Student finance debunked – tuition fee rises – is it worth it? | UK base rate cut (mortgage & savings)

Martin Lewis takes you through the increase to tuition fees. There’s advice for students and those affected by the fall in interest rates. Tell Us is all about the most impulsive purchase you’ve made, and why you regret it. And there’s a special Mastermind for Adrian concerning floral shirts.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Martin Lewis?

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• 1:50Martin Lewis?

  Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Usually much of it comes from my BBC Radio 5 live show with Adrian Chiles, but there's bonus money-saving tips just for you lucky, lucky podcast listeners. In today's pod, news this week that tuition fees are due to go up in England next year, as are maintenance loans. So I want to decode what this really means for the cost of university, how the university system works. Is it still affordable? Should you still go? Do parents have to contribute? And why it's better to think of it as an extra tax, not cheap, but an extra tax rather than a loan, and so much more. We'll also be talking about the fact interest rates have been cut by 0.25 percentage

• 2:33Martin Lewis?

  points and a quick run through of what this means for mortgage holders and savers. And this week's tellers, what's the worst impulse buy you've ever made? Hamsters, camper vans, 20p pieces and schwims all come up. Play the theme tune.

• 3:08Martin Lewis?

  Shall we do interest rates?

• 3:09Speaker 04

  Let's do interest rates. They've just come down. What's your take on that?

• 3:13Martin Lewis?

  Well, this is highly unsurprising. Right, I mean, before the budget, it was a night, the market moves was effectively predicting a 95% chance they'll come down. After the budget, it was an 80% chance they'd come down by a quarter of a percentage point. They have them come down by a quarter of a percentage point. It's an eight to one vote. That's a huge, huge majority. So what does this mean in practice? Well, for mortgage holders, if you are on a tracker mortgage, your rate will drop by 0.25 percentage points. If you're on a variable discount rate mortgage, it will probably drop by around 0.25 percentage points, but they don't have to move it exactly. They can, they can move it at their schwim, at their schwim, based on competitive reasons.

• 3:57Martin Lewis?

  Now, that equates to about on a typical repayment mortgage, and it really does depend how much you've got, but let's just say very rough rule of thumb, a saving of £15 per month per £100,000 of mortgage. £15 per month per £100,000 of mortgage. If you're on a fixed rate mortgage, clearly the rate is fixed, so your rate won't move, but it does mean when you come off the end of that fix, you may then be moving to a cheaper rate than you would have done otherwise. If you're looking to get a fixed rate mortgage, the rate at which fixes the set do move, but they tend not to move directly with the Bank of England base rate. They move on the market's prediction of long-term interest rates.

• 4:39Martin Lewis?

  So while you might expect the rate at which you could fix to drop slightly in the next few weeks. Much of this quarter of a percent cut has already been baked into that. So I doubt we'll see the full quarter of a percent come down. What was probably more interesting was that in the statement from the Bank of England, it was noted that we expect to see interest rates come down further in the long run slowly. Now, again, the markets pre-budget were looking at a drop of around one and a quarter percentage point, according to Nationwide this is, over the next 12 months. So over the next 12 months, you would have expected to go down to 3.75%. After the budget, they were looking at a drop of around 1% over the next 12 months.

• 5:24Martin Lewis?

  So really, those fixed rates will depend on how the markets perceive the UK economy, its interrelation with the US economy, which has, of course, all changed. So we are in a little bit of flux at the moment, but I wouldn't be expecting to see too many radical moves, and that's mirrored in savings. If you've got savings accounts, the variable accounts, the easy access accounts, expect them to drop by around a quarter of a percentage point. Over the next few weeks, you'll be given notice. Maybe the best buys won't quite drop by that much because it's been very competitive in the last few weeks, so they might get dropped by 0.15 percentage points. And if you've got fixed rate savings, well, they're fixed, but the rate at which you can fix mirrors what's going on with mortgages. It's all on long-term predictions of interest rates.

• 6:04Speaker 04

  Are there any, I think this might be a daft question.

• 6:07Martin Lewis?

  Yeah.

• 6:07Speaker 04

  And I've just run it by myself and I'm not sure, but I'm going to ask it anyway. Are there any rules governing how quickly rates have got to go, the tracker rates, the floating rates have got to go up and down after a decision like this? Because if you're the mortgage lender, there's a huge amount of money at stake, squillions.

• 6:27Martin Lewis?

  Tracker rates move pretty quickly, variable and discounted a little more slowly because a tracker, you're pre-notified that it'll move with the Bank of England base rate. Same with savings. Savings, the rule is they have to give you reasonable notice, which tends to be between seven and 30 days of your savings dropping. Reasonable notice, but it is a reasonable clause. So I mean, doing it the next day probably is too swift, but if it's an online account and you're notified with a week, it's probably arguable that that's reasonable. So, I mean, depending on the product and exactly what type you've got, those rates that are variable, if they're dropping, will be dropping somewhere between the next couple of days and the next month.

• 7:03Speaker 04

  Somebody must have tracked, say, for savers when rates are going up, they are then, you know, when the bank rate is going up, then the savers rates go up much more slowly than they come down, I would have thought.

• 7:19Martin Lewis?

  Well, the more interesting question is the differential between when loan rates go down and when savings rates go down and when loan rates go up and when savings rates goes up, which are quicker. I have not done that piece of research.

• 7:28Speaker 04

  Okay, okay, just a, just a thought. When you say chwim, that's always bugged me when people would go chwiel. You often hear it on BBC Radio 4, people speaking very correctly, but that's just wrong because it puts the H before the W. If you're going to say it properly by that logic, you'd go wheel or wim.

• 7:48Martin Lewis?

  I would like to say, I would normally say wim, but I'm just enjoying chwim today. So I'm going to keep saying it, not due to correctness or accuracy, but out of a little frisson it gives me each time I meant the words come out of my mouth.

• 7:59Speaker 04

  Okay, what else have we?

• 8:03Martin Lewis?

  I thought we had questions on interest rates, didn't we? Have you lost your question panel? Your panel's not working today, is it?

• 8:07Speaker 04

  No, I'm not. I got all excited about, I got all excited about.

• 8:10Martin Lewis?

  The wheels, the wheels have come off.

• 8:12Speaker 04

  The wheels, they, yes, they, they're always loose and they have come off. So Alex says, well, we've kind of answered this, the turnaround time for lenders to realise these rate changes and reduce theirs. We do renewal on 1st of December, so not much time between now and then. I think you've.

• 8:28Martin Lewis?

  Well, again, renewal is about fixed rates. So I presume, I'm guessing, that your renewal will be to a new fixed rate. And yes, we will likely see moves in the rate at which fixes are set between now and December, but if you, if you've booked in your mortgage, it should not change, right? I mean, it depends where you are in the process. Talk to your mortgage broker.

• 8:50Speaker 04

  James, good question.

• 8:52Martin Lewis?

  I mean, obviously you want them to come down.

• 8:54Speaker 04

  Yes, yeah, yeah.

