Best Bits: Student Finance tips | Tell Us your budget wedding stories

27:23In fact, for a long time, it was hidden and I have campaigned for it to be made overt. And it is a bit better than it was. We have had some changes over recent years. But let me explain. When you go to uni, you're eligible for a loan to help with living costs. It's called the maintenance loans. Yet for most under 25s, even though you're old enough to vote, old enough to get married, old enough to fight for our country, your living loan is dependent on family residual income, which for most people is effectively it's the income that your family has minus some pension contributions and a very minor adjustment if you've got more than one dependent child.

27:59but for most families the income isn't the young persons the income is their parents so in reality the amount of living loan you get depends on parental income and that starts to be reduced the living loan starts to be reduced at family income of just 25 grand until once you're around 65 000 pounds and it do depends on whether you're living at home living away from home or living away from home in London, on income of around£65 ,000, you get the minimum living loan. This is in England. The system's worked differently elsewhere in the UK. The minimum living loan, which is around half of the maximum.

28:37So let's just make it really simple. If you're living away from home and the maximum loan is£10 ,227 and due to parental income, you're only getting£6 ,000, while they never say it, Pippa, where do you think they're expecting the£4 ,227 shortfall to come from? Mate. Correct. They don't call it a parental contribution and George cannot mandate you to give him the money but that is implied in the system that you will fund that difference which is why I warn all parents of kids who are going to be coming to university age even in the next five or six years to go online where there are parental contribution calculators work out roughly what you will be contributing and make sure that you've got the money put aside because paying for it out of one year's income is quite tough, paying for it if you're saving for it.

29:30I mean, Gareth, you've already experienced this, haven't you? Did you know, have you done the maths to see what the shortfall from the full loan is to what the loan that your children who are at university are getting and what the parental contribution expected is? Or had you not done that maths? I hadn't done it before. It was only on one of the open days that I found out that it was even means tested. and then when we went through the process it was quite a shock at what he was allowed to get and what the expectation was that we were meant to help and I guess with cost of living and interest rates on mortgages and stuff as Pippa mentioned, that differently changed our circumstances and it has made it much more difficult for my son at university he's not been able to rely on us for as much as he'd need.

30:21So it was a shock that the maintenance grant didn't even cover his basic halls of residence in his first year. No, and it's very interesting for me. Years ago, when I used to do road shows for my TV programme, I always remember I had one student come up to me and say he didn't know how he was meant to survive. His loan, I mean, it was years ago, so I'm making up the numbers. His loan was£5 ,000 and his hall fees were£7 ,000. He was living in a hall of residence. and he didn't know what he was supposed to do. And his parents had said to him, this is your problem, you're an adult now. And I said, well, hold on.

30:55And we went through it and his parents were relatively wealthy. So he was getting the minimum loan and they had not been told how the system worked. They hadn't been told that the reason his loan was smaller was because of their income, that he wasn't getting anything close to the full loan, which someone who comes from a background where there's no parental income would get, which you could argue is what the state sees as the minimum that you should have to live off and so I actually spoke to his parents on the phone from memory there and I explained to them how the parental contribution system worked and said look you're quite right to say you want him to stand on his own two feet but effectively you're giving him a four five grand a year disadvantage here because you're not giving him the money that he's reduced because of your expected to give it him so maybe anything above that you might want him to do but of course they were in the position that they could help and not everybody is which is why you have to look at going to work at university it's recommended you don't do more than 15 hours a week because it interferes with your study but up to 15 hours could help to help fund if your parents don't have the money you look at the grants and bursaries websites that are out there and just to while I'm on this I think it probably doesn't apply to any of you but what's really difficult in this situation is the parental contribution is the family income of the main carer's home And they do it based on who's in the home this year, even though they're doing income two years ago.

