WEBVTT - The 51% Graduate Tax

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>Hello and welcome to Merin Talks Your Money, the personal

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<v Speaker 2>finance edition of Merin Talks Money. In these bonus podcasts,

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<v Speaker 2>we talk about the best strategies for making the most

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<v Speaker 2>of your money. I'm Meri in Sumset Web and with

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<v Speaker 2>me today senior reporter and Money Distilled author John step

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<v Speaker 2>Back here, John, Hi.

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<v Speaker 3>Mel.

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<v Speaker 1>Okay, John.

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<v Speaker 2>So this week we are tackling a topic that you

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<v Speaker 2>and I have talked about a lot over the years,

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<v Speaker 2>and everyone else has finally noticed. It is student loans. Now,

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<v Speaker 2>there's rising graduate debt levels, there's lots of pressure refer reform.

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<v Speaker 2>Might there be some possibility of change in the current system,

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<v Speaker 2>and what might.

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<v Speaker 1>It look like.

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<v Speaker 2>We'll get onto that in a minute, but let's just

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<v Speaker 2>talk about what is happening here. I mean, there're a

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<v Speaker 2>variety of different kinds of student loans. I can't even

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<v Speaker 2>remember how many other five different types of student loan

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<v Speaker 2>depending on when you took it out. But the one

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<v Speaker 2>that's really causing ructions at the moment is the Plan two,

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<v Speaker 2>which I think runs from people who were at university

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<v Speaker 2>between twenty twelve and twenty twenty two. Just correct me

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<v Speaker 2>when I'm wronger better on detail than I am.

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<v Speaker 3>No, No, it's way too over that, okay.

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<v Speaker 2>But whatever your plan, you end up paying effectively nine

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<v Speaker 2>percentage points extra in tax above the repayment threshold. And

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<v Speaker 2>we've talked about that over the years because we think

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<v Speaker 2>it's part of the thing that disincentivizes people from working.

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<v Speaker 2>We think it's more from taking promotions at least, we

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<v Speaker 2>think it's one of the things that makes life so very,

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<v Speaker 2>very difficult for the young in the UK because they're

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<v Speaker 2>paying a phenomenally high effective rate of tax. You know,

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<v Speaker 2>you think you think maybe you've just gone over the

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<v Speaker 2>forty percent threshold, but in fact your new tax rate

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<v Speaker 2>is fifty one percent by the time you've taken into

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<v Speaker 2>a gang student loan and national insurance. And this seems

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<v Speaker 2>kind of shocking, particularly as for the majority of people

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<v Speaker 2>it's going to be with you not just for five years,

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<v Speaker 2>ten years, twenty years, but maybe thirty years, probably thirty years.

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<v Speaker 2>And of course on the newest plan, which is a

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<v Speaker 2>Plan five, I think it's forty.

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<v Speaker 1>Years, not thirty years.

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<v Speaker 2>And people are suddenly beginning to notice that this is

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<v Speaker 2>a really shocking burden to have to carry for your

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<v Speaker 2>entire working life. But I suppose the first question I

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<v Speaker 2>want to ask is why do you think people are

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<v Speaker 2>noticing now when we've been talking about it for years.

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<v Speaker 3>I think it's like a lot of these things, it's

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<v Speaker 3>only when they're critical master people have been actually pummeled

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<v Speaker 3>by it. I think wine issues because obviously these the

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<v Speaker 3>Plan two started in twenty twenty elve, So the canes

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<v Speaker 3>of people who graduated and see twenty sixteen going to

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<v Speaker 3>be in the kind of like thought, these no starting

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<v Speaker 3>families working in can of metal management get into the

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<v Speaker 3>bit of their career where they feel that they should

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<v Speaker 3>be young and enough to buy a house and start family.

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<v Speaker 3>Quite how few of those people are working in the media,

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<v Speaker 3>you know, so the good columns in the Times or whatever,

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<v Speaker 3>and they're starting to know is the hotel a minute? Like,

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<v Speaker 3>I'm a forty percent taxper but yes, I'm paying fifty

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<v Speaker 3>one percent on top of that, I'm paying in my

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<v Speaker 3>auto enrollment pension and basically there's nothing left for me

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<v Speaker 3>at the end of the day. And I thought that

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<v Speaker 3>things were going to be easier by now. So I

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<v Speaker 3>guess they've just started. And also of course they've getting

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<v Speaker 3>a letter you know, from the student Launch Company every year,

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<v Speaker 3>and they're kind of looking at and they're thinking, wait

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<v Speaker 3>a minute, oh, at least as much as I did

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<v Speaker 3>the I graduated in that was a decade ago.

