Wednesday, November 10, 2010

British Liberal Party implements money-grabbing student loan scheme

Crippling 30-year graduate debt trap will see parents still paying instalments as their children go to university. That should be an effective bar to a university education for all but the rich, who don't need loans. A strange outcome for a party that is allegedly on the side of the poor.

I entered the workforce with an advanced degree and no debt. My son will enter the workforce with an advanced degree and no debt. How sad that few British university students can look forward to that -- JR

Graduates on modest incomes face an effective tax rate of 45 per cent and crippling debts for most of their working lives, a Money Mail investigation has discovered. Radical reforms to the level of tuition fees and the way loans are repaid will leave many in debt until their mid-50s - by which time they'll be wrestling with putting their own children through university.

Tuition fees are set to rise to as much as £9,000 a year while living costs can be up to £8,210 a year, according to the NatWest Student Living Survey. That's £17,210 a year or £51,630 over three years. The maximum government loan is likely to be £43,500.

Debts to the government will be reclaimed by deducting 9 per cent from any salary above a £21,000 threshold, but interest will be added to the debt. This will range from the retail prices index (RPI) to RPI plus 3 percentage points, with higher earners paying the most.

For those on modest and middle incomes, the amount of interest is likely to be greater than the amount they repay, meaning the debt will balloon through their life until, after 30 years, it is written off by the government.

We asked data analyst Moneyfacts to look at two scenarios that could encompass millions of graduates in essential occupations such as teaching and nursing. In the first case, we assumed someone started work owing £43,500 earning £21,000 a year and receiving a 3 per cent pay rise each year. After 30 years, they would have paid £33,217, but, because of the interest, they would still owe £73,659, which would be written off.

If their pay rose by a more generous 5 per cent a year, they would repay £64,239, but still owe £26,406. And these calculations assume 2 per cent RPI; today it's 4.6 per cent.

To make life tougher, any graduate earning more than £21,000 a year would be losing 45p in every £1 they earned above this threshold. This is made up of basic-rate income tax at 20 per cent, National Insurance contributions of 12 per cent, having 9 per cent stripped to pay for their student loan, and another 4 per cent taken by their employer as a pension contribution.

Research for Money Mail by the Chartered Institute of Taxation shows a graduate earning £22,000 will lose a total of £6,029 - 27 per cent of their total pay. It would reduce their take-home pay to £1,330 a month.

Someone earning £26,000 will have £7,829 deducted - equal to 30 per cent of their takehome pay. For those on £30,000, their take-home pay is reduced by £9,629 or 32 per cent.

'We risk creating a generation of students who will never be able to pay their way out of debt,' says Chris Tapp, of debt charity Credit Action. 'They are going to be lumbered with a lifetime of borrowing. The danger of student loans rising is that other more expensive credit may get put to one side.

'This is just the start of a cycle of problems. Parents may be so worried about funding their child's education that they borrow to help them out.'

Students graduating from 2017 will face the full brunt of the Coalition's reforms to tax, pensions and student funding. From next April, National Insurance rises from 11 per cent to 12 per cent. Then a new national pension scheme will strip further money from their income.

From October 2012, anyone aged 21 or over who is employed for more than three months and who earns more than £7,475 will have 0.8 per cent of their income taken as a pension contribution. This will increase to 4 per cent by 2017.

Their situation will be exacerbated by cuts to student loans for better- off graduates, which will force them to borrow more from banks.

James Daley, editor of Which? Money, says: 'If you are going to be saddled with huge debts, you need to be financially equipped to deal with that and most graduates are not. Otherwise they are going to start off poor and end up poor.'


Teacher who lost her voice trying to make herself heard in a noisy British classroom wins £150,000 payout

A teacher has been awarded £150,000 after she lost her voice trying to make herself heard in the classroom. Joyce Walters damaged her vocal cords straining to raise her volume above the clamour coming from a nearby playground. As a result she was forced to quit her job as an English teacher.

The 50-year-old says she now struggles to speak on the phone and suffers a sore throat and hoarseness when she raises her voice in noisy bars.

