Dear Listener

Do you think they are fair? That is the question I have been asked over and over again since I did changes to tuition fees and student loans in England on BBC1 Breakfast this week. Face to face by colleagues and in emails to the BBC and tweets to my twitter account @paullewismoney. They all want to know are they fair? Much as I hate to admit that I can’t answer a question, I really, really don’t know the answer to this one. Fair to whom? Shifting the cost – or much of it – from taxpayers to those who have been students could be seen as fair. Graduates do benefit personally from their education – but then the whole of society benefits from having a well-educated population.

People also want to know whether it is ‘fair’ to leave young people with a debt of £35,000 to £45,000 at the end of their three year course and face an extra tax – which is what it is – of 9% on income above a certain level. And they also want to know if the new system is worse than the present one. Or rather they assume it is worse and want to know how much worse. Oh and is that fair?

In fact the new system will be cheaper in the early years. Instead of paying 9% of their income above £15,000 graduates who start from 2012 will pay 9% of their income above £21,000. That is not as generous as it might seem because the £15,000 threshold will be uprated with wages from 2012 so would be £17,690 by 2016 on official average earnings estimates. But it is an advantage.

The new system will get more expensive for those earning more than the lower threshold of £21,000. The interest on student loans is currently charged at the RPI rate of inflation. But the new scheme will charge more than that to anyone earning more than £21,000. At £42,000 it will be RPI plus 3% and on a sliding scale down to £21,000. That will mean the debt – and the repayments of it – will rise as graduates earn more.

The Department for Business, Innovation and Skills estimates that 40% of graduates will not repay their loan in full before it is written off which happens 30 years from the April after their course ends. Others say that figure is higher.

One final point. The word ‘graduate’ is potentially misleading. The fees and the repayments apply to anyone who has done even part of a course. About one student in eight drops out completely. They will still have to pay without the advantage of the extra earnings the degree is supposed to bring.

***IN MONEY BOX THIS WEEK***

Debt advice. We look at the problems of one CAB after the Government announced the end of the Financial Inclusion Fund which pays for 500 face to face debt advisors nationally. Mark Hoban the Minister responsible, responds.

We look at the dangers of finding free debt advice using search engines. How to make sure you get what you are really looking for.

Why do investment fund managers charge so much? How can you avoid them? And should you avoid the charges, the managers, or both!

Which? tells us why it is asking the Office of Fair Trading to investigate the hidden surcharges on payments by credit or debit card.

And one listener tells us she has paid a penalty charge because Santander did not make her credit card payment using the faster payments system.

Money Box will squeeze all that – we hope – into our live show on Saturday at 1204, repeated Sunday at 9pm and you can listen any time via the podcast page www.bbc.co.uk/podcasts/series/moneybox. Check out our website www.bbc.co.uk/moneybox to follow links, download transcripts, send us stories or ideas you want us to look into and Have Your Say on one of our stories.

This newsletter is available at bbc.co.uk/moneybox/newsletter (tell your friends who don’t subscribe) and you can keep up with my random but timely thoughts on money 24 hours a day at www.twitter.com/paullewismoney.

Best wishes,

Paul

PS don’t forget the programme trail on Breakfast on BBC 1 between 0845 and 0900 on Saturday. And I am back on Breakfast on Thursday at 0640ish and then answering emails from viewers at 0810ish.

e-mail Paul Lewis