• 8:55Martin Lewis?

  So you might be able, if you haven't, if you haven't booked it in, or even if you have booked it in, if rates got cheaper, you might be able to just forego the administration charge and go to a new cheaper mortgage, in which case you would have to factor in if it's worth foregoing the administration charge, because the saving on the new cheaper mortgage is better for you. Talk to your mortgage broker.

• 9:12Speaker 04

  James says, I'm currently remortgaging and have a fixed mortgage approved, though it's not due to start until March. Will I still be able to switch to a cheaper rate if they change in the meantime?

• 9:24Martin Lewis?

  You don't have to take the mortgage generally. I mean, one of the tricks I've been advising when rates have been going up is to book in a mortgage a long time in advance. Sometimes you have to pay a fee for booking it in or an administration charge for booking it in, which you can then let go of and pay that, you know, if if things then get cheaper on the other end. So the question here is what have you paid and what is refundable at this point? I mean, they can't force you to take up that mortgage, but they may be able to keep some of the fees that you've paid. I don't know the exact situation that's going on in there, but it's absolutely worth looking at if we were to see a big drop in rates by next March at the rate which you could fix that, which is quite possible

• 10:05Martin Lewis?

  with the mood music at the moment, although one doesn't know how much the Bank of England have factored in what might happen in the United States, because their meeting was before sort of it's a two day meeting and the United States election happened halfway through that. So but currently they're saying rates will go down. That's possible and that's something you should be keeping an eye on, whether you've got the flexibility and freedom once you've gone in, how much you're going to lose if you then decide to ditch the mortgage that you've booked and go for a new one.

• 10:32Speaker 04

  Might it not have been an idea to delay the meeting until after the?

• 10:36Martin Lewis?

  It's fixed in our time table. What other countries, what other countries' elections do we delay the meetings for? You know, what other externalities?

• 10:42Speaker 04

  Americans sort of bigger, isn't it?

• 10:44Martin Lewis?

  Well, it's because it's because because Trump won, Donald Trump is the new going to be the 47th president of the USA, and he has, he's, he says his favorite word is tariff. Right. And that, of course, has a big impact on the world economy. So I think, I think if the Bank of England had done that, I think you would have many people arguing that it was some type of political signal that they should not be doing and getting involved in overseas elections. I mean, this is all going to play out. Remember, Trump isn't going to be the president until next January. Now, before I get into the chat about student finance with Adrian, I just want to give you my five quick points everybody needs to know about student finance. We're going to go into all of these in more details throughout the podcast, but I think a little

• 11:28Martin Lewis?

  bit of summary at the start might just help you digest what is to come. Point number The student loan price tag can be sixty thousand, but that is not what you pay. What you pay is all based on what you earn once you leave university. Current English students will repay nine percent of everything earned above twenty five thousand pounds. If you earn less than twenty five thousand pounds, you will not repay in that year. The more you earn, the more you repay in a year. Point number two, there is an implied amount most parents are meant to contribute. The living loan, as applies in England, and the living loan and grants in Northern Ireland and Scotland.

• 12:13Martin Lewis?

  The total amount you get is dictated by a means test of household income, a proxy for residual income. So, the more your parents earn, the less the living loan that you get is. Effectively meaning there is an implied parental contribution in the system. Point number three, the amount you borrow is mostly irrelevant day to day. In fact, repayments work more like a tax. Remember, you repay nine percent of everything you earn above twenty five thousand pounds a year on the new system. And you will do that for forty years or until what you have borrowed is repaid. Now, for many people, you'll just pay for forty years.

• 12:53Martin Lewis?

  So in reality, this is like having a nine percent additional tax over twenty five thousand pounds, an additional income tax on all earnings, because it's paid through the payroll anyway. Only those who either borrowed less or are earning more and therefore will clear within the forty years, for current students, thirty years for many previous students, will actually see the loan ever end within the time period. For them, how much you borrow has an effect, because if you borrow less, you'll clear it quicker and you'll stop paying. But for many people, you're just going to repay for the full forty years, your whole working life, regardless of if you borrow more or not, which is why, as I'll explain in a moment, increasing tuition fees won't affect many low or middle earners. Number five, the system can and has changed.

• 13:37Martin Lewis?

  Student loan terms should be locked into law, so only an act of parliament can negatively change them once you've started uni, but they're not. And we did a few years ago see a bad change imposed, though thankfully after much campaigning and I threatened lawyers on it, it was overturned. Much of the past changes were about the repayment thresholds, the £25,000 at which you will start to repay, rather than bigger structural issues. And I would view the repayment threshold as variable. The rest, I would be surprised if they changed it once you start university, though they could change a different system for people who start after you. But nothing is impossible because Parliament is what's called omnicompetent. Anyway, that's my quick summary. Let's go into all of that with a lot more detail. Here's Adrian.

• 14:21Speaker 04

  Tuition fees then, talk us through this.

• 14:25Martin Lewis?

  So we had this announcement earlier in the week that tuition fees are going to rise £285 from the next academic year for English students, taking the maximum to £9,535 and pretty much all courses charge the maximum. The idea that tuition fees would put a market in student finance, David Willet's big idea, super brain Willet's, never worked. It has always, always been at the maximum. So the market idea and concept hasn't worked. At the same time, we've seen maintenance loan, the amount of loans that students get to live off at university increased also with inflation by 3.1%. The exact amounts for that do depend on your exact situation.

• 15:05Martin Lewis?

  So just for example, for 2025 starters, the full annual loan is £8,877 if at home, £10,544 if away from home and £13,762 if away from home in London, although those are means tested, as I'm sure we will come on to later. So let's take each of these in turn. Tuition fees. Look, people won't like what I'm about to say, but there is truth in it. Tuition fees have not gone up for eight years. Universities have been starved of funding. They have been primarily subsidizing, many have been primarily, not all, have been primarily subsidizing UK students' fees with overseas students' fees. A change in immigration last year meant that overseas students could not bring their partners with them. We're seeing a drop in overseas students.

• 15:50Martin Lewis?