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<v Speaker 1>Yeah.

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<v Speaker 2>I think that's one of the really interesting things about it,

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<v Speaker 2>isn't it is that you know, people keep saying, oh,

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<v Speaker 2>don't worry about it.

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<v Speaker 1>It's not a big deal. You know, if you don't

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<v Speaker 1>have enough money, you know, I'm paid off. It's not

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<v Speaker 1>like a real debt. It's not like a real debt.

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<v Speaker 1>It's just a graduate contribution.

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<v Speaker 2>Is Martin Lewis, and I strongly disagree with most of

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<v Speaker 2>what he says about the student lives, but he keeps

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<v Speaker 2>referring to it as a graduate contribution, and it really,

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<v Speaker 2>you know, it's just it's not that big a deal.

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<v Speaker 2>It's not like a real debt. But if you get

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<v Speaker 2>a letter every year telling you that you are pounds

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<v Speaker 2>fifty thousand pounds sixty seventies eighty pounds and that worse,

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<v Speaker 2>even though you've been paying it off for all year,

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<v Speaker 2>or you think you have. At the end of the year,

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<v Speaker 2>because the interest rate is very high, you may own

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<v Speaker 2>more at the end of the year than you did

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<v Speaker 2>at the beginning, despite the fact that you felt you

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<v Speaker 2>paid some off. Yeah.

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<v Speaker 3>And I think the other problem is that, I mean

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<v Speaker 3>you've said this before, but there's the psychological building of

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<v Speaker 3>having that hanging over you. Yeah, if people were going

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<v Speaker 3>to union and the people were complaining about this. Also

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<v Speaker 3>people who consider themselves to be high achievers and so

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<v Speaker 3>they sort of see this inability to pay this debt

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<v Speaker 3>off as some kind of personal failure. But also, I

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<v Speaker 3>mean is more than just psychological, it's a huge financial

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<v Speaker 3>planning issue. Yeah, Because you know, we talk about retirement.

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<v Speaker 3>So the big problem with retirement is that you's fundamentally

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<v Speaker 3>full of uncertainties. And the main uncertainty is obviously you

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<v Speaker 3>don't know when you're going to die, and you do

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<v Speaker 3>not know the partner of your spending between the time

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<v Speaker 3>you retire and the time that you cannot pass away.

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<v Speaker 3>And student loans a a lot like that. It's like,

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<v Speaker 3>if you wanted to know what you should do with

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<v Speaker 3>your student loan, you would have to have perfect certainty

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<v Speaker 3>about the way that your earnings were going to work.

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<v Speaker 3>And not only that, your earnings and your life events.

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<v Speaker 3>I mean, like good example is you know what happens

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<v Speaker 3>if you have kids. You know, you might be a

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<v Speaker 3>high flying can I graduate at kind of twenty nine

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<v Speaker 3>thirty doing well? But what if you'd say to take

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<v Speaker 3>a career break and then you decide, well, actually, you

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<v Speaker 3>know after kind of a year on maternity or paternity

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<v Speaker 3>leave that I said, I'm going to be the one

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<v Speaker 3>that stays home and looks after the kids. When a

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<v Speaker 3>couple of years, that's completely different decisions you should make

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<v Speaker 3>on your student loan.

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<v Speaker 2>Man, in terms of whether you should take a loan

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<v Speaker 2>or not, whether you should try and get your parents

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<v Speaker 2>to pay it at front, or how you should do everything.

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<v Speaker 3>Yeah, well the exactly kind of the financial SIDEA is

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<v Speaker 3>kind of night marriage from that point of view, because

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<v Speaker 3>at the end of the day, if you if you

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<v Speaker 3>were to just leave your nie and then not get

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<v Speaker 3>a job at all, then yes, it would be pointless

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<v Speaker 3>to pay by your student loan because we're paying back

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<v Speaker 3>sixty thousand pound OIDs and you would never ever, actually

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<v Speaker 3>I've had to repay that, John.

