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  • FIRST POST
    • MSE Rosie
    • By MSE Rosie 14th Jul 17, 6:16 PM
    • 63Posts
    • 29Thanks
    MSE Rosie
    Guide discussion: Should I repay my post-2012 student loan?
    • #1
    • 14th Jul 17, 6:16 PM
    Guide discussion: Should I repay my post-2012 student loan? 14th Jul 17 at 6:16 PM
    This is the discussion area for the


    Click reply below to discuss. If you haven’t already, join the forum to reply.
Page 2
    • Mogley
    • By Mogley 21st Jul 17, 1:01 PM
    • 224 Posts
    • 185 Thanks
    Mogley
    As a parent of 2 post 2012 graduates if I have £36k (each) to clear their debts wouldn't I always be better off paying it into a LISA for them?
    Originally posted by setmefree2
    Or put £12k into the more flexible Help to Buy ISA? Boosts savings by 25% if you buy a house but more flexible if you want it for something else before 60.
    Originally posted by setmefree2
    You wouldn't be able to put all your money into their LISA or HTB ISA at once because of the funding limitations. A 100% equity S&S ISA would be a good flexible place for larger funds if you are investing for the long term to beat inflation.

    Ditto for a student who can afford to pay anything off a student loan - wouldn't they always be better off investing in a LISA or H to B ISA?
    Originally posted by setmefree2
    A graduate with spare money after all outgoings is most definitely better off paying into a LISA or HTB ISA if they are first time buyers due to the 25% bonus.
    No.25 for 2017 £1070/£4000 saved.
    You should pay attention to the needs of the moment - otherwise there is no future. But to ignore the future is foolish - living solely for the moment leaves nothing for when the next moment arrives.
    • setmefree2
    • By setmefree2 21st Jul 17, 2:55 PM
    • 8,843 Posts
    • 18,884 Thanks
    setmefree2
    You wouldn't be able to put all your money into their LISA or HTB ISA at once because of the funding limitations. A 100% equity S&S ISA would be a good flexible place for larger funds if you are investing for the long term to beat inflation.
    Originally posted by Mogley
    Yes I'm sorry I was a bit unclear. I meant "drip it"into a LISA using the annual limits. Also the balance in a HTB ISA at April 6th 2017 can be moved into an LISA this year - meaning you can put £8200 (more than double the usual allowance of £4k) into a LISA this year and get a £2,250k bonus. So £8,200 becomes £10,250 by next April.

    http://www.moneysavingexpert.com/savings/lifetime-ISAs

    Definitely better than paying off student debt if you are saving to buy a home.
    Last edited by setmefree2; 21-07-2017 at 3:20 PM.

    • setmefree2
    • By setmefree2 24th Jul 17, 11:16 AM
    • 8,843 Posts
    • 18,884 Thanks
    setmefree2
    Does anyone else find it seriously disturbing that Corbyn said this (below) on the Andrew Marr show.

    “There is a block of those that currently have a massive debt, and I’m looking at ways that we could reduce that, ameliorate that, lengthen the period of paying it off, or some other means of reducing that debt burden.
    http://www.independent.co.uk/news/uk/politics/jeremy-corbyn-labour-student-loans-debt-manifesto-pledge-amnesty-cancel-tuition-fees-a7856161.html

    Lengthen the period of paying it off? That would make things worse for students not better. He clearly has no understanding of the SL system. And he wants to be PM. Hummmm.
    Last edited by setmefree2; 24-07-2017 at 11:24 AM.

    • Sampson1994
    • By Sampson1994 24th Jul 17, 11:54 AM
    • 1 Posts
    • 0 Thanks
    Sampson1994
    Hello,

    I currently have £7000 student loan debt, I earn £23000 but will rise up to £40000 within 7 years. Should i pay off my student loan in bulk? I'm currently on Plan 2.

    Hope this is the right place,

    Thanks
    • koru
    • By koru 24th Jul 17, 3:56 PM
    • 1,276 Posts
    • 644 Thanks
    koru
    I currently have £7000 student loan debt, I earn £23000 but will rise up to £40000 within 7 years. Should i pay off my student loan in bulk? I'm currently on Plan 2.
    Originally posted by Sampson1994
    I assume you are in your 20s. As your loan is pretty small, you are going to end up paying it all off fairly quickly anyway, at 9% per year on your salary above 21k. If you know what your salary is likely to be, you can work out how long it will take to pay it off (and what rate interest you will be charged each year until then).

    Then, you need to work out how much earlier you could voluntarily pay it off and then decide the best use you could make of the money if you hang on to it as long as possible. If it would earn you less than the extra interest you incur by waiting, then best to pay it off early. If you have a car loan, on which you are paying 5%, probably best to pay that off instead. If you would otherwise not use your £4k LISA allowance, you may be better putting the money in a LISA and getting the 25% uplift, plus the return on the LISA savings/investments.

