Student Finance

[+John Teacake MVC]

So I have had a lets say discussion with a a careers advisory. I was lets say informed that that I was making the job harder for them because I was spreading wrong information, I wanted to see how you view it...

 

My personal view is that the media has pushed out an agenda, (I am in the UK but I presume that this applies to other 1st world country's as well) that they are reclassifying student loans,finance,fees etc etc as "Investment" rather than a debt to make people feel better. They are pushing the wrong message out to people. Take all these loans and worry about it later mentality, If you cant afford to pay it back don't worry we will write it off anyway. No pressure. I think this is personally wrong. I don't care what you say, Until you pay it back its a Debt! You owe money to someone else plain and simple. Further education especially University is a Business and big business at that.

 

I DON'T buy into the? BullS*** that you have to go to university and get a 4 year degree to be successful... therefore you DON'T have to take out loans. And that's the problem. A lot of people do or did buy into the BS, myself included. They really do drill that in your head when your high school. Not everyone is a good critical thinker. It has to be re-taught to some? people due to immense brainwashing.

 

I think this is brilliant (I say this in the most sarcastic way possible), This guy says stop calling it a Debt. Then later in the article and I quote directly....

 

it's proportionate to earnings. If you haven't cleared what you owe within 30 years, the debt is wiped.

 

 

Make up your mind much?

 

http://www.telegraph.co.uk/finance/personalfinance/borrowing/loans/9558187/Martin-Lewis-Its-time-to-stop-calling-student-loans-debts.html

 

Thoughts?

[watkinsx2]

I agree, It is debt but not in the traditional sense.

[philcruicks]

I class it as debt as I have to pay it back, but I can clearly see how you could think of it as investment.

There is no way in hell I'd have the job I have today earning the money I earn if I hadn't gone to uni and gotten my degree.

So in that sense yes I've "invested" the money for my future.

 

The key difference and why it is debt and not investment

Is that debt involves taking money because you don't have it.

Investment is taking money you have and putting it into something with the hopes of gaining a return. (hence the business term RoI Return on Investment)

 

As I had to borrow money to go to Uni it is therefore debt. Simples.

[Astra.Xtreme]

Most professional jobs out there absolutely require a degree, and that's just how it is.  How else can you quickly prove that you're qualified for the job?  I definitely see it as an investment, because you're essentially spending money to then turn it around for a return on that investment.  I spent around $120k for my degree and will be paying off my loans for a few more years, and without spending the money on that prestigious school, I would have never had the opportunities I had in college and moving forward in the future.

 

Yes, way too many people get crappy degrees and then get crappy jobs, but overall, people pay off their loans and then make more money than they started out with.  That's a pretty straight-up definition of investment.

 

When I put money in the stock market, I'm essentially loaning the company money and creating a debt, but it's still technically an investment.  Overall, it probably doesn't even make much sense to compare "debt" to "investment" since they're different concepts. Investing in something typically involves a debt being created, so you can't compare the two if one creates the other.

[Nick H. Supervisor]

I would class it as debt. But I dropped out of University (as you mentioned in the OP, some people just aren't cut out for academia) and went to work, so my debt is gone.

[LaP]

I class it as debt as I have to pay it back, but I can clearly see how you could think of it as investment.

There is no way in hell I'd have the job I have today earning the money I earn if I hadn't gone to uni and gotten my degree.

So in that sense yes I've "invested" the money for my future.

 

The key difference and why it is debt and not investment

Is that debt involves taking money because you don't have it.

Investment is taking money you have and putting it into something with the hopes of gaining a return. (hence the business term RoI Return on Investment)

 

As I had to borrow money to go to Uni it is therefore debt. Simples.

 

Then everything could be an investment and not a debt.

 

An house is an investment. Without it you could probably not work. A car can be an investment if you use it to go to work. Clothes are investment without them you could not work. Food is an investment without it you could not work. A computer can be an investment in most case. Entertainment is an investment cause let's face it without it you could not work 99% of the people can't work 24/7 without having fun sometime.