  And that means, you know, there is talk of a number of major universities' finances being so tough, they are on the brink of going bust. We may need to see mergers. And what everybody needs to understand is there's all this sort of, and now we pay them, universities have always got money from the state, right? It used to be a grant. And then, or a form, a number of different grants, I'm simplifying. And then it was turned into part grant, part tuition fees, and then it was moved into tuition fees. Now, the state used to give all the money, and now what happens is the state gives the money through the student loan company, but then expects students to repay it back once they leave university. But because we now have this system that's linked directly to students, there becomes this political imperative that if you put it up, you're

• 16:35Martin Lewis?

  charging individuals more, so you can't put it up, which is why they haven't gone up for eight years. And all we've actually had this year is what universities were effectively used to be promised, which was an inflation rate rise in tuition fees. It's only gone up roughly in line with inflation at 3.1%. Now, the reason I'm saying, you know, that there's been a lot of anger about this is there's a little frustration from someone like me who looks at the system. In 2023, the then government, the Conservative government, changed the way student finance in England works, which was a seismic earthquake-sized change in the way it impacts how much you pay afterwards. It increased the cost for

• 17:20Martin Lewis?

  a typical graduate of going to university by 50%. But it wasn't talked about, because they did it by changing the repayment terms that people don't understand. What they did to keep it nice and simple is they said, you're going to start repaying when you earn less, so you'll repay more, because if you're repaying at £2,000 less, the threshold went from £27,300 to £25,000. So that's an extra 9% of £2,400 that you will repay a year if you're over the threshold. And instead of repaying for 30 years, you'll repay for 40 years. Now, the impact of that change, they did also cut interest rates down to that you pay on loans down to the level of inflation. The impact of that change was

• 18:01Martin Lewis?

  to increase the cost by about 50%, to change the state contribution from £44 in the pound to £19 in the pound, towards the cost of higher education for students. But there wasn't much fuss made. Now, this week, we heard tuition fees are going up by 285 quid with inflation and there's, oh, it's uproar. Now, I get the whole political issue about what's being promised and what's not. But in practical terms, increasing tuition fees will, A, not change what graduates repay once they leave university in a year, because what you repay is based solely on what you earn. And if your earnings are the same, you'll repay the same, no matter what you owe. What it will do is it will change

• 18:45Martin Lewis?

  if you can repay in full over the 40 years or not. Now, more students under the current system will. But to make it very simple, the people who will pay more because tuition fees have gone up, and it's only a percent or so, or a percent or two more, are mid-high to higher-earning graduates. Low to middle-earning graduates will not repay any more because tuition fees have gone up, because they're just going to repay for 40 years at 9% above the threshold. They're going to pay for the whole 40 years and then the loan wipes. So this change in tuition fees only impacts mid-high to higher-earning graduates. And I need to be very careful because someone, so I heard somebody on a TV programme the

• 19:30Martin Lewis?

  other day, he was quoting me wrongly. They were talking about people from richer backgrounds and poorer backgrounds. When we talk about student finance, the finance you get going in depends on the affluence of your family. So a richer background gets less student support than someone from a poorer background. What you repay depends on what you earn after university. So you can have someone from a poor background who earns a lot after university, and someone from a rich background who doesn't earn a lot after university. And we can't confuse those two. I've probably gone too complicated.

• 20:01Speaker 04

  No, but that, just to be clear, that the stuff you said that changed, was it in last year?

• 20:07Martin Lewis?

  For starters, in 2023 and beyond.

• 20:08Speaker 04

  That remains, that remains in place.

• 20:10Martin Lewis?

  That remains now. So absolutely. But the big change was that not changing tuition fees. And people have asked me, do these tuition fee rises apply for continuing students? Yes, they do. So do the maintenance loan rises.

• 20:20Speaker 04

  Okay. So you're right, we have got a lot to get to. It's my fault for faffing around somewhat earlier. But so the student loan can be... Say it can be sixty thousand.

• 20:30Martin Lewis?

  It can.

• 20:30Speaker 04

  But that's not what you pay.

• 20:32Martin Lewis?

  No, it isn't. It isn't. The student loan price tag is basically your tuition fee loans added up and the maintenance loans added up over your three or four year course I'm focused on in England at the moment because that's the one that's changed. Now, you repay if you earn over twenty five thousand pounds a year after you graduate and you repay nine percent of that. So let me give you my very simple explanation. Adrian, it's going to be a test, but I think it's a test that you are able to pass here.

• 21:00Speaker 04

  Right.

• 21:01Martin Lewis?

  You are a graduate earning thirty thousand pounds. You repay nine percent of everything above twenty five thousand pounds and you owe twenty thousand pounds. How much will you repay in a year?

• 21:16Speaker 04

  Oh God, say that again, sorry, I've got.

• 21:18Martin Lewis?

  You earn thirty grand.

• 21:19Speaker 04

  Yeah.

• 21:20Martin Lewis?

  You owe twenty grand, how much do you repay? And the repayment is nine percent of everything above twenty five thousand. So how much above twenty five thousand are you?

• 21:28Speaker 04

  Five thousand, oh look, five thousand.

• 21:30Martin Lewis?

  And you earn nine percent of five thousand?

• 21:33Speaker 04

  Is four hundred and fifty.

• 21:36Martin Lewis?

  Perfect. And so you owe twenty thousand, you repay four hundred and fifty pounds a year. Okay, now, you earn thirty thousand, same amount.

• 21:44Speaker 04

  Yeah.

• 21:45Martin Lewis?

  You owe fifty thousand. How much do you repay in a year?

• 21:54Speaker 04

  I can't, four times, five times more than I just said, no?

• 21:59Martin Lewis?

  You earn thirty thousand.

• 22:01Speaker 04

  Oh, right, sorry, yes.

• 22:02Martin Lewis?

  How much above the threshold is that?

• 22:04Speaker 04

  Five thousand.

• 22:06Martin Lewis?

  And what's nine percent of five thousand?

• 22:07Speaker 04

  Four hundred and fifty.

• 22:09Martin Lewis?

  How much do you repay?

• 22:11Speaker 04

  Four hundred and fifty.

• 22:11Martin Lewis?

  Because it's only your earnings that dictate what you repay each year. The fact that you owe fifty thousand is irrelevant. Adrian, they have put tuition fees up to a million pounds a year. You owe three million and twenty thousand pounds when I include the maintenance.

• 22:24Speaker 04

  Four fifty is the answer.

• 22:25Martin Lewis?

  Four fifty is the answer. That maths was to prove the point to everybody that the most important thing that dictates what you repay each year.

• 22:35Martin Lewis?

  Is what you earn.

• 22:36Speaker 04

  And can that be changed, though?

• 22:38Martin Lewis?

  Yes, the threshold can be changed.

• 22:40Speaker 04

  Right.

• 22:40Martin Lewis?

  Okay, it's a really important question that we go on.

• 22:44Speaker 04

  Yeah.

• 22:45Martin Lewis?

  Parliament is omnipotent, it can always change anything and it can change it retrospectively. So there is never any certainty that nothing can change. If I look at the history of student loans, one of the things I've asked and written to the government about in the past is they should be more upfront about what is effectively fixed and what is effectively variable. Things that are variable are things that can change once you've started your university.

• 23:09Speaker 04

  Yeah.

• 23:09Martin Lewis?

  So I'm not talking about changing the system for future students, I'm talking about changing the system for students who've got it. They've tried to change repayment thresholds in the past in a negative retrospective way. Putting them up with average earnings is what's always expected. They tried to drop them substantially in the past for existing students. I threatened to take them to judicial review, that was overturned. But thresholds of repayments can change. How long you repay for, I think, would be more difficult for them to change, it's not impossible. I think that we've only ever seen that change for new students, we've never seen it change retrospectively for existing students. So I think the repayment threshold and the percentage you repay at, repayment threshold is variable, the percentage you repay at and how long you repay for are things they have

• 23:53Martin Lewis?

  never changed retrospectively and I would be surprised and very angry if they did. The threshold at which you repay, I think, could change. And don't worry, there's lots more on student finance in a bit.