    Also bear in mind how sure you are about your future salary. Can you rule out losing your job or not working?
    koru
    • tysonpj
    • By tysonpj 25th Jul 17, 7:10 PM
    • 3 Posts
    • 2 Thanks
    tysonpj
    Mis-sold?
    Do you think these loans were mis-sold to 17/18 year olds at a vulnerable(ish) time in their lives with little advice offered? If it was sold as a graduate tax then fair enough but a loan?.. that never gets paid off...rates that may or may not change...repayment amounts that may or may not change..terms that may or may not change.
    I do not know the answer but over time this will become another toxic policy that will be blamed on past governments for years to come.
    • Fitzmichael
    • By Fitzmichael 26th Jul 17, 3:34 PM
    • 119 Posts
    • 57 Thanks
    Fitzmichael
    Tell 'em at school
    Surely the Head of Maths, without needing a prompt from Head-teacher or anyone, should explain, like Martin, to all students in the first term of year 11 how student loans are not to be terrified of. With the opportunity to ask questions of a teacher you know and, presumably, trust, this would surely settle any jitters a student (or 'pupil, in my ancient terms) might have.
    • a1bc2ef3
    • By a1bc2ef3 27th Jul 17, 8:20 PM
    • 1 Posts
    • 0 Thanks
    a1bc2ef3
    future changes?
    "My apologies for putting government and guarantee in the same sentence."

    Bad memory's quote.

    How much can we trust the 30 year period followed by writing off of the outstanding amount as being guaranteed? Will future governments consider this to be binding on them? Is this a term that could be changed in future or not? Is there any official guarantee available to the students affected?
    • Fitzmichael
    • By Fitzmichael 27th Jul 17, 10:01 PM
    • 119 Posts
    • 57 Thanks
    Fitzmichael
    Cost/value of uni then and now
    BoxerRules: I graduated just before you started and the big difference from our day was that no-one, at least that I ever knew, went to uni with financial advantage in mind; you went to follow your intellectual interests (and for the 'fun' you expected to have). Uni choice was by their intellectual reputation; there were no comparison 'Guides' to how much graduates of each earned. 'Career' requirements only affected a minority, such as medical students. (Want to be a top civil servant? - Do Classics, so useless, except as a demo of intellectual ability.) I went to become fluent in all aspects of my 3 foreign languages (+ the fun). I knew they would give me a choice of interesting (chance to travel) and steady jobs, not necessarily with very high pay. There were no grants when I was 18 in 1959, and uni was still for the class that could afford to pay their children's tuition and all the living (inc 'fun') expenses of escaping to different surroundings. However because uni in France was a free entitlement for those passing the Bac (equivalence to which a French Cultural Attache awarded me), I spent a year at Grenoble Uni before grants were introduced here, and none of my French, Spanish and Luxemburg fellow-students mentioned career enhancement - education was an intellectual pursuit. How impractical those Continentals are, and how anti-intellectual we Brits!
    Last edited by Fitzmichael; 27-07-2017 at 10:07 PM. Reason: To name the poster I am replying to.
    • Tom26
    • By Tom26 28th Jul 17, 11:12 PM
    • 2 Posts
    • 0 Thanks
    Tom26
    Mis-selling indeed
    When I contacted the SLC to make a similar point to the "Mis-Sold?" post above, they said "well your son should have read the small print when he signed up". I find this totally disingenuous, given that nearly all 17-year olds are financially very inexperienced - and don't have much clue what constitutes good value (or not) in a loan.


    Also he applied in early 2012 - just before the old very low fixed interest scheme ended - and he/we assumed that low interest pertained.


    A strong whiff indeed of mis-selling.
    Last edited by Tom26; 28-07-2017 at 11:16 PM.
    • Tom26
    • By Tom26 28th Jul 17, 11:27 PM
    • 2 Posts
    • 0 Thanks
    Tom26
    What Interest Rate applies?
    My son has had a variety of low-paying jobs since graduating in 2016. He has now (thankfully) found a "proper job", and will have a salary of £22k from 1st October. However his total earnings in the 2017/18 tax year will be less than £14k.