32:17So I did have a case, a girl, a woman, I should say, who was at university in her first year, when her mother's partner moved in with her, she had been on the full loan because the mother was low income. But because the mother's partner had income and they were now sharing a house, from that point onwards, even though they were looking at the income that they had two years ago, So his income was taken into account. She, for the next year, was then only given the minimum loan. There was something like a£5 ,000 gap. And how is she going to go and ask the mother's partner to pay£5 ,000? She can't.

32:52The mother doesn't have any money, and she actually had to leave the institution she was in because she couldn't afford to stay and live away from home to do it. So there are... It's horrible, isn't it, Pippa? Yeah, yeah. Yeah, I think the bigger problem is, you know, the cost of living mortgages has gone up substantially and what would have been maybe a few years ago potentially spare money that could be helped out has gone even ours I think for a lot of people the concern is about cost of living and the idea of then having to find a lump sum on top even if it's spread across the year is really difficult.

33:40So then the expectation immediately then drops to the student and the extra jobs and all the rest of it or savings or whatever they can do. And so I think it seems bizarre that the maintenance grants should even be in a position where they're getting less than basic accommodation. And the other sort of the double whammy for students is accommodation costs have gone through the roof as well because once they get into their second year, they are into private rented. And all of the private sort of landlords have essentially their mortgage costs have gone up. So they put the rent up. So we're in this sort of catch 22 where parents are tighter than they were and rent has gone up substantially.

34:27So it's really tough, I think, for students. It is incredibly tough. I don't disagree with a word that you've said. I have been the worst thing is that in England specifically, when inflation was over 10%, the maintenance loan was only increased by 2%. And effectively, we have degraded the maintenance loan in real terms very substantially over the last two years. Now, that certainly is an issue of social inequality and social mobility from those from the lowest incomes, because if the full loan is not enough to live off, which it isn't because it's not going up with inflation, then that is certainly off-putting from those from non-traditional university backgrounds.

35:10but it also this hits right the way up into the middle income scales too because of the means test assessment it is absolutely a huge added pressure on parents now i've been campaigning to have the maintenance loan increased i mean arguably if you do the parental contribution calculation that could increase the parental contribution that's expected from some parents too but at least it would mean more raw cash coming into the student but nothing is doing on that clearly we're about to have a general election and the two main parties don't have any plans to increase it and to catch up with inflation.

35:43So that situation isn't going to change. And I think, Gareth, you're absolutely at the nub of this. If you want my practical view of what people need to look at when going to university, forget the focus on tuition fees. Forget the focus on what you pay afterwards. Those are both deal-withable and they're issues for graduates. You need to look at the cost of going to university, at the cost of living while you're there, at the parental contribution, you may need, and it's a terrible thing because I think this isn't what our university system's about, you may need to look at doing comparative costs of different universities for living, what the accommodation costs are, what the food and other and travel and transport costs are, and you may need to look at your university choice within the lens of the cost of living in those different cities and towns around the UK, rather than purely at what is the best university for you.

36:41And that is not a good situation, but that is absolutely the only practical course of action, because I will be honest with you, I don't see the situation over maintenance lines changing for at least the next two or three years and possibly longer. So Gareth, I mean, I agree with every word you said, and I've been campaigning on it. I'm trying to explain to people, it's a tricky balance for me if you see I think it's honestly really hard because I want people to understand the system I don't want any bright young person for whom university is right for to be put off going to university by the finances but at the same time we have to be honest about the practicals so much as I think I can ignore them to don't worry too much about how you pay afterwards you know my big hope to be honest and I say this to to to George George I hope university is going to cost you a shed load of money because it means because it means you will have earned a shed load of money right so i hope it's but my bigger worry is is can you afford to go and you've got you've got four kids and the the amount they take into account for the fact in the in the parental contribution assessment for the fact that you have four dependent children is is virtually negligible and it's just a very small adjustment is that can you afford to put nothing and i mean it's yeah i mean it's sort of i think it put a couple of them off and one's finding it really hard that's already there you're right the different universities particularly on the accommodation front which you only learn as a parent when you start going to the open days and start reading you know the accommodation costs but there's a genuine lack of accommodation once they get out of the first year and that's the practical reality and i think you've expressed it very well.