 

I agree with you it's a debt.

[n_K]

It is most certainly a debt, the government can change the interest at any time of any of the loans since 1997 or so (some leaked documents showed the government was planning to sell off a bunch of student debts and allow the company that bought them to set the level of interest per year that you owe on top to whatever they wanted), that is a DEBT and is in NO WAY AT ALL an investment. You're not guaranteed a job nor any work after getting a degree.

And it gets written off after 30 years if you're unable to pay it back, assuming that they don't later decide to change that, and wahay, if you get a degree and can't get a decent job and you're earning peanuts well don't let that put you off because the government will write off your debt by the time you retire! Oh what a uselessful idea......

[Tom]

It's both. It is a debt, but one that is usually an investment. Investments require you to give some in order to get more back and that's precisely what going to university does. Sure, not all university grads become sucessful, and sure, people that don't go can become sucessful but the point is simple; knowledge that others don't have usually leads to someone needing that knowledge and thus paying for it. Universities are where knowledge collates and thus learning from those lecturers inside is going to provide you with the knowledge (of your choosing) and thus increasing your chances of getting a better paid job.

 

As was already pointed out, a lot of jobs require degrees (no matter if you have the knowledge or not) and getting one allows you access to a whole new section in the job market that you wouldn't have otherwise had. University can increase your job chances but it's up to the individual whether they can make it pay off in the long run.

[Torolol]

I see it as debt, by luck managed to graduate without taking those 'loans'.

and now i have better net income than my peers who have same job,

as the money wasn't used to repay that loans with its interest.

[Phouchg]

If one borrows change for a bus fare to get to one's classes, is it an investment, too? Therefore, debt.

[Astra.Xtreme]

If one borrows change for a bus fare to get to one's classes, is it an investment, too? Therefore, debt.

Actually yes, I'd classify that as an investment.  You're investing in getting to class faster as opposed to being late, so your return on investment is Time.

[Phouchg]

Actually yes, I'd classify that as an investment.  You're investing in getting to class faster as opposed to being late, so your return on investment is Time.

 

Hmm. Then perhaps everything we do is an investment? For instance, taking a walk (by investing increased physical effort; by extension, energy gained from food bought with money earned... or borrowed?) promises some, if highly uncertain, health benefit, with certain risk of getting run over by a bus, down the road. Also it isn't yet defined whether one will actually avoid being late or even arrive on time (consider a traffic jam).

 

I will not argue that "investment" in such cases can still be freely used (in addition to one's optional hard work, the learning process), but perhaps there is a line where economics becomes too convoluted and rather than a term it instead becomes a metaphor.

 

However, I'd rather like to stress "debt" which is dead certain, because that money will have to be returned with interest, in most cases regardless of whether the investment was fruitful.

[Astra.Xtreme]

Hmm. Then perhaps everything we do is an investment? For instance, taking a walk (by investing increased physical effort; by extension, energy gained from food bought with money earned... or borrowed?) promises some, if highly uncertain, health benefit, with certain risk of getting run over by a bus, down the road. Also it isn't yet defined whether one will actually avoid being late or even arrive on time (consider a traffic jam).

 

I will not argue that investment in such cases can still be freely used (in addition to one's optional hard work, the learning process), but perhaps there is a line where economics becomes too convoluted and rather than a term it instead becomes a metaphor.

 

However, I'd rather like to stress debt which is dead certain, because that money will have to be returned with interest, in most cases regardless of whether the investment was fruitful.

They're both basically metaphor terms, but they kind of refer to different concepts.  So for that reason, it's not really meaningful to compare them.  We invest in things hoping for a high ROI, but that investment requires we give something up in the form of a debt.  We can apply to that basically any give-take in life, so they go hand in hand with each other.  An investment always requires some sort of debt, and a debt is created due to some sort of investment.

[Torolol]

when the money you obtained in the past became financial liability in future, it IS debt.

just like what happened to my friend.

[Axel]

It's more of a tax than a debt.

