, but also get a regular grant for living expences, although they do pay for it through much higher taxes.

 

[EIBB_Ray]

And it's bigger than just one nation/one government. Most everything that's been said here so far also applies in the states.

I have a loose theory about it (plenty of holes no doubt, but kick it around.) I think that a large part of the problem is that our last global (at leat western) economic growth period was fueld by technology (and speculation in technology) this investment made a lot of money available for loan in the marketplace. So companies got rich but it wasn't as a result of worker productivity, therefore workers didn't prosper relative to the general gowth. So, they borrowed more of the easily available funds.

That's the theoory, no facts to back it up, just came to mind.

 

[geordiecolin]

The good thing about having no money?

You appreciate it when you have some!!

....Says he who is eternally skint!

 

[BottyBurp]

Not related to student debts, but personally I live 100% within my means. If I want something, I pay for it (apart from the mortgage!) in full. I personally hate owing money. If I want a car, I'll pay in full (after haggling, of course!). If I can't afford something, I don't have it - I'll save for it and then buy it. Maybe I'm one of the lucky ones...

As regards house prices, I think there is a healthy element of people falsely declaring their incomes, thus allowing them to get bigger mortgages which, in turn, keeps pushing house prices up.

 

[Naomi McFadyen]

I managed last year without a student loan, but this year, I needed to take it out, and I'm in debt :shock: at the moment but it won't be a problem once the next installment comes through! Then when the accomodation fees come out my account I'll be back down to nothing again...
Oh what a life!

As for paying the loans off... well, you have to earn £10,000 before you do... Musician, Money, Musician, Money...
Hmmmmmmmmmmm... :?

;-)

 

[andyp]

I think the debts people are taking on will eventually drive this country back into recession. A third of the mortgages taken out in the last year were re-mortgages (source:BBCi). People are thinking "Great, my house is worth £xxxxxx now, I'll have a bit of that, get me a new car/conservatory/holiday/whatever". Fine, but your mortgage is now £xxx higher, your monthly repayments are £xxx higher and if interest rates go up even a couple of % you are in deep do-do's, mate. The only people doing well out of this are solicitors and estate agents. They're driving the market up on purpose, cos they're on a percentage. Anyone trying to buy a house now is pretty much stuffed unless they can borrow 5-6 times their salary. If you're single, you might as well stay at home with your parents (which is becoming more common - wonder why?). It's all very well house prices going up loads (which they do gradually anyway) but I don't see anyone's salary doing the same, except for certain company directors, obviously.
Apparently the average price of a house is now around £126k or so, soo even if you earn £25k a year you're looking at 5 times your salary. The repayments on that house will be around £500+ per month. If interest rates went up to 8% it would be well over £1000 per month. People seem to have conveniently forgotten that a mortgage lasts for 25 years!
I'm not even going to mention student loans, OK I am, cos they're a stupid idea. Education shouldn't depend on money. I count myself lucky to have managed to get through Uni without having one (we were just about the last year that had grants). Successive governments have perpetuated the myth that going to university will guarantee you a fantastically well-paid job, in order to keep people in education and keep the unemployment figures down (they also used incapacity benefits and creative statistics, but that's another story). Now the universities can't cope with the intake without major cash.

Must ......get back to work and stop ranting !

 

[lynchie]

People seem to have conveniently forgotten that a mortgage lasts for 25 years!

This of course is why some lenders are thinking of offering longer term mortgages. But that of course means that you have a mortgage hanging over you your entire working life!

 

[andyp]

People seem to have conveniently forgotten that a mortgage lasts for 25 years!

This of course is why some lenders are thinking of offering longer term mortgages. But that of course means that you have a mortgage hanging over you your entire working life!

Ah, but there's a worse one even than that. Apparently in some European countries you can leave your mortgage to your kids, and they have to carry on paying it, and the house never actually gets paid for at all.
Actually, that wouldn't work here, because you'd have to sell it to pay for your care in your advancing years, of course......