38:25And I hope that people, you know, for those people who haven't fully got their offers or aren't decided on their university yet, this is a big thing that you need to look at. Now, I'm cautious. We're doing a very long podcast. I'm going to run through my couple of final points with you guys, if you don't mind. Now, one of the big thorny questions about going to university is the interest rate on student loans. Under the new system for those who started university in 2023 or longer, it is set at the rate of inflation, the retail prices rate of inflation. That's actually the slightly higher rate of inflation.

38:55Those who went before were paying between inflation and inflation plus 3%. Now, what that means, the fact it's only at inflation, is you don't actually, in real terms, which is an economic term, you don't actually repay more than you borrowed. So you may pay, borrow£10 ,000 now, which is enough for 100 shopping trolleys worth of goods. You may in 20 years time repay£15 ,000 and that's the face value of the money. But in 20 years time that£15 ,000 would still only buy the same 100 shopping trolleys worth of goods that you borrowed. So your purchasing power is not diminished by the interest which means effectively there is no real cost to going to university.

39:40Although when you get your statement, just in the same way that inflation rises. And of course, the inflation rate only moves once a year. It's based on the March rate of inflation and it changes in the September. It's going to be almost certainly going to be 4.3 % from this September. You will see the amount you owe rise in actual monetary terms, but in real terms, actually, it's rising in line with purchasing power so there isn't a real cost to you. My final note is everything I'm explaining to you today is about the system as it stands now. But the system can and has changed. Student loan terms, in my view, should be locked into law so only an Act of Parliament can negatively change them once you've started uni, but they're not.

40:27And a few years ago, we did see a bad change, though thankfully after much campaigning, and I threatened to take the government to court via judicial review in it, it was overturned. Most of the past changes have been about the repayment threshold. So at what point do you start repaying? So for Plan 5 loans, it's£25 ,000. It is due to go up with average earnings in the future. But a future government may decide they're not going to put it up, a bit like fiscal drag on taxes. So what I would say to you is I think it is perfectly possible the repayment threshold changes in future. I think other term changes are unlikely once you've started your loan.

41:04So I'm not saying they might not change the whole student finance system in future, but that would be for future students. Once you've got your loan, mainstream other changes are unlikely, not impossible, but we could see changes to the repayment thresholds and it's worth being aware of that. And I think that probably ends where I am. So anything left from the three of you, Pippa and George? How's it gone? Where do you feel now? More or less likely to go to university on the back of that, George? Definitely more likely, yeah. Stay at home, George. Do you want to stay at home? Is that what your puppy you're saying?

41:38It'd be a lot cheaper if he lives at home. At home with your mother. Yeah, well, what about George? At home or away? Depends where the unit is, really. OK, you're not desperate. When I went to university in London, being a boy from the northwest of England, I was thinking I want somewhere that's far enough away that I can get back if I need to, but they can't come and visit me too often, which I think was my strategy. Yeah, me too. Yeah, Gareth, I think you knew most of this and your frustrations about the living loans, But hopefully at least the panic afterwards about the debt may have subsided a little.

42:09Yeah, it does help a lot. And I think it'll help for my younger children to understand that it's essentially not really allowing its attacks. Yeah. So I think from that point, it's been really useful. Yeah, it's been really useful for me, definitely. Well, I really appreciate the three of you coming on. George, I want to wish you the best future, whatever you choose to do, whether university or an apprenticeship or something else is right for you. I hope it goes brilliantly well. And the same to Gareth, to all of your four boys. I wish them all the best. Thank you. Thank you for joining me, all of you.