• 24:07Martin Lewis?

  Tell us what the worst impulse buy you've ever made is.

• 24:11Speaker 04

  What's yours?

• 24:12Martin Lewis?

  I don't buy an impulse, Adrian, or at least that's what my brand notes say.

• 24:16Speaker 04

  Yeah.

• 24:18Speaker 04

  But, you know, I bought something on impulse on your recommendation, we talked about it on air, it was your...

• 24:25Martin Lewis?

  No, no, that was based on detailed research by a trusted colleague.

• 24:29Speaker 04

  Yours, yeah, true.

• 24:30Martin Lewis?

  But that's always, that's not the definition of impulse. The definition of impulse is seeing something, not knowing you wanted it, not having done your research, checked your value, got any recommendations, and just going and getting it on a whim.

• 24:41Speaker 04

  On a whim.

• 24:42Martin Lewis?

  You didn't do it on a whim, you did it... I like that word. You did it based on, on, you know, integral detailed recommendation from a trusted third party.

• 24:50Speaker 04

  Mm hmm. Okay. Yes, that was you.

• 24:52Martin Lewis?

  If you're wondering what it was, people, it's a little vegetable chopper costs about ten quid. It's not, it's not like he's gone and, you know, invested a trillion pounds in a, in a ISA.

• 25:01Speaker 04

  But it's very satisfying because you, it's not electric. You pull it with a mechanism like a starter motor on an outboard engine, which I find curiously, curiously fulfilling. Jill, a gaming chair for us. And what does a gaming chair look like?

• 25:16Martin Lewis?

  I believe that is, that's one of those big chairs with sound on the side and maybe even vibrates. Who knows when you're playing again and gives you your haptic feedback and moves and all this type of stuff.

• 25:25Speaker 04

  Okay. Well, I'm, I'm sorry to report. It's never been used or sat upon and now just collects his clothes. Well, at least he's putting his clothes on there, not just slinging them on.

• 25:35Martin Lewis?

  I quite like Hannah's.

• 25:36Speaker 04

  Go on.

• 25:37Martin Lewis?

  My husband bought a boat which had no engine and a hole in it. It was on the Kent coast. We live in Cumbria and had no way of getting it almost 300 miles home. But this is missing the, the impulse. I want the impulse factor from you. Vicky, I bought a bin in the John Lewis sale reduced from 120 quid to 35 quid, but you needed to spend 45 pounds to get free delivery. So I impulsively added a 350 pound bean to a coffee cup machine to my order, bean to cup coffee machine to my order. I've been looking for one and I did check it was the best price around before adding. Best thing I've ever bought though. I rarely drink coffee out of the house now. But no, okay, Vicky, we're looking at the worst impulse buyer, Vicky.

• 26:15Speaker 04

  Well, we weren't clear.

• 26:16Martin Lewis?

  Read the terms and conditions.

• 26:17Speaker 04

  Well, they weren't in the terms.

• 26:18Martin Lewis?

  They were, they were. I shall read you.

• 26:20Speaker 04

  All right. Okay. I'm not going to walk you.

• 26:21Martin Lewis?

  Tell us, what's the, this is all from social media. What's the worst impulse purchase you've ever made? Why did you buy it? And why was it so bad? I need to, I'm going to have a word. Matt, who's out there, who is the person who compiles these. Matt, we need some impulse ones. They need to be, did you buy them on impulse? Why did you get it suddenly? What do you regret? There's one on Twitter from a, a former personal finance journalist, I think now works in PR, who was right at the top. James, his name is. I liked his very much. Can you get me that one? Shall we do student finance while, while those are all being compiled?

• 26:49Speaker 04

  Okay. Let's, let's do, well, actually, I'm just going to give you three and where they qualify by our new impulse rules. My PS5 Pro arrived it, arrived today. Don't need it, but need it. Well, we don't know what his thought process was.

• 27:04Martin Lewis?

  What we have is it was an impulse buy, but we don't yet know if it was a bad impulse buy. If we think of a PS5 Pro as a piece of entertainment, and you're going to get hundreds or thousands of hours of use out of it, then, you know, as an entertainment mechanism, that doesn't make it a bad impulse buy. I am not against people buying things that makes them happy as long as they can afford it and they've budgeted for it, etc. What I want is things that you've bought that you've just gone, "This was useless. Why on earth did I buy it?" You know, this tends to happen late at night when people have been out for the evening.

• 27:35Speaker 04

  Yes, and Amazon and stuff is a real vector for it because you can, you know, there ought to be a cooling off period, hadn't there? When I wake up in the morning function, when you can see what you've ordered.

• 27:46Martin Lewis?

  Christine, three chickens cost 60 quid. Ended up having to spend another 600 pounds on their accommodation. Then there was the-

• 27:52Speaker 04

  Live chickens, we're talking about, yeah.

• 27:54Martin Lewis?

  Then there was the avian- We don't need accommodation for dead ones, Adrian. Then there was the avian flu bird lockdown, so they needed to be inside undercover. That was another 400 quid. Then they all stopped laying eggs. Vet bills then followed. Now standing at 700 pounds in total. Two died, so had one on its own, so I bought two friends to keep it company. Then that one died. Okay, it's not a very jolly tale, is it? I think we should do student finance. I've got a lot to do on student finance. Slightly worried we're going to run out of time.

• 28:19Speaker 04

  Okay. Actually, I'm going to just give you one.

• 28:21Martin Lewis?

  All right.

• 28:22Speaker 04

  James, while watching TV, I saw a character had a sword on the wall of their flat. And I thought, "Wait, can you just buy a sword?" "You can." I did. And I'm forever grateful HSBC blocked my 2am online purchase as suspicious activity.

• 28:35Martin Lewis?

  And that is from a former personal finance journalist.

• 28:38Speaker 04

  Oh, is that the one?

• 28:39Martin Lewis?

  That's the one.

• 28:39Speaker 04

  That's the fella.

• 28:40Martin Lewis?

  Swordman. That's always going to be- James, you're now Swordman.

• 28:43Speaker 04

  The Swordman.

• 28:44Martin Lewis?

  The Swordmeister. And that's not the end of the tellers. There's more of your "What Did You Buy on a Chwim?" coming up.

• 28:54Speaker 04

  Loads of stuff coming in on student loans. Matthew wants to know what happens when you can't pay it back? Who ends up covering it?

• 29:01Martin Lewis?

  This is a very interesting question because the answer is the state ends up covering it. But I go back to the original point before we had tuition loans, the state covered everything. Now, what a lot of people get in touch and they say, well, you know, if the state, if someone has a degree that they don't pay back in full, therefore it must be a wasted degree because they haven't managed to pay it back. And I think that is often a fundamental misunderstanding of the student finance system. The student finance system is set up to be, if you like, a no win, no fee system based on financial success. If you financially succeed on the back of university, you have to contribute towards the cost of it. If you don't financially succeed on the back of university, then you're meant to contribute less towards it.

