What a Negative RPI Means to Students Past and Present.

RPI, CPI, MPI … I could write 500 words and still be listing the many Three Letter Acronyms (TLAs) used in the financial sector! However at the moment the RPI should be of interest to anyone who has taken out a student loan from the Student Loans Company since 1998. “The Retail Price Index is an important domestic indicator of inflation in the United Kingdom (UK). It measures the average change from month to month in the prices of goods and services purchased in the UK.” (http://www.statistics.gov.uk/about/glossary/economic_terms.asp) Now, in a recent report the Bank of England predicted that, “RPI inflation is likely to turn temporarily negative in the next few months.” (Bank of England Monetary Policy Committee Inflation Report, February 2009, 34) This will generally be good for all consumers as it will mean prices have fallen. However, for anyone with a student loan it is extra good news.

When a majority of students apply to University they apply for a loan from the Student Loans Company, whether it is a tuition fee loan, maintenance loan, an income assessed loan, a non-income assessed loan or any combination of the above. It is just what you do. I remember being under the impression that you did not pay interest on your student loan until you had finished studying. I couldn’t tell you who told me that or why I believed them, but I did. Boy was I in for a rude awakening when I got my first statement through at the beginning of my second year at Uni. The interest on student loans is admittedly lower than those on commercial loans. However, over Spring and Summer 2008 the rate was as high as an extortionate 4.8%!! Whilst it has dropped with the fall in the base rate and is now at 2% they were making a lot of money out of us for a while. On the Student Loans Company website it states that, “this interest rate is based on the annual March Retail Price Index (RPI) or the highest base rate of a number of major banks plus 1%; whichever is lower.” (http://www.slc.co.uk/statistics/facts%20and%20%20figures/index.html#interest) I would like to draw your attention to the last three words of that statement, “whichever is lower”. The Student Loans Company acknowledges that the RPI is usually lower and as a result bases their interest rate on it. NOWHERE does it mention what will happen if the RPI becomes negative, probably because this has never happened in the history of Student Loans. This could be a good or a bad thing. By not mentioning the phenomenon at all, to date, the Student Loans Company could add another clause to their Terms and Conditions capping the rate at 0% if they feel it is necessary. If they do not then an interest rate of -0.5% until March 2010 could certainly help out students when it comes to making the repayments!! The Student Loans Company will start paying off your loan for you, by paying you 0.5% interest! That’s nearly as much as the average ISA is paying at the moment!

We will have to wait and see what happens and we don’t have to do that for long! With forecasters saying that things are going to get a lot worse, certainly worse than the recession in the early 1990s, before they get better this little break from the building of more debt will certainly help to boost the economy when students graduate in the next few years and have more disposable income. Since there are no qualms about sticking to the RPI when it sky rockets I do not see why the Student Loans Company should be able to change the rules when things are in the borrowers’ favour for a change. But when has banking ever been fair?

To read the Bank of England Monetary Policy Committee Inflation Report in full and get a fuller picture of the UK economy go to: http://www.bankofengland.co.uk/publications/inflationreport/ir09feb.pdf.

A Slight Rant About The State Of My Finances

I stumbled upon a University Rankings Table, provided by the Guardian.

1. OxfordGuardian score/100: 100
2. CambridgeGuardian score/100: 92.9
3. London School of EconomicsGuardian score/100: 84.4
4. WarwickGuardian score/100: 81.6
5. St Andrews

The full table can be found here.

I was also mildly happy to see that the student loans interest rate for Income Contingent Loans has been reduced to 2.0%. I'm only mildly happy though, as being a student I believe that our loans shouldn't be racking up interest whilst we aren't earning enough to repay the debts. This view became particularly clear for me last year when I was shocked to discover I had to pay for my dental check ups and prescriptions etc., as the government view my loan as income- and so I 'earned' enough to pay for treatment. It seems sometimes as though everything is aimed at taking our money! Even when it's not ours forever.

Facebook Crumbles After Huge Complaints

At close of business on Tuesday Facebook announced a retraction of their new Terms of Service which suffered from widespread criticism. They finally folded after a group of privacy experts threatened to file a formal complaint with the Federal Trade Commission.

Facebook are now saying they will revise the Terms of Use in conjunction with the thoughts of Facebook users. I think that if they are going to make changes as significant they should at least give users a warning so they can delete their account before being told that doing so will not prevent Facebook having the rights to their information.

"We Can Do Anything We Want With Your Content. Forever."

Facebook have sneakily changed their Terms of Service (TOS) without many users knowledge.

Facebook's TOS used to mean that when an account was closed, any rights they claimed to the original content you uploaded would immediately expire. But due to a change in the TOS, any content uploaded can be used by Facebook in any way they please, forever- even if an account is closed. Not only can Facebook use this content, but they can sublicence it (meaning that any third party, deemed fit, could use this content).