42:41Let's get to Tell Us, shall we? Yes. Budget wedding stories. Did you have a low-cost, glorious wedding, asks Martin. Martin, do you want me to start or you're going to start? Well, oh, I was playing my... I had music on my cart wall and it didn't play. Oh, it's faded up. Was it faded up? It's faded up. Oh, do you really want to switch to instant mode? Yes, I do. I'm on air live for heaven's sake

43:11Seamless professional radio Yes, the tellers is all about budget reading It comes because I was asked when I was doing a live Q &A the other day I was asked by someone by Emma on Instagram getting married is so important to me how can I do it on a low income and I just wanted to say don't have a bad marriage because you had a good wedding too many people are so desperate to fall into the social pressure of having the perfect wedding day that they leave themselves in debt for their married life. You know, if you want to make that legal, public, lawful commitment to be with a partner, then get married.

43:48You don't have to have a big ceremony. So I wanted to hear people's inspirational stories about what they did and how they did weddings on a budget. So that's my intro. Why don't you go for some first? OK, Adam, my wedding cost£35 in 2012. We had some last-minute visa issues and just booked the first appointment we could at Wandsworth Town Hall, went to the pub after. Actually, lovely. 13th year anniversary next September. Now live in New York. Oh, congratulations and well done. That sounds wonderful. I know people who've done a bring-your-own-food-and-booze-in-the-park wedding feasts afterwards.

44:21I stole this one off the Twitter ones. Normally I do Facebook, you do Twitter, but I like this one so much. Vicks, we did a bridesmaid bake-off. Each bridesmaid made a cake instead of having wedding cake. Far less cake was wasted. I like the bridesmaid bake-off. I think that's quite cool. Yeah, that's really good. David says, we didn't have a flower budget. Instead, my brother grew chilli plants for each table that people could take away after. This involved him at a level he was happy with, kept costs down on both flowers and favours. Years later, people still have them. Love that. It's always a wonderful idea to get those close to you, near and dear to say, don't give me a wedding present, help me with the wedding.

44:58Julie, my wedding cost 50 quid at the registry office and we got a room for free. The cake, the DJ and the buffet was paid for by friends and family as wedding gifts. That was 26 years ago and was still going strong. Wonderful. Brilliant. OK, speaking of the tellers, here's a voice note we've had sent in. Hi, Martin. It's Lisa Burton. My husband and I got married last July in Cambridge. we had a most magical day made even more special by consciously deciding to go with a few local suppliers who lived in the same village as us. This included the folk who made our wedding cake, the flowers, my wedding dress and our DJ.

45:38And in fact the DJ and wedding cake maker were just starting out in their careers and we really wanted to give them a chance. The fact that they ended up being less expensive was a bonus but it all made our day even more special. oh how wonderful lovely and here's another tell us voice note we've been sent hi there my name's ellie david and i got married in september 2022 and then we had a party with our family in march 2023 and to save money for our wedding i made all of our flowers and decorations out of felt it took a little while but it means that we've got them to keep or to give away to family and friends we also made our own favours out of loose leaf tea and because we've got a lot of musicians who were friends we asked them if they wanted to come and play for us as a as a present instead of giving us a gift and that saved us a bit of cash too talking of gifts eddie messaged you saying we didn't want our guests to spend money on wedding gifts we had enough stuff in our lives instead we asked for a copy of their favorite book with an inscription we could know our friends even more and have a library to keep us on rainy days winter evenings and summer holidays that's great it's all quite romantic isn't it i like this one from claire we got married in 2015.

46:50Registry office and a pub call. Apart from the legal costs at the registry office, our biggest expense was£70 for the first round. We both wore jeans, so no expensive outfits. The day was amazing. Our wedding meal was a Greg Sarni. Wow. I went to someone's wedding once and we all wore football. We all were asked to wear sports tops to the wedding, which I thought was fun. I just, I think this is it. You've got to do it your way. I mean, look, don't get me wrong. If you want the big white wedding with all the trimmings and you can afford it, then you go for it. It's your special day. Enjoy it. My concern is the pressure that people feel to have the perfect day when they can't afford the perfect day.