Mrs Walters, who taught for 12 years, won a total of £156,000 in out-of-court settlements from her council after claiming she could never teach again. It is one of the largest payouts of its kind and an example of the growing compensation culture among injured and sacked teachers, which costs the taxpayer more than £20 million a year. Last year another teacher was awarded £173,595 for dislocating an ankle during playground duty. In comparison, an injured war veteran could expect a maximum of £34,100 for a similar injury.

Education campaigners say the rise is the result of councils opting to settle out-of-court, rather than challenging claims. Nick Seaton, chairman of the Campaign for Real Education, said: ‘This is a frightening trend that should be tackled head-on. ‘Local authorities need to get a grip. There are too many instances were they surrender too easily to claims that may seem frivolous.’

Mother-of-two Mrs Walters, from Ickenham in Middlesex, taught English to foreign students at nearby Harlington Adult Education Centre, housed at Harlington Community School, between September 2005 and July 2006. She gave lessons in a classroom next to a roofed courtyard where 11- 18-year-olds played during lunchtimes and breaks.

After a doctor diagnosed non-cancerous vocal cord nodules, she missed the 2006/2007 academic year. Despite repeated pleas, she was assigned the same classroom when she returned the following September and had to quit three months later.

Mrs Walters, who is married to a former policeman, took Hillingdon Council, which runs the school, to an employment tribunal and was awarded an £11,000 out-of-court settlement in October 2009. She also filed a personal injury claim against the council, which won her an out-of-court settlement of £145,000 last July.

Mrs Walters, who had months of speech therapy following her voice loss, yesterday defended her payout, saying her injuries had a devastating effect on her life. ‘Teaching was my calling, I adored the classroom and miss it so much, but the problems with my voice make it impossible for me to ever go back,’ she said. ‘I have to think twice about day-to-day things, like speaking on the phone.’

Joanne Jefferies, a specialist in workplace injuries at law firm Irwin Mitchell who represented Mrs Walters, added: ‘Despite attempts to raise her concerns with her employer, she was ignored and it has resulted in this terrible, life-altering injury. ‘To make matters worse, she is still awaiting assurances that something has been done to prevent others suffering.

Yesterday, Jean Palmer of Hillingdon Council said: ‘After almost three years, the council felt that it was in the best interests of Mrs Walters, the council and taxpayers to settle the claims.’


Great shortage of male teachers in Australia

CHILDREN face going through school without ever having a male teacher because of falling numbers of men in primary schools. Male teacher numbers in Government primary schools have dropped below 20 per cent for the first time in a decade as classrooms become female-dominated.

Catholic primary schools across the state have even lower proportions of men, with only about 15 per cent of teachers from kindergarten to Year 6 being male.

Teacher of eight years Scott Carroll said there was a stigma attached to men who worked with children: "Primary teaching is traditionally associated with females - perceptions need to change."

Principal of Mary MacKillop Primary School at Penrith South, Anne Corrigan, said men brought different perspectives to a school. "I like guys in my school, role models are important," Ms Corrigan said.

Data released by the NSW Government shows classrooms in public primary schools have lost 609 male teachers since 2000. The decline showed an election commitment by state Labor seven years ago to "work to increase the number of male teachers, especially in primary schools" had failed. With just 4695 men in the public primary system, there are children who have never been taught by a man.

Parents have said that, because of the high level of single-parent families in many areas, it is important young children are taught by male as well as female teachers. Many principals agree, telling The Daily Telegraph it is critical that more men work in primary schools.

NSW education chiefs argue that gender is not the most important factor in seeking suitable applicants. A Government spokeswoman said: "There is no definitive research that students, learn better from a particular gender - it is the quality of the teacher."

Low social status, poor wages and fear of being labelled a paedophile were identified as factors in men shunning primary teaching.

The Australian Catholic University said the presence or absence of male teachers had "major implications for the culture of schools".

The NSW Government offers up to 300 teaching scholarships each year using "male teacher role models".


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