 

If you go to uni you pay the tax.  If you dont go to uni, you don't.  If you can't pay, you don't pay.  If you can, you do.  No bailiff's are gonna come knocking.

[Phouchg]

They're both basically metaphor terms, but they kind of refer to different concepts.  So for that reason, it's not really meaningful to compare them.  We invest in things hoping for a high ROI, but that investment requires we give something up in the form of a debt.  We can apply to that basically any give-take in life, so they go hand in hand with each other.  An investment always requires some sort of debt, and a debt is created due to some sort of investment.

 

Yes, I suppose...

[Arpit]

Isn't this kind of like taking out debt to invest in the stock market.  If you earn a greater return in the market, then it is debt because you owe money and investment because you're also getting a return on it.

[Brian M. Veteran]

It's an entirely subjective question, depending on what you want to do in life.

 

If you want to work in a bank, or go on in academia, then you'll need it. Same goes for anything remotely medical and/or research based. There's no other choice.

 

For me, it's most definitely an investment. I did my undergrad (thankfully at the old fee caps), then a self funded masters. If I didn't have a student loan, there would be no way on earth I'd be able to afford to do that. I'm now doing a PhD (luckily, research council funded) - which wouldn't have been possible without my prior degrees (and therefore, without the student loan). I don't really care that I'll have a, quite frankly, tiny amount deducted from my salary for the foreseeable future. The knowledge, experience and colleagues I've gained over the past few years are priceless in comparison.

 

I do agree that far too many people get pointless degrees these days, though. One of my first lecturers said to me that "you're better off dropping out of a good degree from a good institution, than getting a first in a crappy degree from a poor institution, simply because it shows that you had the ability to get on the course in the first place."

[Biohead]

It is a debt, but it can also be an investment... it depends what you're studying at the end of the day.

 

A lot of people I know went to uni for the sake of going to uni and studying a subject which doesn't really have much career prospects - for them they either love the subject or fell into the trap that they felt they had to go to uni. In these cases I wouldn't exactly call it an investment. Now a lot of these people go on to get jobs, which no doubt having a degree helped them to secure - but I wouldn't say that job would have been impossible to get without a degree.

 

Myself, I secured a position on a grad scheme straight out of uni with a very large company. I'm straight in at a management level, and from the go earn almost ?10k a year more than new starters in my department. I've also got substantially more career prospects now in that I can move within the company fairly easily, even to a completely different role. The salary alone makes it so that uni for me has been an investment. I will have earned more than I paid for my course (4 year integrated Masters - so around ?12k) within about 14 months.

[imachip]

It really does depend on your attitude towards it.  It's essentially borrowing money, and you payback on your PAYE (pay as you earn).  When I was a student I didn't give it a second thought because I needed that money to pay for uni accommodation (I wouldn't go otherwise).  So if you need it you need it, if you don't then don't.

 

IMO the media hasn't pushed out any agenda.  The education bodies offer the loans to ensure that students in hard up families can afford to go.   It wouldn't be fair to you to discourage others as you have no idea how that will affect them in later life.

 

Yes there are degrees that seem to offer narrow options for careers but it's the choice people make, it's not forced on them.

[Ambroos]

I honestly think the whole concept is a bit strange. Coming from a country where the most expensive university doesn't charge over ?600 a year (and it's reduced to less than ?100 if your parents have a lower income), where you can go study at any university without having to apply and without entry requirements (yes, I'm serious), it seems absurd. Letting people educate themselves enriches your population and is the best thing a government can do for their country, by far!

[Growled Member]

It's only an investment if you use the money wisely, same as any other investment. Otherwise it's just a debt.

[Xilo]

Null vote and let me explain.

 

Student loans are only an investment if you get a degree that is worthwhile and desirable in the workforce.

 

Loans for an Engineering, Law, or similar degree is an investment. You most likely will end up making 6 figures within 10 years.

Loans for a Liberal Art degree such as English or Business is a debt. You will most likely be working retail or something completely irrelevant to your degree making minimum wage or enough to get by.