The actual changes to the TOS are noted at the consumerist.com

A clause in the TOS states that Facebook "reserve the right to change any aspect or feature of the Facebook Service at any time without notice." Which allows this change, without the consent and knoowledge of Facebook users.

This does not seem right, and while the reality of these changes may just be Facebooks owners trying to cover their own backs, it does allow for some scary possibilities.

Careful what you put up on Facebook!

Pop!Casts

In a lecture this morning I was introduced to poptech.org

This website provides a 'network of remarkable people, extraordinary conferences, powerful ideas & innovative projects that are changing the world.'

Having not had much time to search the site, I cannot confirm whether I'd go as far as to suggest changing the world, but the conference we were shown today certainly was different!

Benjamin Zander is a man of great enthusiasm, and a strong belief in human potential. I recommend his pop!cast to anyone who is stuck with negative thoughts about their capabilities. And I think the website as a whole would be beneficial to anyone, within business or as an individual.

Studentgems on TV!

The BBC Working Lunch programme yesterday aired an interview with the Studentgems management and Chris Bamford, a second year Cybernetics student at the University of Reading. Chris was talking about his work experience and employment prospects. Chris was interviewed on the programme after successfully helping design a new cash free vending machine system, as a freelance project, which he found through Studentgems.com.

Like most students Chris has found working essential to help him support his studies. He registered on Studentgems.com hoping to find paid work which would also look good on his CV and he succeeded! In the interview he explains about how initially he only had a relatively small, simple task to complete. Due to the good quality of his work and attitude they asked him to become more involved in the project to the point where he, in his own words, “basically ended up doing pretty much the entire thing!” He goes on to say how valuable the experience has been for him. He was able to gain a real insight into the corporate world, far more so, he says, than friends who have completed internships for big multinationals.

His employer discussed how pleased they were with Chris’s work and professional manner. In addition to being vital in the development of the end product, he successfully participated in and presented to corporate meetings with the management team and investors. Per Hovland, Managing Director of the company describes Chris’s achievements as those of, “the perfect type of student that we need now”, one who knows their subject and can communicate their skills and what they are working on in potentially intimidating situations.

Overall, I would say that any work experience will be beneficial to students and that it is paid should be a given. This is something that Studentgems.com is working hard to achieve, as Sue one of the Company's founders explains in the interview. Chris is the perfect example of a student with the necessary skills to complete a job which needed someone who was aware of the latest developments in their field and willing to take on, what was initially only a small job. Studentgems.com is the place where students can search for jobs and companies can search for students, enabling more profitable partnerships such as this one to form. Students from every discipline can find work through the site doing jobs ranging from dog walking (not exactly work experience I know, but paid nonetheless) to telesales to photography.

You can watch the programme on the BBC iplayer, or go to this page: http://www.bbc.co.uk/iplayer/episode/b00hq3h8/Working_Lunch_11_02_2009/ to view this particular episode, which will be available until 18th February 2009.

Do you want the edge?

The media, the Government and everyone in between keeps saying things like, “well in the current economic climate …” and “we are in a recession you know” and unfortunately this is only the beginning! According to a UK Government paper GDP figures show that we officially went into a recession in the fourth quarter of 2008. If the last recession is anything to go by we’ve got at least another year of this, if not more. So what does that mean to Britain’s youth? Those of you who had a part-time job in Woolworths have already felt the harsh short-term affects of people spending less money and many other retailers are cutting back on staff. Plus, restaurants and pubs are not getting as much business and so are cutting back on staff too.

The immediate adverse consequences of the recession as I see them are; it will be more difficult to find a part-time job doing what you are used to. You will almost definitely get rejected for the credit-card you applied for, but then maybe that’s not such a bad thing! Interest rates for your savings accounts have plummeted.

The immediate positive consequences are; student loan interest rates have dropped, for the first time ever (!!) which will help out quite a lot when you start having to pay it off. Gas and electricity prices are going down. In addition to everywhere doing lots of special offers there are quite a few student discounts floating around, make the most of them. Due to the fact that firms are cutting down on the number of full-time staff you may be able to find part-time or fixed contract work which will give you much better experience than stocking the pick’n’mix at Woolies ever did.

A really good website I found solves the problem of work now and employability later is www.studentgems.com. They focus on helping students find paid work experience to improve their CVs and help fund your studies. When you register you have to select the skills you have from a drop down list. This really makes you think about skills you have which employers are interested in. For example, if your only job so far has been waitressing then it can be hard to get a work experience placement with your CV. By listing your skills you can include report writing, presentations and computer literacy as you will have experience in all these things from College and University. You can then apply to jobs posted on the site, or potential employers can search through the students registered and contact you to offer you a job. I got a job through the website and recommend it 100%.