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<v Speaker 2>I suppose, unless you felt you had a duty to

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<v Speaker 2>other taxpayers.

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<v Speaker 1>To pay your way.

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<v Speaker 3>I feel that we've already demonstrated that is not the case.

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<v Speaker 3>You cannot lie on your human beings for that.

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<v Speaker 1>No you can't.

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<v Speaker 2>I mean, I suppose when when people look at it

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<v Speaker 2>and say, well, it's not like a real loan, it's

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<v Speaker 2>you know, it's a lump sum that you might never

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<v Speaker 2>pay off, and so in the end that maybe a

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<v Speaker 2>very large number of people will never pay back where

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<v Speaker 2>they borrow.

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<v Speaker 1>So watch the problem.

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<v Speaker 2>I think that that's a confusion, isn't it, between effectively

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<v Speaker 2>stock and flow.

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<v Speaker 1>Right, You're still.

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<v Speaker 2>Paying nine percentage points extra every year, and that's a

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<v Speaker 2>massive burden, regardless of what the big number is, whether

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<v Speaker 2>you're paid off or not.

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<v Speaker 3>But also, I mean the other thing is the reason

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<v Speaker 3>they keep changing it. I think this is that says

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<v Speaker 3>actually important is that the government is then increasing the

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<v Speaker 3>number of people who do endor promently pay it bus

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<v Speaker 3>And I think that's it, because you're really people started

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<v Speaker 3>obviously oh well it's not a real loaning and it

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<v Speaker 3>doesn't matter that much anyway. But the closer it gets

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<v Speaker 3>to being something that will likely not this is just

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<v Speaker 3>a summer money that you have to pay off over

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<v Speaker 3>your work in lifetime. You know, you can no longer

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<v Speaker 3>kind of keep dismissing it like that. I mean a

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<v Speaker 3>law Plan two is when people are complaining about Plan five,

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<v Speaker 3>actually moves it much further along that way, the interest

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<v Speaker 3>rate doesn't look as ugly, but the fact you have

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<v Speaker 3>to pay over forty years thirty means that far more

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<v Speaker 3>people are going to end up paying the whole thing.

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<v Speaker 2>Yeah, and I think people are beginning to notice some

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<v Speaker 2>of the unfairnesses here. And one of the things that

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<v Speaker 2>you hear people now talking about over and over again

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<v Speaker 2>with the Plan two loans and the Plan vied by

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<v Speaker 2>the way, is that the interest rate is based on RPI,

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<v Speaker 2>not CPI. Now the government uses CPI for almost everything

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<v Speaker 2>because they no longer consider RPI to be a reasonable

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<v Speaker 2>measure of inflation. But of course when it comes to

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<v Speaker 2>money that the government has keen to receive, it's much

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<v Speaker 2>better for them to use RPI because it generally comes

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<v Speaker 2>in about one percentage point higher than CPI. So if

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<v Speaker 2>you say we're all student loans are based the interest

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<v Speaker 2>rate is based on RPI, that brings in a lot

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<v Speaker 2>more money, but also it's kind of unfair because it's

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<v Speaker 2>not used for any anything else. And then if you

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<v Speaker 2>look at Plan five EI, the one that most recent

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<v Speaker 2>students are on, the interest rate is just RPI.

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<v Speaker 1>That's it. You pay back over.

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<v Speaker 2>Forty years, right, but Plan two it's your RPI. And

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<v Speaker 2>then in a sort of bount of extraordinary progressiveness, because

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<v Speaker 2>the UK tax system is one of the most progressive

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<v Speaker 2>in the world. I don't think people grasp that very often,

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<v Speaker 2>but this is yet another example of why this is

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<v Speaker 2>a tax, not alone and not just a tax, but.

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<v Speaker 1>A very very progressive tax.

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<v Speaker 2>The interest rate you pay goes up as you earn,

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<v Speaker 2>more so at the bottom.

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<v Speaker 1>Of the threshold.