Like the man (Robin Williams?) said; "Be nice to your kids. They decide which nursing home you're going in".

 

[The Cornet King]

Education shouldn't depend on money.

Quite!!!

Does anybody else find government policy totally contradictory? :?
They say that they want 50% of students to go to university...fine.

Then they are saying lets raise tuition fees to £3,000 a year, which will ultimately have to lead to a rise in student loans, which will lead to students leaving University to the tune of around £15,000-£20,000 debt!

HELLO POLITICIANS!!! Not everybody comes from a family able to afford this sort of cash...and quite how an attractive debt like this is going to attract more students, when at the moment a more attractive alternative is to leave school and start earning money without the worry of a debt.

I'm doing a degree at the moment...and do i expect to just waltz into a job?? Yeh right!!...
It's time to totally reform the University system...and someone needs to start doing it quickly before getting a degree starts to become meaningless!!!!!

Regards...a government hater!! :wink:

 

[stephen2001]

I agree with all the points that have been made about the university system.
When Tony Blair came into office in 1997, he said he would not scrap the grant and not create tuition fees. Not only has he done both, but there is all this clap-trap about top up fees for the top courses at the top universities.
OK, these top-up fees will be paid when you start work, but if you add up everything that will come out of your basic salary (Tax, National Insurance, domestic bills, university repayments, rent/mortgage), how much will people have to live off? Answer = not a lot.
Although I can't wait to finish university and move into the 'real world', I can see that the next 10-15 years are going to be a massive struggle financially for me. This is dispite the fact that I am not the stereotypical student who goes out and gets absolutely plastered every other night and am saving as much money for things like cars/house deposits. I don't do credit cards out of principle more than anything, and have seen the downward spiral some students have been through because of them.
As has been pointed out, many countries in Europe have higher taxes than us, and the results can be seen with better health, education, public services etc. I for one when I start in the world of work am more than happy to pay extra taxes provided the money goes to the right places.
Call me cynical, but the main reason people are not wanting to pay more money into the Government coffers is that they have a massive distrust in the system. At the moment, it a lot of the money is going into housing asylum seekers, and giving them all the commodities they want, for fear of going to the courts claiming "a breach of human rights". Also, paying for senior ministers to travel abroad for an official visit where they may end up spending most of the time lying on a beach.
If the money can be seen to go to the needy causes like hospitals, schools etc, and the benefits can be seen over the space of a few months, then maybe attitudes will change, however, I think it is too late for this government.

 

[lynchie]

but then the government would be spending money on things in this country and for people living in this country, and that would just totally confuse them!!

 

[twigglet]

Only been at uni for two months and yep, despite working over the summer to save up... already in debt (oops!!!)

How do they expect us poor students to have a life, study and work, there just aren't enough hours in the day.

Ahh well, mr HSBC is my friend, I see his nice overdraft as free money

 

[geordiecolin]

Until Mr HSBC says "no! you've had enough of my money!".........

With regards to the government's new university reforms etc, Tony Blair is in someways going back on his manifesto, but tehnically he's not because as the "Daily Politics" pointed out today, the words "not in this parliament" were stated after his "pledges". Seeing as we are no longer in that parliament......

Not that I agree with them, my main gripe being the ability for uni's to choose their tution fees. If a student is clever enough to go to Oxbridge, why can't they have that option. Their choice of unis shouldn't be restricted by costs. This policy will only serve to further polarise our higher education establishments!

 

[neiltwist]

did anyone else know that something like 2000 students have now declared themselves bankrupt?

I heard about one guy who left uni in £23,000 debt just on his credit card.

 

[geordiecolin]

Watched a TV programme not long ago, Working Lunch I think who thought that perhaps in the longrun students declaring bankruptcy wasn't such a bad idea!! Although obviously it would affect your further borrowing power for mortgages etc....

 

[lynchie]

and you wouldn't be able to start your own business...

of course people that start businesses are all drop outs, so all you uni students might as well resign yourselves to never being millionaires!