I’m afraid that here comes the bad news, the long term negative consequences of the recession on students. As those students graduating in 2009 will have already found out companies are closing or significantly reducing the size of their graduate schemes, making finding a job extremely difficult. Between 2007 and 2008 the number of graduate jobs available fell by 6.7%. This has fallen by a further 0.3% in 2009 and is expected to keep falling. I’m afraid that this will continue to be the case over the next few years as businesses slowly rebuild their customer base, so competition for jobs is greatly increasing.

I am not a Government official, a University administrator or someone who thinks they know everything because they lived through the last recession, but for what it is worth my advice is simple:

• Find a savings account with a good fixed interest rate (web-savers are usually good if you want to be able to move money around a lot) and clear out your ISA because the interest rate has dropped hugely.
• Don’t worry about your student loan or try to pay it off quickly, at the moment the interest rates are so low you would be much better off clearing your student overdraft and getting a high interest savings account.
• Make the most of being a student, get an NUS Extra card and join websites such as www.studentbeans.com where you can get student discount vouchers and information.
• Give yourself an edge. When you are applying for jobs you don’t want to have to skip through the ’Work Experience’ section of the application form. Apply now for summer placements, if they only offer voluntary ones in your industry then do it for a week. IT WILL HELP. Try to get industry relevant work experience; if you want to be a building surveyor work as a brick layer for a few weeks, if you want to be an accountant get a temp job doing data-entry or something, in an accountancy firm, it will help.

Transfer to Durham?

Graduates from Durham University are being offered £2,000 to stay on and research rather than try to find their first job during the recession!

It has been clear for a while that there would be intense competition for jobs among graduates this year, due to the lack of available jobs during the ‘credit-crunch’. This has lead to the possibility of more students applying for post-graduate courses.

The University will award 102 scholarships of £2,000. This will apparently be available for most Masters Courses.

Prof Forster stated, "It's also about keeping the brightest and best at Durham and in the North East, but we want our graduates to go on and get the best jobs wherever they are."

The chance to gain a Post Graduate Degree, with a scholarship is great, and being encouraged to further our academic knowledge is also positive. But what is being missed is that it will result in more debt due to living costs, and monthly fees. The thought that this is OK because of the worth of a Post Graduate Degree is also misguided, as its worth will diminish with the more people that gain one.

In my opinion, this is not a solution, it merely avoids the problem.

Maybe I'm wrong? I'd love feedback as the credit crunch is a problem for all.

This year is going well...

The Grammys, a night I usually pay little attention to. But…

I am VERY happy to discover that Blink-182 have, in Travis Barker’s words, “decided…to play music together again.”

New album, new tour!

I actually cannot wait!

"To put it simply, we’re back. We mean, really back.”

They better be…

So the Grammys do have their uses.

University Shuts Down

When I arrived at work today I was amazed to find the BCUC campus, where studentgems is based, closed. Apparently due to the snow all three campuses were closed and would soon be locked up for the day (at 9.45!!).

Admittedly there was a lot of snow and I could understand them being short staffed or having to cancel some lectures as people couldn't get into work, but closing all facilities to people who wished to use them is outrageous!

I do not understand why facilities are being closed when there are enough people there to run them, particularly not-for-profit organisations such as Universities who wouldn't lose any money by staying open as on any other Thursday.

Needless to say I was not happy. This was made considerably worse when it took me 1 hour 15 minutes to get down Amersham Road / Hill to get home!

Google is 'white bread for the mind'

An article in the Times Online last month really hit home, and as I have an essay due this week I have been reminded of the warnings it gave.
Most students immediately head for Google when starting assignments. Some just want some inspiration, or an idea to start those crucial first few sentences. But far too many (including me) rely on online information, sometimes without knowing whether this information is correct.
Already at university we are warned against sources such as Wikipedia, as anybody can change the information.

“Google offers easy answers to difficult questions. But students do not
know how to tell if they come from serious, refereed work or are merely
composed of shallow ideas, superficial surfing and fleeting commitments."

This focus on students however is slightly misguided, as I'm sure that in all walks of life the importance of instant online information is growing.

It's a great shame that we cannot trust everything posted on the Internet. Whilst this is unlikely to change, we must learn to discern useful sources from those that are untrustworthy.
Or even better, I might try to read more books!

Facebook plans to profit from private data

The wonders of snow. I had the joy of a free morning, with no lectures.

It seems amazing that Britain encounters some snow, and schools and universities close, buses stop running and so forth. How inconvenient. It's times like these that we can be thankful for the internet.

An article in the Telegragh yesterday reported on how facebook plans to exploit the vast amount of personal data it holds on over 150m users.
Information from marital status to preferences will be available to multinational companies, allowing them to selectively target members to research the appeal of new products.
This exploitation comes as a result of facebook struggling to gain money from advertising, and I feel it is understandable that a networking site with the size and potential of facebook should want to capitalise financially. However, is it immoral to allow companies access to target people based on their personal information? Or is it a clever financial move by facebooks' founder Mark Zuckerberg, which doesn't actually affect our privacy?