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<v Speaker 2>When you go over that threshold and forum type two loans,

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<v Speaker 2>it's just over twenty eight thousand, isn't it twenty eight

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<v Speaker 2>than four hundred ish pout At that.

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<v Speaker 1>Level you just pay RPI.

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<v Speaker 2>By the time you get up to the top, you're

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<v Speaker 2>playing RPI plus three percentage points.

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<v Speaker 1>So these interest rates are.

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<v Speaker 2>Very high and that doesn't seem quite right.

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<v Speaker 3>Yeah, And to be clear, the top is just fifty

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<v Speaker 3>one tho, so it's the bottom of the forty percent

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<v Speaker 3>tax bracket.

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<v Speaker 2>And the other on fairness that I think people have

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<v Speaker 2>now noticed is this business of the threshold being frozen.

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<v Speaker 2>So the moment we just said it's over twenty eight thousand,

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<v Speaker 2>the current threshold. It's going to be moved up to

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<v Speaker 2>twenty nine thousand, three hundred and eighty five pounds from

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<v Speaker 2>April twenty twenty seven, but then frozen for three years.

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<v Speaker 2>And this brings us into fiscal drag, which people perfectly

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<v Speaker 2>reading me say, is not something that should be used

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<v Speaker 2>in this context to let them inflation deal with the problem.

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<v Speaker 2>So if you've been listening to government ministers talking about

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<v Speaker 2>this recently and Rachel Ruths herself talking about it, one

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<v Speaker 2>of the things they say is, oh, well, you know

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<v Speaker 2>we're keeping an eye on this. I know we're watching it.

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<v Speaker 2>No idea, you know, poor people, et cetera. But but

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<v Speaker 2>we've got a lot of stuff to pay for. And

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<v Speaker 2>suddenly you look at this and you're like, yeah, that's

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<v Speaker 2>a tax. That is a tax. They're shifting the goalposts

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<v Speaker 2>all the time in order to increase the revenues from it,

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<v Speaker 2>as if it were a tax to you know, have

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<v Speaker 2>it help pay for other things, et cetera. So that's

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<v Speaker 2>obviously absolutely maddening for people with this dat.

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<v Speaker 3>Yeah, and it's also worry because as soon as it

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<v Speaker 3>gets recognized in that way, then the direction just keeps

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<v Speaker 3>moving towards it. Being attacks. It's one thing, you know,

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<v Speaker 3>we'd be sitting and we talk about how should you

0:10:12.920 --> 0:10:15.199
<v Speaker 3>pay for this? How should you think about paying for this?

0:10:16.320 --> 0:10:19.080
<v Speaker 3>And in an ideal world, yeah, you would have you know,

0:10:19.559 --> 0:10:22.000
<v Speaker 3>like the resources that appearents would have the resources to

0:10:22.040 --> 0:10:24.800
<v Speaker 3>actually just pay for it up front and it wouldn't

0:10:24.840 --> 0:10:27.280
<v Speaker 3>be something you had to worry about. But I think

0:10:27.559 --> 0:10:31.079
<v Speaker 3>we now have to think about getting a degree as

0:10:31.320 --> 0:10:34.120
<v Speaker 3>is it actually value for money in a way that

0:10:34.280 --> 0:10:38.200
<v Speaker 3>you didn't have to whenever we went to UNI because

0:10:38.240 --> 0:10:41.839
<v Speaker 3>it didn't ultimately cost as much or anything at all

0:10:41.880 --> 0:10:46.640
<v Speaker 3>dependent Whereas now we young people don't have that luxury anymore.

0:10:47.080 --> 0:10:49.400
<v Speaker 3>You know. It basically is this thing worth paying sixty

0:10:49.400 --> 0:10:54.400
<v Speaker 3>grand for? You know? And that's that then moves away

0:10:54.400 --> 0:10:57.440
<v Speaker 3>from the university experience of you know, getting away from

0:10:57.520 --> 0:11:00.559
<v Speaker 3>your hometown and meeting new people and our rest. Well,

0:11:00.559 --> 0:11:02.560
<v Speaker 3>you can do that in other ways aren't going to

0:11:02.600 --> 0:11:05.160
<v Speaker 3>cost you that kind of money. So that thing is

0:11:05.200 --> 0:11:07.440
<v Speaker 3>something that's to be seriously kind of thought about, as

