Why I chose not to go to uni: £40k debt is just part of the answer

Why I chose not to go to uni: £40k debt is just part of the answer

Both of my parents went to university, and all of my classmates have gone to university. But I chose not to.

The vast cost – which would end up as a debt I’d be paying off for decades (see below) – definitely played a part in my decision.

But perhaps an even bigger reason, when I thought hard about it, was that I wasn’t sure exactly what I wanted to do. Would it really be a good idea to spend three years and tens of thousands of pounds in the vague hope that by the end of it I’d have a clearer idea of my chosen career?

The more I thought about it the more certain I became: I’d be better off (financially and in other ways) by going straight into the workplace and discovering, through practical experience, where my future might lie.

What I was not prepared for was how my decision would be viewed.

Sofia Mumtaz is 18. She is currently on the i2020 training scheme which exists to help school leavers and graduates find a route into the investment industry.

Sofia Mumtaz is 18. She is currently on the i2020 training scheme which exists to help school leavers and graduates find a route into the investment industry.

You don’t think uni is for you? Get ready for criticism and judgment

It’s always tough to go against the flow. Having gone to a selective Grammar school for sixth form, it was obvious from the outset that most if not all of my peers would go on to university. That’s what the system is geared toward.

In the same way that we focus first on GCSEs and then on A-levels, our attention is automatically pushed on from A-levels to university. At my school, for example, significant resources are devoted to help bright students get into elite universities like Oxford or Cambridge. But if you’re a bright student who decides you’d rather go and work for a top firm – don’t expect any support whatsoever.

On the contrary, you can expect criticism.

 Our teachers went to university - so they expect us to do the same

I didn’t quiz every single one of my teachers, but I reckon all of them went to university.

The difference for most of them is that when they graduated they weren’t lumbered with anywhere near a £40,000 or £50,000 debt.

Our teachers failed to encourage us to stop and think. Provided you were expected to get excellent grades, no-one ever said: “Hey, are you sure that university is going to be the best next step?”

And for many students the prospect of more fulltime education was comforting.

All our lives we’ve know where we will be up until the age of 18. University adds another three years of familiarity.

How I made my decision

Like my peers I was convinced university was my only option until a few months before leaving sixth form. I applied to a top university and was offered a place.

But then, as I settled down to serious revision ahead of the exams, I began to wonder about my options - and I went on the hunt for work placements aimed at school leavers. I soon realised that I had left this a bit late but also that there were many attractive opportunities (not that they had ever been brought to my attention).

I sent off several applications and then pushed the issue to the back of my mind not really thinking much of it until after exams.

The question of tuition fees and living expenses

I love learning, but it’s like everything else: there has to be value for money. When you head off to uni you’re making a huge financial commitment on the assumption that you will get a worthwhile return. But will you?

Almost all universities charge the maximum tuition fee which is set at £9,250 a year. If you are planning to do a course costing £9,250 per year and take out a student loan, the interest on your loan is calculated at inflation (Retail Price Index) +3% for the period while you study. The measure of inflation is taken at single point and rate set each year.

You don’t make any repayments – the interest is simply added to your loan balance.

Once you’ve left uni, again, you’ll only start making repayments when your income exceeds a set threshold, currently £25,000. You’ll pay 9% of your income above that threshold toward your debt. After 30 years any remaining debt will be written off.

So it works a bit like an extra tax: provided you still have some outstanding debt and you earn more than £25,000, you’ll pay 9% of your income above that £25,000 limit for up to 30 years.

To make matters more complex, the interest rate is based upon your income. If you earn below £25,000 the interest rate on your loan is only RPI. If you earn more the rate rises, up to a maximum of RPI plus 3% which kicks in on earnings of £45,000 or higher.

Students loans - getting your head ‘round the maths

There are many quirks in the student loan system and one of the most cruel is that students are having interest added to their loans at the highest possible rate of RPI plus 3%.

For the academic year 2018/2019 the interest rate is set at 6.3% (RPI taken at 3.3%+3%). And remember, the interest is compounding – interest being charged upon interest – so after the end of three years your debt will be in the region of £30,000.

That figure is just for fees.

Take into account maintenance loans, where you can currently borrow up to £11,354 per year (this is means-tested against your household income), with interest charged at the rates, and you can expect your debt easily to exceed £40,000.

And my future…?

I was fortunate enough to secure a job straight from school and can say with confidence that it’s the best thing that could’ve happened to me. I won’t say I’ll never go to uni – perhaps I will, one day – and if so I hope I will have a very clear idea of what I want to study and why.

University is a big commitment in terms of cost but also time. The world of work enables me to be inquisitive about where I see myself in future and consider how I can get there. If I’d gone straight to university it would have felt as though I was putting my life on hold.  Uni might be a great choice and opportunity for you, but whatever your parents and teachers say, it’s not the only one.

 

Money journo Holly Thomas: Five things you might not know about investing - but should

Money journo Holly Thomas: Five things you might not know about investing - but should

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