47:36And the fact that that is detrimental for their life in future. Finance after infidelity and financial mismatch and financial problems is the second biggest cause of divorce. Starting your married life in debt is putting an unnecessary stress on your relationship from the very beginning. The marriage, if you're going to do it, is more important than the wedding day. We've got Maya here. I'm a wedding photographer and the best budget weddings are those in village halls. There's a lot of DIY involved, but if you enjoy that kind of thing, it's fun, a barbecue and a BYOB. Bring your own booze. Easy.

48:14Melissa says, from a slightly different perspective, I was a registrar. I have seen literally thousands of them and the cheaper the do, the happier the couple on the day at least. Spendy do's make brides frantic. They get to the venue and are busy checking details and not enjoying it. They're often depressed. The planning bit is over too. Lindsay, getting married at four o 'clock in the afternoon next February to save money. Buying through the year to save on costs. Got my dress off the rack. my bridesmaids in the sales and one pair of my shoes off Vinted and a brooch bouquet off eBay. Not having flowers or photographer, having a wedding creator instead.

48:53Not quite sure what that means, but it sounds interesting. Podcast producer Simon, PPS, what have you got? Yeah, well, Liv got in touch saying that they're using a Colin the Caterpillar cake rather than a traditional wedding cake. Nice. Going to put a veil and top hat over them to jazz them up a little. Didn't your wife make the cake at your wedding? She did make the cake. My wife's quite a keen baker, so she made the cake, which we then served as dessert, and then on display we had this sort of polystyrene cake. So you didn't have a separate dessert, the cake was a dessert? Yeah, yeah, so that was the other way we saved money as well, so we didn't pay for a dessert.

49:24Because I'm at that stage in my life where I go to a lot of weddings, and I go to a lot of weddings where you see a lot of cake just on the side at the end that sort of goes to waste, and we were desperate for that not to happen. So we served it as dessert, and then we had like a polystyrene for display cake. Where'd you get that from? Well, we also made that, which sort of took about a week to sort of pile up high. And then we had a videographer who was a lovely guy who was French. And to be fair to him, his English is better than my French, but his English wasn't perfect. And he didn't, when we were trying to do some stage photos of the polystyrene cake, he kept telling me to sort of cut into the cake.

49:57And then I had to say, oh, no, no, it's not real. And he was like, yeah, yeah. But if you just cut into it, it's like, no, I think it's me, I can't. Yeah, yeah. But we got there in the end. I was trying to think what cake is in French. I'm just going to go with gâteau. It works quite simply. Let's do one more of these each. Lots of people, by the way, are saying how they had midweek weddings to cut down on the cost that really worked. Nicky, never put the word wedding when searching online as it bumps up the price. I got my dress off eBay, prom dress and fake flowers. And an anonymous one we got sent in.

50:29We tried, but COVID defeated us twice. We went to Gretna on our own, stress-free and a great day. F1 seemed pleased for us when we told them we bought a new kitchen with what we would have spent. Oh, it's lovely. And I think we should also, the big message here is let's move away from the ideal of a perfect wedding day. Whenever you set yourself up for perfection when it comes to weddings, I think you're going to end up with either debt or disappointments. So just try and have a wonderful day instead of a perfect day.

51:02Okay, so a little bit more on student Finance Now. You have sent lots of questions in. I want to try and answer them. Producer Chloe is with me. Hello, Producer Chloe. Hello, Martin. Yes, just so everybody knows, I don't call you Producer Chloe when I meet you off air. No, it's just normal Chloe. Yeah, I just call you Producer then. Yeah. Right. We've got this one in from Gingerbread, they call themselves. It says, does student debt go on your credit score? Is it counted as debt to reduce your chance of getting, for example, a mortgage? So no, student loans do not generally go on your credit file.