0:11:07.480 --> 0:11:09.439
<v Speaker 3>opposed to all these people you see trotted out on

0:11:09.640 --> 0:11:11.720
<v Speaker 3>newsnight and all the rest of it, who went to

0:11:11.880 --> 0:11:15.560
<v Speaker 3>UNI in nineteen seventy five or whatever, when somebody paid

0:11:15.559 --> 0:11:17.600
<v Speaker 3>them to do it, and they can waft on about

0:11:17.640 --> 0:11:19.760
<v Speaker 3>how oh yeah, it's all about you know, can I

0:11:19.840 --> 0:11:23.320
<v Speaker 3>the enlightenment and learning and education for the sake of it?

0:11:23.440 --> 0:11:25.840
<v Speaker 3>You can't. That's no longer a luxury that we've got.

0:11:26.559 --> 0:11:30.240
<v Speaker 2>No, And it's interesting that when you were talking about

0:11:30.240 --> 0:11:32.760
<v Speaker 2>it just now, you said, is it worth sixty four grand,

0:11:32.800 --> 0:11:34.640
<v Speaker 2>sixty five grand, seventy grand? And I would say the

0:11:34.679 --> 0:11:37.319
<v Speaker 2>other way around, I'd say, is it worth nine percentage

0:11:37.360 --> 0:11:40.000
<v Speaker 2>points of extra tax for your entire working life?

0:11:40.080 --> 0:11:41.800
<v Speaker 3>Yeah? I mean that too. I mean I think the

0:11:41.840 --> 0:11:44.040
<v Speaker 3>only benefit to say in sixty grand is because it

0:11:44.080 --> 0:11:47.240
<v Speaker 3>actually puts a figure on it up front, becaus I

0:11:47.280 --> 0:11:50.120
<v Speaker 3>think a lot of people, until you're actually paying that

0:11:50.240 --> 0:11:54.199
<v Speaker 3>nine percent, you're not aware of just how brutal that

0:11:54.400 --> 0:11:56.079
<v Speaker 3>is in terms of extra tax.

0:12:06.520 --> 0:12:08.080
<v Speaker 1>So, okay, onto the real questions. Now.

0:12:08.120 --> 0:12:10.160
<v Speaker 2>We've done a podcast before you and I on whether,

0:12:10.600 --> 0:12:14.360
<v Speaker 2>if you can afford it, you should pay for your

0:12:14.400 --> 0:12:17.480
<v Speaker 2>kid's education upfront, and I think you know, we came

0:12:17.559 --> 0:12:19.679
<v Speaker 2>down on the side of, well, all right, it depends

0:12:20.520 --> 0:12:22.400
<v Speaker 2>if you have plenty of money and you want to

0:12:22.400 --> 0:12:25.559
<v Speaker 2>re leave your child of that psychological burden. Absolutely, if

0:12:25.600 --> 0:12:27.520
<v Speaker 2>you have a limited amount of money, are you better

0:12:27.559 --> 0:12:30.920
<v Speaker 2>off putting it into a house deposit for them later,

0:12:31.160 --> 0:12:33.240
<v Speaker 2>or putting it into a pension for them or into

0:12:33.280 --> 0:12:34.680
<v Speaker 2>an ISA for them, etc.

0:12:35.040 --> 0:12:36.800
<v Speaker 1>So choices, choices, choices.

0:12:37.160 --> 0:12:41.559
<v Speaker 2>And we can't really have a clear view for any individual,

0:12:41.600 --> 0:12:41.920
<v Speaker 2>can we?