• 29:45Martin Lewis?

  Now, the reason, the judgment of whether you pay off in full or not is irrelevant to whether your degree was financially worth it is because whether you pay off in full or not is solely a function of how much revenue the government wants to raise, not a function of the value of the degree. So let's see if we can work this through together, Adrian. If I were in charge of student loans, the interest rate is currently based at the rate of inflation, and I dropped the interest rate to 0% rather than based on the rate of inflation, would more or less people pay it off in full if the interest rate was lower?

• 30:27Speaker 04

  Oh God, I'm being obnoxious today. Is it?

• 30:30Martin Lewis?

  So I've made it. I've made you.

• 30:33Speaker 04

  Less, if it's lower.

• 30:35Martin Lewis?

  No, more people would repay it in full.

• 30:37Speaker 04

  Oh, more people, yes.

• 30:37Martin Lewis?

  I've dropped the interest rate. Therefore, the loan isn't growing as quickly because the loan is smaller, more people would clear it in full in the 40 years before it wiped on the current system, previous systems, 30 years. So if I drop the interest rates, more people repay in full, would the government gain more or less money?

• 30:58Martin Lewis?

  With a lower interest rate.

• 31:00Speaker 04

  Less.

• 31:00Martin Lewis?

  So they're charging less interest, the state would rack in less money, but more people would clear in full. Now, let's do the reverse and go to an absurd level. Let's increase the interest rate to 100%. Would more or less people clear in full if I had 100% interest rates?

• 31:16Speaker 04

  Less.

• 31:17Martin Lewis?

  Less, I mean, probably only Mark Zuckerberg and Elon Musk would clear in full. Everybody else would just repay for 40 years.

• 31:22Speaker 04

  They'd find a way of not paying as well, anyway.

• 31:24Martin Lewis?

  Yeah, well, try. Everyone else would be paid for 40 years at 9% of their income. It would become effectively a tax, an additional tax of 9% above your income if you increased interest rates to 100%. Would the state rack in more or less money with 100% interest rates?

• 31:40Speaker 04

  Well, in theory, more.

• 31:42Martin Lewis?

  Well, certainly more, absolutely more, unquestionably more, because everybody would just pay 9% of their earnings above a threshold for 40 years. No one would clear it. So my point on answering this question is, how much is repaid is simply a function of how much money the government wants to get back. You can do that by changing the repayment length, you can do that by changing the threshold. It is not a function of the value of a degree. So going to your question, who pays if the student doesn't? That is based on this idea that there's some actual cost of your university, rather than this is a funding mechanism, a complex funding mechanism, which is what it is. So the answer is, it's really about how much money the state wants to bring in.

• 32:22Martin Lewis?

  And the changes to 2023 went from, as I said earlier, it was before 2023, 44p in the pound towards undergraduate degree costs was paid by the state. 56p in the pound was paid by the individual graduate. The 2023 changes made 19p in the pound, it's estimated will be paid by the state. 81p in the pound will be paid by the individual graduate. None of this is a function of who pays or who doesn't. It's just a question of where you shift the pendulum to who's contributing what. But the state's cost, that still isn't the state's cost, because that's based on the interest rate they choose to set, not on the government's cost of borrowing. So it's a really complicated piece of finance.

• 33:04Speaker 04

  But they must have projections. There must, there must be projections for how much is never going to get paid back. And also when they.

• 33:11Martin Lewis?

  Yes, but my point is how much is never paid back is a function of how you set up the finance.

• 33:15Speaker 04

  No, no, I understand that, but it just seems to be like there's a chicken, it's a separate problem, we don't need to get into it. But a chicken's going to come home to roost at some stage.

• 33:23Martin Lewis?

  No, because this is an arbitrary amount of money. The amount you pay back is a function of the interest rate. Right, again, if I set it to 100% interest rates, nothing would be paid back, but the state would rack in a lot more money and would be much better off. So the idea that you can measure the success of the system by how much is paid back is false. That's just a function of the way you choose to set up your finances. That's what I'm trying to debunk here. And lots of people think that, but it doesn't work that way. It's complicated economics. It's not as simple as I haven't paid back, so the state has to. No, because it's all involved in the interest rates and the threshold and the repayment and how you discount with inflation over time and the government's cost of borrowing. It's so much more complicated.

• 34:03Speaker 04

  Amanda is concerned, says her daughter's hoping to go university next year. I'm terrified how much we as a family are going to have to contribute to her living costs. She's hoping to study mental health nursing. I'm so proud of her wanting to study this, but I'm not sure we can help her financially. What can we do?

• 34:19Martin Lewis?

  Well, look, I think that is a valid worry. My concern about student finance is not about the tuition fees. Firstly, because unless you have a lot of money and your family has a lot of money and you choose not to take the tuition fee loan upfront, tuition fees are not a cost to students, they're a cost to university leavers. You only start repaying nine months after you leave university, so it doesn't directly affect the student at university. What does affect the student at university is the maintenance loan, the living loan that you get. Now, I should state, in England, it's a loan. In Wales, Scotland and Northern Ireland, it is a combination of a non-repayable bank grant and a loan.

• 35:02Martin Lewis?

  So only in England is it all funded by loan. And this is the real issue. Now, if you're a parent of a 10-year-old, forget tuition fees. What you need to focus on now is how much will I be expected to contribute to my child while they're at university? Now, there are two factors here. The first is the maintenance loan in England has been eroded substantially over the past five years because it has not gone up with inflation. And that is a real problem, especially for those who have come from the lowest income families, who are reliant on the full loan, because they are not going to get enough to live off. And I'm very pleased to see that the government has announced it's up

• 35:44Martin Lewis?

  rating living loans in line with inflation from the next academic year, but that will not catch us back to what we've lost. That will just mean we're not losing any more. But hey, better than nothing.

• 35:54Speaker 04

  But in practice.

• 35:55Martin Lewis?

  And I wrote to the Chancellor asking for that.

• 35:56Speaker 04

  But in practice, you're gonna need more than you can get.

• 36:00Martin Lewis?

  Well, there's a second element here, and that is that the loan is means tested. The amount of maintenance loan you get is means tested, based for most under 25s, on what's called household income, which is a proxy for parental income. It's basically parents' income minus what they're contributing towards a pension, minus a very small amount if you have another dependent child. Now, if you have parental income below £25,000, you get the full loan. If you have parental income above roughly, it depends whether you're living at home or away from home, whatever, roughly £60,000, you get the minimum loan, which is about half the full loan. So, what is the difference? In my view, the

• 36:41Martin Lewis?

  difference is an implicit but not explicit parental contribution. The only thing that is changing what your child gets to go to university is your income. So the state's saying, you have more income, you are able to support your child, therefore we're expecting you to support your child. I finally, after about a decade of campaigning, finally got them to put a little note on this into the government documents, into the student loan company documents, which says, parents can help by making up the difference. But that's what's like, of course you can work, you can do other things. So the answer here, the first thing everyone needs to do, and there are parental loan calculators on the, parental contribution calculators on the internet, which will show you what your expected situation will be, is work out what loan you will get.