    Does this mean for 2017/18 his student loan interest rate will be 3.1% - or 6.1% ?? (Is the £21k 'earnings' threshold based on salary at tax year end - or actual income in the tax year?)
    Last edited by Tom26; 28-07-2017 at 11:31 PM.
    • koru
    • By koru 29th Jul 17, 10:39 AM
    • 1,276 Posts
    • 644 Thanks
    koru
    Does this mean for 2017/18 his student loan interest rate will be 3.1% - or 6.1% ?? (Is the £21k 'earnings' threshold based on salary at tax year end - or actual income in the tax year?)
    Originally posted by Tom26
    The rate only hits 6.1% if his earnings are £41k per year. They gradually increase from 3.1% to 6.1% in proportion to the amount of salary greater than £21k. So, even if he was on £22k for the whole year, the rate would only be 3.25%.
    koru
    • Mogley
    • By Mogley 31st Jul 17, 9:57 AM
    • 224 Posts
    • 185 Thanks
    Mogley
    (Is the £21k 'earnings' threshold based on salary at tax year end - or actual income in the tax year?)
    Originally posted by Tom26
    The contributions are based on gross monthly pay threshold of £1750 earnings. Your son will be paying £7.50/month contribution at £1833/month earnings.
    Full details of repayments and interest can be found here:
    http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678715&_dad=portal&_schema=PORTAL
    No.25 for 2017 £1070/£4000 saved.
    You should pay attention to the needs of the moment - otherwise there is no future. But to ignore the future is foolish - living solely for the moment leaves nothing for when the next moment arrives.
    • Drave
    • By Drave 23rd Aug 17, 10:36 AM
    • 2 Posts
    • 0 Thanks
    Drave
    I am not currently a student ( I graduated more than forty years ago) and I applaud Martin for his efforts to put this issue into perspective.
    ... ...
    Was I better off than today's students?
    Originally posted by BoxerRules
    I graduated in 1970 and now have two millennial children living at home, rent-free.
    In the context of the cost of a degree, the question "Was I better off than today's students?" is only mildly interesting but I think any answer should take into account, for each case:
    1. the typical income tax, National Insurance and Purchase tax/VAT paid by a graduate (I feel mine were much higher)
    2. "expectations" - that latter seriously affect how "well off" you feel and I feel that my children's are much higher than mine were, including in terms of the environment and global justice.
    • Drave
    • By Drave 23rd Aug 17, 10:49 AM
    • 2 Posts
    • 0 Thanks
    Drave
    Dropped out, repay small loan?
    The MSE advice is, again, very useful. However I wonder how it applies to someone, such as I know, who started a course, say with OU, and then "dropped out" with, say only £3000 student loan? Their salary profile over the next 30 years could mean that they repay their loan+interest in full but might do better to clear it much sooner? Perhaps a topic for the next "incarnation" of this guide?
    • Blackcat29
    • By Blackcat29 23rd Aug 17, 1:28 PM
    • 11 Posts
    • 0 Thanks
    Blackcat29
    I've just completed my degree, having studied part time, and skipped a year via credit transfer my student loan is currently just over £11,000. I've not worked for a few years but I am looking at going back into work in the next month or so with a starting salary of between £25-30k. I'm 42, so not sure if the full 30 years is valid for me but if all goes as expected with my career then I expect to repay the full amount. This being the case, should I look at paying more on my loan payments to pay it off quicker?
    • Liz Holds
    • By Liz Holds 29th Aug 17, 2:17 PM
    • 1 Posts
    • 0 Thanks
    Liz Holds
    Small loan
    I have a £15k loan after pulling out of uni and won't be going back. I currently earn £14k and may earn £21k plus in three or four years. Any suggestions? Thanks
    • Billy1996
    • By Billy1996 7th Sep 17, 8:40 PM
    • 1 Posts
    • 0 Thanks
    Billy1996
    Have I made a mistake?

    I am going into my final year of study and only took a loan out on my first year of study so at the moment my debt is £9,000 + interest. As I have paid off a year of study already, am I better off paying all of my student fee's off or taking a loan for my final year?
    • Ed-1
    • By Ed-1 7th Sep 17, 8:49 PM
    • 2,032 Posts
    • 1,094 Thanks
    Ed-1
    Have I made a mistake?

    I am going into my final year of study and only took a loan out on my first year of study so at the moment my debt is £9,000 + interest. As I have paid off a year of study already, am I better off paying all of my student fee's off or taking a loan for my final year?
    Originally posted by Billy1996
    Noone can answer that as with student loans, the amount you repay depends on what your future earnings are. The size of the debt is mostly irrelevant.

    Many people on modest salaries will pay the same if they have a debt of £20,000 or a debt of £100,000. The only difference is the amount that the Government will write off which is no worry for the student.

    With interest of RPI+3% added annually most people's debts escalate into unrepayable territory anyway so it becomes a 9% tax above £21,000 for up to 30 years. Paying off the debt voluntarily by paying fees upfront is like paying tax upfront that might never have needed to be paid.
    Last edited by Ed-1; 07-09-2017 at 9:48 PM.
    • silvercar
    • By silvercar 7th Sep 17, 9:27 PM
    • 36,046 Posts
    • 152,258 Thanks
    silvercar
    With interest of RPI+3% added annually most people's debts escalate into unrepayable territory anyway so it becomes a 9% tax above £21,000 for up to 30 years. Paying off the debt voluntarily by paying fees upfront is like paying tax upfront that might never have needed to be paid.
    The chances of fully repayimg are higher if you have a smaller loan. You need to look at the chances if repaying more than 18k to see if its worth not taking it this year.
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