0:12:42.360 --> 0:12:44.719
<v Speaker 3>Unfortunately not? I mean again, I think this is kind

0:12:44.720 --> 0:12:47.959
<v Speaker 3>of the problem with it being being more lake attacks

0:12:48.040 --> 0:12:53.240
<v Speaker 3>than a day, because it's always going to be fating

0:12:53.559 --> 0:12:55.840
<v Speaker 3>as a priority with all the other things that you

0:12:55.920 --> 0:12:58.160
<v Speaker 3>need to pay for, and so many of those things

0:12:58.160 --> 0:13:00.560
<v Speaker 3>are higher priority of like buying the host. You know,

0:13:00.600 --> 0:13:02.120
<v Speaker 3>if you could got a choice doing pay an extra

0:13:02.160 --> 0:13:04.920
<v Speaker 3>to your student there or saving not for the hosing deposit,

0:13:05.080 --> 0:13:08.040
<v Speaker 3>that really isn't any coin test there, because what where's

0:13:08.080 --> 0:13:10.280
<v Speaker 3>the money for the house? Can they come from? If

0:13:10.280 --> 0:13:14.000
<v Speaker 3>you've whacked any of the student loan? Obviously emergency find

0:13:14.040 --> 0:13:15.960
<v Speaker 3>needs to be a built up before even considered any

0:13:15.960 --> 0:13:16.120
<v Speaker 3>of this.

0:13:16.600 --> 0:13:19.920
<v Speaker 2>And then pension, well, hundred percent mortgage you one hundredercent

0:13:19.920 --> 0:13:21.600
<v Speaker 2>mortgage and you've got a higher cash flow, makes it

0:13:21.600 --> 0:13:22.720
<v Speaker 2>easier to get a mortgage.

0:13:23.120 --> 0:13:27.920
<v Speaker 3>I mean that's true. You could, yeah, if you want to,

0:13:28.440 --> 0:13:31.320
<v Speaker 3>you could assume that you can get wine, but then you

0:13:31.360 --> 0:13:34.000
<v Speaker 3>play get two expensive forms of a day coming out

0:13:34.000 --> 0:13:35.880
<v Speaker 3>of something your finances if your mind.

0:13:36.080 --> 0:13:37.800
<v Speaker 1>Yeah, okay, So how do we solve this problem?

0:13:37.920 --> 0:13:40.320
<v Speaker 2>Now? Coming back has been out saying let's get this

0:13:40.400 --> 0:13:43.360
<v Speaker 2>interest right down, cut it down, and.

0:13:43.280 --> 0:13:43.880
<v Speaker 1>That will help.

0:13:44.000 --> 0:13:46.080
<v Speaker 2>But of course it only helps to a certain degree,

0:13:46.120 --> 0:13:48.680
<v Speaker 2>because even if you're playing a significantly lower rate of interest,

0:13:48.760 --> 0:13:51.160
<v Speaker 2>you might still end up paying the ninet percentage points

0:13:51.160 --> 0:13:53.040
<v Speaker 2>for the rest of your career. So the other side

0:13:53.040 --> 0:13:57.240
<v Speaker 2>of this Martin Lewis argument is that the threshold should

0:13:57.240 --> 0:14:01.199
<v Speaker 2>be higher, significantly higher, and that would make the difference.

0:14:01.240 --> 0:14:03.120
<v Speaker 2>My own view is that they're both wrong, because that's

0:14:03.320 --> 0:14:04.800
<v Speaker 2>a good way to go with this kind of thing.

0:14:04.840 --> 0:14:06.640
<v Speaker 1>And then in fact, the best thing to do would

0:14:06.640 --> 0:14:08.960
<v Speaker 1>be to you know, maybe.

0:14:08.880 --> 0:14:10.880
<v Speaker 2>I don't really know about the threshold. Thousand pounds, ye,

0:14:10.920 --> 0:14:12.560
<v Speaker 2>thousan pounds. There is not going to make much difference

0:14:12.600 --> 0:14:14.600
<v Speaker 2>people over a career, but it would make sense for

0:14:14.640 --> 0:14:16.679
<v Speaker 2>there to be really no interest rate on it at all.

0:14:16.840 --> 0:14:18.640
<v Speaker 2>Just pay it back in nominal terms and be done

0:14:18.640 --> 0:14:18.880
<v Speaker 2>with it.

0:14:19.160 --> 0:14:21.440
<v Speaker 1>Then we're subsidizing.

0:14:22.280 --> 0:14:27.560
<v Speaker 2>Education to a degree, to a degree, but they're still repayment.

0:14:28.280 --> 0:14:28.880
<v Speaker 1>That would work.