• 37:25Martin Lewis?

  Subtract that from the full loan and that is the minimum expected parental contribution. It cannot be mandated, you're not forced to do it, but that is what you are expected to do. So even then, the full loan is not particularly generous. So there's a problem here for those on the lowest incomes that the state loan isn't enough. The real big problem here is those in the middle, those on forty, fifty thousand pound total household earnings, who are going to be expected to contribute, you know, five grand a year towards their child while they're at university. Many people can't do that, so you might want to save up in advance. So what you need to do is work out what your parental contribution is. Parental contributions work as well in Scotland and Northern Ireland, where the total amount

• 38:09Martin Lewis?

  you get does change based on parental contribution, although the parental contributions are much smaller if you subtract the maximum you could get from what you're getting on a higher income. In Wales, plaudits to Wales for this, all the parental contribution does is dictate how much you get is a grant and how much is a loan, but the total amount is all the same. So there is no, the parental assessment doesn't affect what the student gets. They all get the same, so effectively there is no implied parental contribution. But all of these loans are pretty low, even without a parental contribution. If you can, you're probably going to need to help them and they're going to need to work while at university.

• 38:48Speaker 04

  There is, well, actually Scott says, is it better financially to take the course loan and pay back over forty years or pay ourselves with inheritance money that could be used towards a future home for my son?

• 39:02Martin Lewis?

  So this is a very common question. When we were on the previous Plan Two loans, I was very robust that most people should be taking the loan if we are looking purely at an individual's finances here. You need to make your own moral decisions over whether the state should fund and whether you should be doing this if you can't fund. I'm not going to get into that, I'm just going to do the maths. Right, under the new system, far more undergraduates, the new English system, are likely to repay in full in the forty years. So that would say, maybe you shouldn't be taking it. But the interest rate has been lowered. The interest rate on the 2023 starter loans is set at the rate of inflation, which in

• 39:47Martin Lewis?

  economic terms means there's no real interest. To explain that to people. If I borrowed, if my loan to go to university was the equivalent of a hundred shopping trolleys worth of goods, how much a hundred shopping trolleys worth of goods would cost, because it goes up with inflation, I will only ever have to repay the cost of a hundred shopping trolleys worth of goods, whatever the actual pound amount of that is. So in terms of the purchasing power of having a loan is not eroding under the new system. So if we look at the terms of the student loan, you only repay if you earn over a threshold. It's wiped after forty years if you don't repay. You repay in proportion to income.

• 40:31Martin Lewis?

  It's paid through the payroll, so there are no debt collectors going to come to call. It does not go on your credit file. Structurally, this is the best form of debt you'll ever get. You'll never have a better form of debt. So my question would be, the first thing to look at is, are you likely to clear in full over the forty years? If you're going to be a higher earner, then that would push you more towards, if you've got the money, not taking the loan. My next question would be, are there any other uses of money that would be more efficient? Obvious ones that are more efficient are a deposit for a mortgage and having to prevent you from having other borrowing like credit cards and personal loans in future, which have much worse terms, will generally be more expensive, but even

• 41:13Martin Lewis?

  if they're not more expensive, have worse terms. If that is likely to happen, then I would say you would be better to save the money towards that mortgage deposit and reducing the future mortgage than you would be clearing the student loan because it has the best possible terms. Now, an easy halfway house here, especially now there's no real rate of interest, don't pay it off now. Go to university, take the very small hit of inflation rates of interest, you know, it's going to be, over the next few years, two or three percent, it's not going to be very high. When you finish university and you're in a much better position of understanding what your potential earnings are, because you might have gone to university wanting to work in the city, and you might have left university wanting to be a beat poet, travelling around the world, not earning anything. Once

• 41:57Martin Lewis?

  you have that idea, then you're always free to clear it at that point. So you don't have to do it before you go to university, you could take... The loan and make the decision afterwards if you chose to, once you understand your earnings potential and whether you're likely to pay it off. But I would always prioritise putting money aside to prevent future other debt, including mortgage debt, ahead of student loans, because it's the best form of debt you could get.

• 42:19Speaker 04

  You were putting me on the spot with questions earlier, I was very poor at answering. Does that mean I get away with?

• 42:24Martin Lewis?

  No.

• 42:24Speaker 04

  Doing Mastermind.

• 42:25Martin Lewis?

  We're still doing Mastermind. And I know we've got more to do on student finance. Just to say, we're going to, we'll go to Mastermind now. I will be going into, carrying on with this when I do the podcast. So if you're interested in this, please download the podcast later and I'll be doing lots more Qs and As on that.

• 42:38Speaker 04

  Okay. You sure you don't want to do another?

• 42:40Martin Lewis?

  Play the theme tune, Adrian.

• 42:41Speaker 04

  Probably got time.

• 42:42Martin Lewis?

  Play the theme tune.

• 42:42Speaker 04

  Play the theme tune, okay.

• 42:46Speaker 04

  Oh, make it an easy one up. I've not covered myself in glory today.

• 42:50Martin Lewis?

  Okay. So the current Mastermind score is Adrian has got two right in this and he's got three wrong, which is still better than even odds, considering it's a three option multiple choice. You're better than a monkey picking randomly, which your predecessor, Nihal, wasn't. So you're still slightly ahead of where Nihal was.

• 43:06Speaker 04

  Okay.

• 43:07Martin Lewis?

  But you're degrading, you got the last three wrong.

• 43:09Speaker 04

  Well, I went 2-0 up, then I'm 3-2 down.

• 43:10Martin Lewis?

  Okay. Now, for those who don't know, the, the Mastermind is a question where there's always a nice charming setup about Adrian to begin. So Adrian recently fell in love with a shirt, a lovely colourful floral shirt in a sale at his local kitsch store. He couldn't resist, grabbed it on impulse, thinking it would be perfect for work. As an aside, I've often thought when I come in here that Adrian, your voice and delivery doesn't fully get across to the listener how you actually look in the studio right now. I need to say, as he normal does, Adrian's always wearing floral print shirts on his upper body, often accompanied by glittery hot pants and Doc Martens.

• 43:49Speaker 04

  Okay. Well, you're being silly with the hot pants, but the rest of it is true.

• 43:52Martin Lewis?

  Okay, they're not glittery, just hot pants.

• 43:53Speaker 04

  Okay, yeah.

• 43:54Martin Lewis?

  I added the glittery bit. So I just want you always, when you listen to Adrian Future, to think of the floral shirt, the glittery hot pants, or just the normal hot pants, and a pair of Doc Martens with those long luscious legs hanging out between the two.

• 44:06Martin Lewis?