51:33so they're not part of that debt. Although, of course, you can be asked about them on an application form and you certainly would be forgetting a mortgage. But interestingly, I've done the explanation it works more like a tax. The same is true for mortgages. It does impact your mortgageability, but not because it's a debt, but because just like if they increase taxes, it would reduce your disposable income. Because you're paying 9 % higher tax above£25 ,000, that gives you a reduced disposable income. So when they're calculating how much you can borrow, then the student loan has a factor because you've got less disposable income.

52:11So when they're looking at it, just as I've explained, it's a bit more like a tax. They look at it a bit more like you pay extra tax rather than looking at it like you've got a debt hanging over your head. But absolutely, it does impact what mortgage you would be accepted for because it reduces your disposable income. And that's a crucial factor when they're deciding how much they're willing to lend to you. Hayley asks once I have a degree does that mean I can no longer use student finance to fund further studies beyond that? So you generally get one go as an undergraduate and student finance is for first-time UK undergraduates however there is also a postgraduate loan available that works in a similar way to student finance but without the maintenance loans and it is slightly different but you can get postgraduate student finance as well.

52:59This one from Mandy who asks and this might be a how long is a piece of string kind of question i don't know 7.2 inches when will student funding align with inflation uh it's it's up to the government uh and it depends what you mean by funding i think you probably mean the maintenance loan look i absolutely believe they should lock the maintenance loans and link it to rpi inflation after all they link repayments to rpi inflation so they should link the maintenance loan to rpi inflation too hey even if they linked it to CPI inflation, the slightly, slightly lower level, it would at least be fairer.

53:31Unfortunately, I said it at the very start, it's a political football. It depends the party and government. They don't want to relinquish control by locking it into a set mechanism. So they decide year by year what the loan is going to be. And I think that the loan has now fallen substantially behind where it needs to be. Ironic, isn't it? I said this in the Today programme interview, the biggest problem with student finance, the biggest practical problem is not the loans are too big, it's that they're not big enough. This is more a comment from Emma, which reflects quite a lot of what we've discussed.

54:00She says, I don't understand why parents' income should be used as a measure. Our children are legally adults and as parents we have no other rights when they pass 18. All rights fall to them. So it's a flawed system that parents' income is used as a measure for this. I have a lot of sympathy with that argument. I certainly, you know, I find it very strange that they're considered independent adults in every other way. Having said that, you would of course get the argument the other way, that if it was taken out of there, that exceedingly rich people are getting exactly the same student finance and student loans when they don't need it and they could afford to pay it off, you know, as everybody else.

54:38And it does help the system. So it's a really difficult one. I mean, look, if you want to get, if we want to really talk about the difficulties in student loans. So one of the people who set up the income contingent loan system in the UK is Professor Nick Barr of the London School of Economics, which he did with Ian Crawford, the late Ian Crawford. And they were doing this system around 1991, 1992, when I happened to be a student at the London School of Economics. And I happened to know both of them. And I happened to get involved with them as being one of the people they were feeding back on what students thought on it.

55:12And I was later general secretary or president of the Students' Union. So I know them both rather well. And what's interesting now, and I have debated Nick Barr, and it's funny because he's one of my professors and he's a lovely man, about student finance since. And there's an interesting question, if we get a bit political, about whether the changes that have been made in 2023 are regressive or progressive. So progressive is where higher earners pay more, regressive is where lower earners pay more. Now, if you look solely, my argument is, if you look at university leavers, the changes that have been made by extending the loan, reducing the interest and reducing the repayment threshold, they benefit higher earners who repay quickly and repay less interest.

56:00So actually, the changes are beneficial to the highest earning graduates, and they're detrimental to middle and lower middle earning graduates, those who'll be on middle salaries, who'll be paying the loan for most of their lives and high interest and are paying for 40 years rather than the previous 30 years. So I would argue that the change is regressive. What Nick Barr argues is the change is progressive because he says we shouldn't just look at university leavers, we should look at the entire population. And the, let's call it roughly, roughly 50 % of those who go to university will tend to have more affluent lives than the 50 % who don't go to university.