0:14:29.080 --> 0:14:31.760
<v Speaker 2>And the other possibility and you know, I would really

0:14:31.800 --> 0:14:33.600
<v Speaker 2>go great guns with this one. This would be my

0:14:33.760 --> 0:14:39.120
<v Speaker 2>absolute topic. Absolute topic would be to work a little

0:14:39.160 --> 0:14:42.600
<v Speaker 2>harder to create an economy that creates an awful lot

0:14:42.960 --> 0:14:46.280
<v Speaker 2>of high income jobs so that paying this debt off

0:14:46.320 --> 0:14:49.640
<v Speaker 2>isn't such an extraordinary burden. A world where people don't

0:14:49.680 --> 0:14:52.120
<v Speaker 2>aspire to earning forty two thousand pounds but are pretty

0:14:52.160 --> 0:14:54.080
<v Speaker 2>sure that if they'd really do well, they'll be earning

0:14:54.120 --> 0:14:57.840
<v Speaker 2>one hundred and seventy that's the actual answer, right.

0:14:58.040 --> 0:15:01.080
<v Speaker 3>Yeah. There's a journalist of and the Ft joined Burden

0:15:01.120 --> 0:15:03.400
<v Speaker 3>mud Duck who did a really good piece on Yes,

0:15:03.800 --> 0:15:06.160
<v Speaker 3>and they basically pointed out that the UK is the

0:15:06.160 --> 0:15:09.120
<v Speaker 3>only place where the graduate premium has gone down, even

0:15:09.120 --> 0:15:12.440
<v Speaker 3>the low student participation has gone up in loads of

0:15:12.440 --> 0:15:16.160
<v Speaker 3>different countries. So it's not just as I know. To

0:15:16.160 --> 0:15:18.760
<v Speaker 3>be fair, I fell into this a bit. I thought,

0:15:19.160 --> 0:15:21.560
<v Speaker 3>it's because we get so many graduates now that the

0:15:21.600 --> 0:15:24.360
<v Speaker 3>graduate premium has gone down, but just as an echo

0:15:24.440 --> 0:15:26.280
<v Speaker 3>that helps, we are including places like you know, the

0:15:26.360 --> 0:15:29.720
<v Speaker 3>US and Australia. And his point is basically it's just

0:15:29.800 --> 0:15:33.200
<v Speaker 3>because they've produced the decent, high paying jobs that had

0:15:33.280 --> 0:15:38.400
<v Speaker 3>enough graduate jobs to go around.

0:15:36.840 --> 0:15:39.760
<v Speaker 2>Growth low growth and live productivity. And that's why people

0:15:39.800 --> 0:15:42.520
<v Speaker 2>care about these loans so much. That's why they're such

0:15:42.560 --> 0:15:46.760
<v Speaker 2>a purdon is because we can't create the high income

0:15:46.880 --> 0:15:48.720
<v Speaker 2>jobs to pay them off easily, to make them in nothing.

0:15:48.720 --> 0:15:50.320
<v Speaker 2>Maybe will be able to brush them off and say, well,

0:15:50.320 --> 0:15:51.760
<v Speaker 2>that'll be gone by the time I'm thirty four.

0:15:51.760 --> 0:15:52.160
<v Speaker 1>I'm all good.

0:15:52.200 --> 0:15:55.480
<v Speaker 3>It's so so interesting because employers are always complaining about

0:15:55.480 --> 0:15:57.640
<v Speaker 3>how we don't have a skilled enough workforce, and that's

0:15:57.640 --> 0:15:59.840
<v Speaker 3>why we need to import lots of people. But as

0:16:00.120 --> 0:16:03.680
<v Speaker 3>tons of we see me have an ordnly qualified workforce,

0:16:03.720 --> 0:16:07.320
<v Speaker 3>but who employers can pervade the jobs. So that's a

0:16:08.360 --> 0:16:11.360
<v Speaker 3>sort of interesting Say they're shoe, they are. But perhaps

0:16:11.400 --> 0:16:13.840
<v Speaker 3>when we can tackle another do yeah.

0:16:14.040 --> 0:16:16.320
<v Speaker 2>Anyway, So I suppose what we come down to here

0:16:16.400 --> 0:16:18.760
<v Speaker 2>is will there be reformed? Very probably? I would expect

0:16:18.760 --> 0:16:21.160
<v Speaker 2>somebody to do something quite soon. There are well over

0:16:21.280 --> 0:16:25.280
<v Speaker 2>five million people on that type two of student loan,

0:16:25.320 --> 0:16:27.560
<v Speaker 2>and so that's that's quite a big voting block right there.