  What a lush, what a lovely picture of the man you are, sir. Back to the floral shirt, anyway, you bought it in the sale, smitten by its swirling patterns of daisies, crocuses and chrysanthemums. You didn't take time to try it on, you took it home and unfortunately, let's just say, even for a slim fit lover like yourself, it was just a little bit too tight. Breath restricting. So you take it back to the shop and they say, sorry, sir, you as our notice say, you should have noticed that we suspend our return rights during the sale. My question, Adrian, are they legally allowed to suspend return rights during the sale? A, yes, within reason, they can do what they like on return rights.

• 44:48Martin Lewis?

  B, no, your statutory rights overcome the return rights, so you have a right to a full refund if you take it back within 14 days. C, no, your statutory rights mean you have a right to a full refund if you take it back within 30 days.

• 45:03Speaker 04

  I would.

• 45:06Speaker 04

  I'll go for B, I would hope the statutory rights do override, 30 days seems a bit generous. No, I'm gonna go for 30 days, I think it's C.

• 45:14Martin Lewis?

  So you think your statutory rights mean you have 30 days in which to take this back and get a full refund?

• 45:20Speaker 04

  No, I've changed my mind, I think it's gonna be 14 days, I gotta be.

• 45:23Martin Lewis?

  You're going for B?

• 45:24Speaker 04

  Yeah.

• 45:24Martin Lewis?

  Okay.

• 45:26Martin Lewis?

  Let's do this, shall we? So Adrian, if you had bought the item online, you have a 14 day right to notify them that you're sending it back, unless it's perishable or personalised, and 14 days after that in which to send it back. So you could have up to 28 days to send it back and to change your mind. But you did not buy this online, you bought this in your local store. If you buy an item in your local store and it is faulty, if you take it back within a calendar month or 30 days.

• 45:59Speaker 04

  Faulty as distinct from not fitting?

• 46:00Martin Lewis?

  As in distinct from actually faulty, not satisfactory quality, or not fit for purpose, or didn't last a reasonable length of time, or wasn't as described. Then you have around 30 days in which to take it back for a full refund, take it back later if it was faulty, partial refund or replacement. But Adrian, there was nothing wrong with this shirt. You didn't try it on. I mean, one could argue that it was labelled a large and it wasn't a large and therefore it's faulty, but we're going to ignore that slight nuance. You took the shirt, it didn't fit you, you wanted to take it back. You have absolutely no legal right to return goods that are not faulty. It is commonly misunderstood. Can we have the uh?

• 46:44Martin Lewis?

  It's a no, it's commonly misunderstood. Many people think they can, I've been in stores, I've been in shops and someone's having this argument, they've seen me and gone, ah, oh, it's Martin Lewis, tell them, tell them. And I say, I'm so sorry, but the store is right. Now, if they have a published returns policy that says you can bring things back, then that's contractual and you can take it back. But this store had a sign saying no returns in the sales. You could have taken it back if it was faulty, you could have taken it back, it was bought online, but if they say, we're not giving you returns unless you stand on one leg, probably break discrimination, discrimination rules, but we'll ignore that. You stand on one leg and you got a receipt, then they're right. And if they say no returns at all, then they're right. They can't overrule it if it's faulty. So you have no return rights whatsoever.

• 47:28Martin Lewis?

  So in future, when you're buying your floral shirts, mate, try them on first, please. Now, we finished a bit with Adrian, but I know you've got many student finance questions. And with me this week, because podcast producer Simon is off having a well deserved break, is Matthew. Matt, what have you got for me?

• 47:43Speaker 05

  Hello, Martin. Thank you very much for having me. Yeah, we got plenty of questions this week regarding student finance. Let's start off with John. Here we go. John says, could someone get in a situation where they never earn enough to clear the student loan, will always earn enough to pay 9% extra income tax for 40 years? What would be the highest amount that someone could end up paying for their degree under this system?

• 48:05Martin Lewis?

  Well, that all depends on interest rates. Certainly, you could pay in monetary terms, not real terms, easily double or treble what you borrowed if UK inflation went very high. But in real terms, you will repay back what you borrowed. You asked me, could someone get in that situation? Absolutely, they could. In fact, we can look at this if we could go through earnings. Now, people always say, you talk about low earners and middle earners and high earners. What do you mean? I can't give you numbers, I'm afraid. Because the problem is, you could start off when you leave university on a low salary and then suddenly, much later on, be on huge amounts of money. That would make you a high earner. Or you could start on a medium salary and stay on the medium salary all of your life.

• 48:47Martin Lewis?

  But it's all about, you know, factoring in that earnings do tend to go up over your working life, most people in graduate careers, and inflation means average earnings go up and prices all go up. So just conceptually, we're going to have to stick with low, medium, and high. So let's go through the all the different situations. You've got your £60,000 of student debt. You leave and you are a very low earner. Well, you will never repay a penny because you will not earn over the threshold. Now, let's say you're a low to low middle earner. Well, in your circumstance, you might earn over the threshold at some

• 49:27Martin Lewis?

  point. So you will start to repay your loan, but you will probably not get close to repaying even the starting amount that you borrowed, even the £60,000. As people's earnings go up and we start to move from mid to low to medium earners, then what you'll find is you may repay everything you initially borrowed, but not repay any of the interest. Then we get from medium to mid-high earners, and you will repay everything you borrowed, plus some of the interest. But if you're not clearing it before it wipes, by definition, you will not repay all the interest that has been added to your loan. So many people focus on the interest that is added to their loan, absolutely understandably psychologically,

• 50:11Martin Lewis?

  but that is different to the interest that you repay. The only people who repay all the interest that's been added, and this applies both to current students and past students, is those who clear the debt in full. Within the 40 years for current students, 30 years for past students before it wipes. That is the only circumstance in which you repay all the interest added. If you're someone who does not clear it in the 40 years, then the interest is less relevant to you, whatever the interest rate is, because you're not going to be repaying all of it. So there are a huge panoply of circumstances here that affect exactly how much you pay, whether you just repay some capital, all the capital, some capital and interest, or all the interest. And it all depends on how much you earn. Did that make sense, Matt?

• 50:56Speaker 05

  Most certainly did.

• 50:57Martin Lewis?

  Good.

• 50:57Speaker 05

  View.

• 51:01Speaker 05

  Here's one from Polly. She's asking, she wants to know why the level at which students pay their debt back is now at £25,000. She says this has gone down from other plans and importantly is a cat's whisker above minimum wage for a full-time worker. Second part of the question is parental contribution kicks in at £25,000. Again, this hasn't risen for years and therefore low-paid households are expected to contribute. Is it really worth someone doing a degree these days to never get out of debt due to the high interest rates on those loans?

• 51:28Martin Lewis?

