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    • Peroxidation
    • By Peroxidation 15th Jun 17, 10:58 PM
    • 5 Posts
    • 0 Thanks
    Peroxidation
    Hello
    Are there any active Student Finance advisors around who have experience of the compelling personal reasons procedure. I would be very grateful for some advice as I am having serious difficulty getting any advice from the the standard advisors.

    Thank you
    • lizziegrace81
    • By lizziegrace81 19th Jun 17, 11:27 AM
    • 1 Posts
    • 0 Thanks
    lizziegrace81
    Hi, I had a full Student loan in 1999 for a 3 year degree equating to roughly £10k in borrowing. I have been in touch with the SLC today for an update as, due to address changes, I've not heard anything for a while. I have been told I now owe over £11k! More than originally! How can that be?! I don't understand how my interest could have accrued to take me over what I borrowed initially.

    I started full-time employment in 2004 earning enough to make payments and although I have been on maternity leave recently I would have thought my balance would have decreased in that time?! I am currently paying £90 a month.

    Would I have been paying interest still whilst on maternity leave? I think it is disgusting. As a student I was not made aware of the consequences of this loan. That may sound pathetic but it was billed to me as an interest free loan. Nobody at any point mentioned this would change after my course had ended.

    Any help greatly appreciated.
    • Ed-1
    • By Ed-1 19th Jun 17, 1:32 PM
    • 1,859 Posts
    • 988 Thanks
    Ed-1
    Hi, I had a full Student loan in 1999 for a 3 year degree equating to roughly £10k in borrowing. I have been in touch with the SLC today for an update as, due to address changes, I've not heard anything for a while. I have been told I now owe over £11k! More than originally! How can that be?! I don't understand how my interest could have accrued to take me over what I borrowed initially.

    I started full-time employment in 2004 earning enough to make payments and although I have been on maternity leave recently I would have thought my balance would have decreased in that time?! I am currently paying £90 a month.

    Would I have been paying interest still whilst on maternity leave? I think it is disgusting. As a student I was not made aware of the consequences of this loan. That may sound pathetic but it was billed to me as an interest free loan. Nobody at any point mentioned this would change after my course had ended.

    Any help greatly appreciated.
    Originally posted by lizziegrace81
    It's the best loan you'll ever get as there's no obligation to pay it back. The only obligation is to make a contribution of 9% of your income over the repayment threshold which is currently £17,775 and increases every April by inflation.

    When you signed the loan agreement, you were confirming you'd read and understood all this.

    The loan is interest free in real terms. That is, interest is only applied at the rate of inflation to maintain the loan's value in real terms and it accrues from the day you get it paid to you. However, since 2009, the Bank of England base rate has been below inflation so the loan has actually been reducing in value as the interest rate on pre-2012 loans is the lower of inflation (RPI) or the Bank of England base rate (0.25%) plus 1%. So with inflation being higher than the interest applied, inflation has been eroding its value.

    If you borrowed £10,000 in 1999 and it's still £10,000 in 2017 then it's worth a heck of a lot less now than it was then. The average wage back then would've been not much more than £10,000. Now it's £26,500.

    But that doesn't change the fact that it's written off at age 65 for you anyhow. So just see it as an extra bit of tax out of your income, not something you need to be worried about paying back.
    • Savvy_Sue
    • By Savvy_Sue 20th Jun 17, 12:56 AM
    • 37,421 Posts
    • 33,756 Thanks
    Savvy_Sue
    Just to add to what Ed said, and to pick up on these bits:
    I don't understand how my interest could have accrued to take me over what I borrowed initially.
    Originally posted by lizziegrace81
    Would I have been paying interest still whilst on maternity leave? I think it is disgusting. As a student I was not made aware of the consequences of this loan. That may sound pathetic but it was billed to me as an interest free loan. Nobody at any point mentioned this would change after my course had ended.
    Originally posted by lizziegrace81
    Hate to break it to you, but you started to accrue interest on this loan on the day you took it out, so each year throughout your degree the total you owed was increasing, so that you always owed more than you'd originally borrowed. Nothing changed after your course ended.
    Still knitting!
    Completed: 1 adult cardigan, 3 baby jumpers, 1 shawl, 2 pairs baby bootees,
    1 Wise Man Knitivity figure, 1 sock ...
    Current projects: 1 shawl, t'other sock (just about to turn the heel!)
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