0:16:27.560 --> 0:16:29.720
<v Speaker 2>So someone will want to do something for them. But

0:16:29.840 --> 0:16:31.920
<v Speaker 2>I strongly suspect that whether we talk about putting the

0:16:31.920 --> 0:16:33.960
<v Speaker 2>threshold up by a couple of grand or reducing the

0:16:34.000 --> 0:16:36.640
<v Speaker 2>interest rate a little bit, or making the interest rate

0:16:36.640 --> 0:16:39.680
<v Speaker 2>maybe even less progressive, so everyone pays the same rate

0:16:39.720 --> 0:16:42.880
<v Speaker 2>regardless of income whatever something like that. But in the main,

0:16:43.400 --> 0:16:46.240
<v Speaker 2>that's not going to make the difference. What's really going

0:16:46.280 --> 0:16:49.240
<v Speaker 2>to make the difference is not having less to pay back,

0:16:49.280 --> 0:16:51.880
<v Speaker 2>but earning more. So it doesn't feel such a burden.

0:16:52.240 --> 0:16:54.560
<v Speaker 2>And I don't see and maybe you have a different view,

0:16:54.600 --> 0:16:56.560
<v Speaker 2>but I don't see that coming down the tracks anytime soon.

0:16:57.320 --> 0:17:00.360
<v Speaker 3>Well, yeah, it's just added too Bretons can a long

0:17:00.440 --> 0:17:04.040
<v Speaker 3>list of huntly unsolvable problems that could always sort of

0:17:04.160 --> 0:17:11.520
<v Speaker 3>if we just did slightly cheaper energy.

0:17:10.080 --> 0:17:11.800
<v Speaker 2>That would be that would go quite a long way, John,

0:17:11.960 --> 0:17:14.520
<v Speaker 2>quite a long way, right.

0:17:15.440 --> 0:17:17.600
<v Speaker 1>We don't want to get into a different conversation.

0:17:17.760 --> 0:17:19.800
<v Speaker 2>And I am sorry, students, I don't feel that we

0:17:19.840 --> 0:17:22.040
<v Speaker 2>have offered you a lot of hope here.

0:17:22.840 --> 0:17:25.359
<v Speaker 3>If you are about to go to unique look things

0:17:25.400 --> 0:17:29.760
<v Speaker 3>like apprenticeships as well or instead you would like just

0:17:29.760 --> 0:17:32.160
<v Speaker 3>just think about your options. I'm not saying don't go,

0:17:32.760 --> 0:17:34.840
<v Speaker 3>but you may be have to think about it with

0:17:34.920 --> 0:17:37.359
<v Speaker 3>a slightly harder head than a lot of people around

0:17:37.400 --> 0:17:38.800
<v Speaker 3>you are encouraging you do.

0:17:41.600 --> 0:17:43.640
<v Speaker 1>Thanks for listening to this week's Marren Talks Your Money.

0:17:43.680 --> 0:17:45.919
<v Speaker 2>If you like our show, rate review and subscribe by

0:17:45.960 --> 0:17:48.080
<v Speaker 2>every listen to podcasts. Also we show to follow me

0:17:48.160 --> 0:17:50.680
<v Speaker 2>and John on ex putt at Marinus w and John

0:17:50.760 --> 0:17:54.040
<v Speaker 2>Underschool Stepic. This episode is produced by Sammersadi and Moses

0:17:54.040 --> 0:17:56.000
<v Speaker 2>and questions and comments on this show and I think

0:17:56.000 --> 0:17:58.240
<v Speaker 2>on this money you will have questions and comments and

0:17:58.359 --> 0:18:00.160
<v Speaker 2>on all our shows are always.

0:17:59.800 --> 0:18:02.720
<v Speaker 1>Well come, I'll show. Email is Marimoni at Bloomberg dot

0:18:02.920 --> 0:18:03.120
<v Speaker 1>Net

0:18:10.680 --> 0:18:10.960
<v Speaker 2>MHM