So I'm going to ask you some questions, and we'll see how we do on this.
First of all,
how much, typically, does it cost to go to university in England?
And we're talking today about the English student finance system
that started in 2012.
How much does it cost to go?
Yeah?
£9,000 a year.
£9,000 a year. Anyone else? Not quite.
-Yeah? -£9,250.
£9,250 is the cost of tuition fees.
How much is it to go to university on a three-year course?
£27,000 or £27,750 if you want to do...
No.
-Yeah? -£50,000.
It's fascinating that you say that. Wrong!
Anyone else?
Would you like to know the answer?
-Yes! -How much it's going to cost you...
I don't know.
This is really important.
When people talk about the cost of university -
your £50,000 figure is getting in the ballpark that people talk about...
You could argue it's £60,000 now.
£9,250 a year times three is £27,750.
There's also a living loan that we'll talk about later -
how do you afford to live when you're there?
If you have the maximum London living loan, living away from home,
plus £9,250,
on a three-year course, you're talking nearly £60,000.
-A lot of money? -Yes.
But here's the point...
That number, for the vast majority of you,
is completely meaningless.
The weird thing in student finance...
...is the price tag.
The amount they say it costs - £60,000 -
is completely
delinked from what you'll actually pay.
And what really counts is what you'll actually pay.
And I can tell you that the actual cost of you going to university
will be somewhere between nothing
and about £150,000.
And what does it depend on? Does anyone know?
What's the key factor?
Yeah?
How much you're earning.
How much you earn when you leave university.
This is all about that.
Do you know how much you repay?
I think it's if you're earning something like £20,000 after that...
You repay
9% of everything you earn over, currently,
£25,725 a year.
9% of everything you earn over £25,700.
And that figure will go up each year. So let's do a simple sum.
Who is good at maths? Any volunteers?
OK, we'll do it here. Are you ready?
So, if you earnt £26,725 a year,
how much above the £25,725 a year threshold is that?
-£1,000. -£1,000.
9% of £1,000 is?
-£90. -£90.
So if you earn £26,725 a year,
you're repaying £90 a year.
Another volunteer...?
Yes? Right...
If you earn £35,725 a year,
how much above £25,725 a year is that?
-£10,000. -£10,000.
9% of £10,000 is?
£900.
So, at £26,700-odd quid, it's £90 a year.
At £35,700-odd quid, it's £900 a year.
If you earnt £125,725, it would be £9,000 a year.
What you repay is in direct proportion to what you earn.
If you earn £24,000 a year, how much do you repay?
Nothing.
So you're starting to hear the language of how this really works.
Everybody... "It's a debt. It's a debt! It's a debt!"
"£60,000? How is my life going to work? What are my children going to do?"
It's what you hear when they do phone-ins.
Parents -
"How are my kids ever going to repay this £60,000 debt?
Hold on. They're paying 9% of everything they earn above £25,725 a year.
If you're worried they're going to be low earners,
it's the least of your worries.
I'm out of breath now. I'm old.
That's the least of your worries.
If they're low earners, how much do they repay?
Nothing.
They repay nothing.
Anyone know when the debt wipes?
It's 30 years
after the April following when you leave university.
So, if you go at age 18, you've got three years at university.
Let's say you're now 21-ish.
So the debt will be wiped when you're 51.
And you repay 9% of everything you earn above a threshold,
and I need to say it's a threshold because that figure changes each year.
Hopefully, it will go up each year with average earnings, as they have said.
We'll talk about whether that will stick later on.
So that's the core concept.
£60,000 is the price tag.
But the cost to you is what you repay each year.
If - and I hope it doesn't happen -
you are never to get a job above the threshold in that 30 years,
you would not repay a penny for your education.
Who pays the most?
Who will repay the most for their education?
The people that earn the most.
Technically, not quite true.
There's actually a bizarre curve here that says low earners pay nothing,
mid-low earners start to pay something, mid-earners pay more,
high earners pay more, very high earners pay more,
extremely high earners start to pay less,
and I'll explain why later.
But, yeah, in general, the more you earn,
the more you repay.
So my hope for you is that university is going to cost you a fortune
because it means you're a high earner.
This is a financially no-win, no-fee system.
If you don't gain financially from your education,
then, hopefully, you won't repay a lot for it.
And it won't be prohibitive.
If you're on £26,000 a year to £26,700 a year,
you're repaying £90 a year from your pay packet.
That's the crucial thing -
that difference between the cost of university and the price tag.
But there are a few more things.
Who pays the tuition fees for you to go to university?
Do you know?
The government? Sort of. The Student Loans Company.
You do not have to pay upfront to go to university.
This bit is really important to make sure, especially,
that those of you whose parents never went to university understand...
When you go to university as a first-time UK undergraduate...
...your tuition fees are paid automatically for you.
You have to apply for it,
but they're paid automatically by the Student Loans Company.
That £9,250 figure that we talked about earlier.
That gets paid for you. That goes to them.
You don't actually need to think about it until the April after you graduate,
when you'll be eligible to start repaying if you earn enough.
So there's no upfront charge.