Thread by @chrisenorth

So, I had a play with the Augar numbers, and the impact on what people repay. You can find the code, and all the plots at github.com/chrisnorth/loa… (might take a while to load, scroll down for the plots). Here followeth a thread. 1/n

First, the assumptions:
- RPI = fixed 2.4%
- CPI = fixed at 1.9%
- Salaries and salary-based thresholds increase with CPI
- Loan interest charged at RPI below £25725, RPI+3% above £46305, linearly scaled between the two

2/

Pre-Augar
- Repayments charged at 9% of earnings above £25750
- Interest pre-graduation = RPI + 3%
- Repayments for 30 years
- Fee = £9250/yr (for 3 years)
- Subsistence = e.g. £5000/yr (for 3 years)

3/

Post-Augar [as far as I can tell]
- Repayments charged at 9% above £23000
- Interest pre-graduation = RPI
- Repayments for 40 years
- Max loan = 1.2 * original loan (+ inflation)
- Fee = £7250/yr (for 3 years)
- Subsistence = e.g. £3000/yr (for 3 years) [due to grants]
4/n

I also defined some salary profiles:
Low salary profile: Start £20k, +£750/yr , cap at £30k
Average: £25k, +£1k/yr, cap at £45k
High: £25k, +£2k/yr, cap at £60k
V High: £30k, +£2k/yr, no cap
Ex high: £30k, double each decade
Super-rich: £50k, doubles each decade
5/n

Here's what the salaries look like (6/n)

raw.githubusercontent.com/chrisnorth/loa…

The more you earn, the faster you pay off your loan.

Post-Augar (dashed lines), the total loan value is lower due to lower fee and lower subsistence loan

The loan cap has very little impact

raw.githubusercontent.com/chrisnorth/loa…

7/n

The more you earn, the more you repay

Under Augar (dashed lines), repayments are higher for all, and continue for longer for lower earners

raw.githubusercontent.com/chrisnorth/loa…

8/n

Currently the more you earn the more you pay in total, apart from the highest earners, who pay less
Those who pay the most in total post-Augar are the Average earners. Above that
raw.githubusercontent.com/chrisnorth/loa…
9/n

After Auger, a greater proportion of people (i.e people on lower salaries than at present) will pay off their loan

raw.githubusercontent.com/chrisnorth/loa…

10/n

You can do the same but assuming a flat salary (+ inflation), which can be easier to compare.

Peak payments are for £55k at present. Augar increases total payment for low salaries, and decreases for higher salaries (peak now £40k)

raw.githubusercontent.com/chrisnorth/loa…

11/n

More people will pay off the total value of their loans

raw.githubusercontent.com/chrisnorth/loa…

12/n

And here's the summary plot:

Pre-Auger, above about £60k the more you earn the less you pay off, whether in terms of total amount or relative to total earnings

Post-Auger, the turning point is £40k

Earners above £45k benefit, below £45k pay

raw.githubusercontent.com/chrisnorth/loa…

13/13

Summary: whatever you think of tuition fees, and grants vs loans, the changes proposed in the Augar review are good news for those earning more than about £45k, and bad news for those earning less than £45k (in terms of total payments). Everyone pays more per month

/fin

Addendum: I'd implemented the max repayment cap incorrectly. The total repayments now look like this:
raw.githubusercontent.com/chrisnorth/loa…
raw.githubusercontent.com/chrisnorth/loa…

Mostly helps the mid-high earners, but effect is small.

/fin+1