  I think it's a really interesting question. Let's take those three points separately. First of all, you are right, the threshold has been dropped to £25,000. For those on Plan Two loans, which is English starters 2012 to 2022, you repay 9% of everything above £27,295. For those on these new Plan Five loans, you repay 9% of everything above £25,000. And that has a big difference. And that was done so that the state is contributing less to the cost of higher education than it was previously. You then move on to the second point, and you're quite right. The point at which you start to have to contribute as a parent has been stuck at £25,000 for

• 52:12Martin Lewis?

  a long time, which effectively means, because we've had high inflation and average earnings have gone up. Fewer and fewer people are eligible for the full loan, which is again saving the state money. I could live with that if the full loan was big enough and had gone up with inflation, but it hasn't been. And all of this, for me, you are again right, I think, has real questions for social mobility and the ability for people from lower income backgrounds to go on to university when those loans are too low. So I'm afraid I can't explain why, apart from that's policy and it's saving the state money and putting the burden on to the individual, and they've swung the pendulum. I can't explain why, I can agree that it is an issue. Your

• 52:51Martin Lewis?

  third question, though, is really important. Is it worth a student going to university with this higher cost? You say higher debt. I would argue, in reality, for most people, this is not a debt or not a traditional debt. It was only called a debt because Tony Blair, when he introduced the income contingent loan system, wanted to, had promised not to introduce new taxes, so framed it as a debt, so wasn't introducing new taxes. I think it is misnamed. Other countries wouldn't call our system, when they have systems like ours, a debt. They'd call it a, something more like a graduate contribution system, and I think we should rename it because it would help people think about it properly.

• 53:33Martin Lewis?

  You know, my biggest problem is, people have this debt and they see that they think is a debt, and they see the interest being added, and they think even if they're on low earnings and not going to clear it, I should pay it because I don't want the interest to build up. And counterlogically, that is the wrong way to think of it. And some people are paying off money that they can ill afford to give to reduce the loan, even though it won't save them any money in the long run because they'll just be paying effectively a 9% tax. So, let's be really plain here. The fact that the cost has increased, which is primarily because of the 2023 changes to going to university, does mean everybody should think far more carefully, is this right for me? I still believe if university is right for you, grab

• 54:15Martin Lewis?

  the opportunity. It can be life enhancing and often will lead to an increased earnings potential.

• 54:23Martin Lewis?

  That's absolute graduates earn more than non-graduates on average. And for many, the degree pays for itself, but not for everyone. So you need to look into the career, look into your aspirations and see whether you could do it with a degree or would an apprenticeship work or would going into work earlier work. I'm not saying everybody should get one, but we shouldn't not go to university. If the career you want involves going to university, then go for it. And even though it's going to be more expensive when you leave, do not let that put you off. But the reality for most people, and this is probably a good way to finish this programme. If you've got more questions on student loans, we can always do them in the podcast in future weeks, get in touch with at [email protected].

• 55:06Martin Lewis?

  But the reality for most people is this is what being a student does to you. Currently, if you earn up to £12,570 in the UK, you don't pay any tax. That's the same for most graduates and non-graduates. Then, when you earn from £12,571 to £25,000, both graduates and non-graduates, and I'm going to say graduates, I mean people who've taken the loan, you pay 20% tax rate on everything above that £12,570. Then the change starts. Once you earn £25,000 and on earnings up to £50,270, someone who has not gone to university, their effective income tax rate is 20%.

• 55:50Martin Lewis?

  Someone who has gone to university, your effective income tax rate is 29%, because you will be paying 9% towards repaying your student loan through the payroll or self-assessment if you are not a payroll payer. When you earn £50,000, £50,271 to £125,000, non-university goers, your effective income tax rate is 40%, we'll ignore the personal allowance being taken away, that does affect it as well. University goers, it's 49%. And once you top rate £125,000, non-uni goers, your income tax rate is 45%. Uni goers, yours is 54%. But once you're earning that amount, you'll probably start to clear pretty quickly and your student loan will be wiped without that much more time.

• 56:32Martin Lewis?

  So the reality is for most people who go to university, you have to say, the question you're asking yourself is, I am going to pay nine percent more tax above twenty five thousand pounds if I go to university than if I don't go to university. Is it worth it for me? Is it worth it for me financially because I'm going to earn so much more? Is it worth it for me spiritually, if you like, because I'm going to go and get the job that I want to do? Is it worth it for me emotionally, if you like, because of the university experience and the mind-broadening experience that many people get when they go to university? I can't answer that, but it is important you clinically assess whether it's right for you financially. Because if you do go to university, unless you're from a very wealthy background,

• 57:16Martin Lewis?

  who can afford to buy you a house and pay off your student loans, then you are very likely to be paying for it for much of your working life. But it can still be worth it, even though you're going to have to do that.

• 57:30Martin Lewis?

  Okay, and to change the tone now, let's just finish this podcast with a few more tellers. Remember the question, what's the worst impulse purchase you've ever made? Why did you buy it and why was it so bad? Matt, what have you got?

• 57:41Speaker 05

  Got some absolutely brilliant ones here. I've got one here from Angie. She bought a dark blue jumpsuit about twenty years ago and then immediately realised I looked like a quick fit fitter.

• 57:51Martin Lewis?

  Well, and so, yes, she dumped it quicker than the quick fit fitter. You can't be quicker than the quick fit fitter. Anyway, I'll stop there.

• 57:57Speaker 05

  Very, very good.

• 57:59Martin Lewis?

  Michelle went shopping for a coat for my daughter and came home with a hamster instead. Twenty pounds for the hamster, thirty pounds for the hamster house. I'm sorry to hear that.

• 58:08Speaker 05

  Not bad. Hamster got a whole house. That's pretty good.

• 58:09Martin Lewis?

  There we are.

• 58:10Speaker 05

  Yeah, I've got one here from Stuart. He said he saw in the window and purchased the first portable television from Harrods in nineteen eighty-five, which is a time I have never existed in. It cost a hundred pounds at the time. He couldn't really afford it. The screen was two inches wide and it was completely useless. So luckily he was able to get a full refund.

• 58:28Martin Lewis?

  Diane, a camper van, second hand. Cost me £17,000, took all of my savings. I didn't get it damp checked. Kept it for a year, unable to dry it, never went out in it, sat on the drive, eventually got rid of it for £9,000, an eight grand lost. I still cry about that loss. I really wanted to get an escape from my working week. Pop off at weekends with my dogs to the coast. My dreams didn't come true that time. Oh Diane, that's really sad, I'm so sorry. Because in a way, it wasn't an impulse buy. It sounds like you'd planned to buy the camper van and that's what you wanted, but it was the specific not doing your due diligence and your checks on what you bought was the problem, rather than the concept of the purchase itself.

• 59:12Martin Lewis?

  And I've just got one last one to finish, which is from Rob. Rob says, "My wife hated my impulse purchase of an expensive revolving chair, but then she sat on it and eventually she came round."

• 59:25Speaker 05

  Very, very good. Very, very good.

• 59:31Martin Lewis?

  That's it for this week, I do hope you've enjoyed it and please do tell friends who may have children who are going to university, or people who are going off to university themselves to have a listen of this. There are so many myths and misunderstandings around student finance, it's really important. If you do like the pod, then tell as many people to listen to it as we like... If you do like the pod, then do suggest other people listen to it and you can of course subscribe. We put out a new podcast most Thursdays, I would be delighted if you joined me again. Bye bye.

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