56:45The funding is being provided by the state, which some would argue means the taxpayer is liable for it. And so if you reduce the cost to the state, it's progressive because there is less benefit to those higher earners who go to university and the people who don't go to university aren't having to pay as many taxes to support them. So he would argue that the system is progressive by making it more expensive for university legalers. I would argue it's regressive because it's the lower and lower middle earners who leave university who've paid more with the change in the system. You see what a sticky wicket this is?

57:21Does that make sense, Chloe? It does make sense. Because I was getting a bit complex there. Yeah, I don't think I could explain it back to you, but I understood what you said. OK. Elisa asks, I understand that the interest begins from day one as soon as the money is received. Is that right? The interest does. But let's just talk interest for a second. And this is slightly less relevant under the new 2023 leaver system, because just over half of people will clear it in full within the 40 years, as opposed to the millions of people who have Plan 2 loans, which is those especially in England between 2012 and 2022 starters who have outstanding loans where only 26 % of people are likely to clear in full before it wipes.

58:03But it's important to understand the only people who will pay all the interest added is those who clear in full before it wipes. Everybody else will not pay all the interest. Some people will pay some interest, those who are getting close to repaying it all. Some will repay just about the the same as the capital they borrowed. Some who earn above the threshold but not much above the threshold will pay less than the capital they borrowed and some won't repay anything at all if they never earn above the threshold. So it's very important to understand that the interest added to your account is not the same as the interest you necessarily pay.

58:40This is a bit like my old equation earlier. What you owe is less relevant than what you earn each year and the interest is just added to what you owe. So whether you will repay all the interest is a function of how much you earn over the period, which is slightly complicated. The worst interest is for those people who repay in exactly 40 years. Those who clear it quicker repay less interest. Those who clear it slower won't repay all of the interest. So it's quite a complicated curve that you have on this. But yes, the interest is added immediately. And for those who pay the interest, then the interest is ticking up every day.

59:15Steve asks, why does student finance, and I think in this term he means maintenance loan, why does student finance think it's a good idea to award a lower amount in the student's third year? Because technically in the previous years you're getting a loan for 12 months and in the third year you're getting a loan up until you leave in July. It's not covering that summer because you've now left university. Great. Into hopefully a very highly paid job so that you can start paying. Exactly. So effectively, they define it as it's covering a shorter time because it doesn't have to cover the summer holiday.

59:48And then Ben asks, and we've covered a bit of this before, but I think it's still useful because of the kind of last part of it. He says, what happens if your student loan isn't paid off after however many years? I understand it's written off in inverted commas, but what does that mean? Does it affect my credit? Is it a national debt time bomb? Well, it never affects your credit. It is totally written off. It is not your responsibility. Is it a national debt time bomb? That depends. That's the political opinion I don't want to give. But let me go back to something a bit simpler that you have to understand.

1:00:17When people talk about the size of the student loan debt and there are accounting issues, which is one of the reasons the system's been changed, because the way the national accounting of student finance is done is changed and it's made it slightly more expensive to offer the loans. But that's not my side of the world. So let me, I'm going to oversimplify. Let's imagine before tuition fees existed. Or we could even say before tuition fees were put to£9 ,000. Do you remember there were£3 ,000 before that? Or even less when I went. Yeah, but let's say when they were£3 ,000. That wasn't a case that university would cost£3 ,000.

1:00:51What happened then is universities got some money which was hypothecated as loans to students and some money that they got direct from the government as a grant. So that was just money given to universities. when it was changed to£9 ,000 it wasn't that the universities got more it's that they no longer got the grant and all the money they were paid for UK undergraduates was counted as a loan to the student now if you think about that difference that actually means the state was paying less because previously roughly two thirds of it was a grant and one third was a loan that they might get some money back but then they changed the system So all of it was a loan at which they might get some money back.

1:01:37So many people talk about the student loans, who's going to repay? What if you don't repay? Well, actually, in the past, when people didn't pay tuition fees and didn't get and got grants, all of the money was paid by the state. And if we want to make it even more interesting, the problem with the philosophy of this, we talk about how much of the loan is repaid. and I've got my statistic here, here you go, let me give you exactly. Under the old system, 2022 started as before in England, the state paid 44p per£1, the cost of going to university. Under the new system, the state pays 19p per pound.

1:02:20In other words, the individual pays 81p. But let's just think of this for a second. How, if I was in charge and I decided the interest rate, instead of being set at the rate of inflation, the interest rate was going to be 100 % a year. Almost nobody would repay in full because at 100 % a year, it would massively accelerate. Only Mark Zuckerberg would have paid his student loan in full. Everybody else wouldn't pay in full before it wipes in the 40 years, but the state would have taken a lot more money in. So less people repay in full, but the interest rate is higher, so the state takes more money in because it effectively just takes 9 % above the threshold for 40 years for everybody.

1:03:02Some people don't clear it as they do in the current system. Alternatively, if we scrapped interest and made it totally interest-free, far more people would repay in full, but the state would take in far less money because it's not taking in any interest. So the argument that people aren't repaying in full therefore burdens the state, it actually all depends on the interest rate and the cost of the state's funding as to how that actually works, which goes again back to my argument, this should be called a graduate contribution scheme. The scheme, the contribution is split between the state, which does benefit from a highly educated population, and the individual, who also benefits from their higher education.

1:03:49What we are debating is always where that pendulum swings between the two. And that is why it's far more complicated than is it a national debt time bomb. It all depends. Push the interest rate up and the state would technically be contributing much more, but in reality be bringing in far more. So it's a little bit more complicated. One final question from Kate on sort of the devolution of it all. She says, why is there such variance between Wales, Scotland, England, Northern Ireland? And it seems very unfair, she says, because I'm wondering why it's so different. Very simply because higher education is devolved and the decision of the funding of higher education in Scotland and Northern Ireland and Wales is given to their assemblies or parliament.

1:04:34It is not set by the UK government. The UK government only sets the system for England. So it is simply a devolution question, which does bring me on nicely to the situation in Scotland, Wales and Northern Ireland. I mean, most people will know tuition fee levels are different in those countries. You don't pay tuition fees in Scotland. So the loans tend to be lower, which is likely to mean that students are more likely to repay before the debts wipe. The 40-year rule has only changed in England. It hasn't changed in the rest of the UK. It's usually 30 years then. In the rest of the UK, in Wales, there is no parental contribution.

1:05:19All that parental contribution effects is in Wales, you get a living loan and a living grant. The more the family income, the more of the funding you get is loan, the less is grant. But the total amount you get is always the same. So there isn't a parental contribution. In effect, everybody gets the same to live off. In Scotland and Northern Ireland, it is also split between a loan and a grant, but the total amount of finance you get still does depend on parental income. So there is effectively a parental contribution there, though it isn't the same size as it is in the United Kingdom. And I always have to be careful how I phrase this, but I know for certain there are parental contribution calculators for all four UK home nations.

1:06:01so you can see what you will pay available somewhere, tram workout where, on the internet. Thanks for listening to this week's Look Back podcast special. If you enjoyed it, please do tell your friends you've been listening to the Martin Lewis podcast. And if you've not enjoyed it, as I say every week, well, it's your own fault for listening this long, isn't it? It's been about an hour. You're still here. You didn't enjoy it. Go focus on happiness, not listening to this, if you don't like it. I would love you to like it, but you don't. So while you're here, go away, shoo.

1:06:49Martin Lewis is the founder of moneysavingexpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double-checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen. I got bills, I gotta pay.

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