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  • FIRST POST
    • ellie44
    • By ellie44 16th Jul 17, 10:12 AM
    • 5Posts
    • 0Thanks
    ellie44
    Should I pay off my student loan if I'm going to be a high earner?
    • #1
    • 16th Jul 17, 10:12 AM
    Should I pay off my student loan if I'm going to be a high earner? 16th Jul 17 at 10:12 AM
    Hi,

    I really cannot decide what I ought to do about my student debt owing to all the political uncertainty at the moment. I started my course in 2014 and am graduating next week. I have over £40,000 of debt and I know the interest rate is pretty high at 4.6% (generally more than I could get in savings!).

    My problem is that I'm going to be earning £100,000 or so in 4 years time, with that amount increasing every year (I'm fortunate enough to be on one of the best graduate schemes in the City) - and therefore I will be a 'high earner' and I will pay back all of my loan by the time I'm 30 (I'm 21 now). That would not have been an issue normally but my worry is about Labour and promising to eliminate student debt. I was planning to pay off my loan quicker than was necessary owing to the interest I'm accruing but I now am hesitant to do this if Labour is going to wipe it anyway. I do not want to be hit with a double burden - having paid off all of my own debt and then being taxed ludicrous amounts to subsidise future students' tuition. The irony is I am from a 'poor' background, so on one hand I'd be classified as the type of student Labour is trying to help but on the other hand, my future income would class me as 'rich' - I am stuck in the middle.

    I should also probably add that for the next 4 years my income will not be anywhere near the £100k mark and so my future higher earnings will coincide close to the next General Election. I have 2 more years of studying to go (fully funded by my future employer - I am going into law) and then 2 years as a trainee solicitor, where I will be earning £45-50k. I am just trying to plan ahead.

    Thank you for any advice!

    ** Apologies if this kind of question has already been answered - I know about the general debate on repaying student debt in relation to generally saving instead towards a mortgage etc but my worry is specific to what Labour is proposing.
    Last edited by ellie44; 16-07-2017 at 10:32 AM.
Page 1
    • McKneff
    • By McKneff 16th Jul 17, 10:32 AM
    • 35,518 Posts
    • 45,710 Thanks
    McKneff
    • #2
    • 16th Jul 17, 10:32 AM
    • #2
    • 16th Jul 17, 10:32 AM
    Dont count your chickens.
    Lots can happen in 4 years.

    Lives can be changed in a split second.

    Dont pay it off.
    No one can make you feel inferior without your consent
    • silvercar
    • By silvercar 16th Jul 17, 11:07 AM
    • 35,866 Posts
    • 151,014 Thanks
    silvercar
    • #3
    • 16th Jul 17, 11:07 AM
    • #3
    • 16th Jul 17, 11:07 AM
    That would not have been an issue normally but my worry is about Labour and promising to eliminate student debt.
    Even Labour themselves have admitted that they don't promise to eliminate student debt for previous loan recipients.

    They have said they would like to abolish student loans going forward, but (a) they have to get into a position to enact that and (b) once in power they have to find the money to deliver that and prioritise it amongst all their other election pledges.

    I suspect that rescinding all existing student loans will be so far down the wish list it is unrealistic to expect it to happen. There is a twitter discussion about this point that crossed my newsfeed today, if you are interested in researching this point further.
    • BonsaiClouds
    • By BonsaiClouds 18th Jul 17, 1:57 PM
    • 11 Posts
    • 8 Thanks
    BonsaiClouds
    • #4
    • 18th Jul 17, 1:57 PM
    • #4
    • 18th Jul 17, 1:57 PM
    As others have mentioned, I suspect that it's unlikely that your worry will come to fruition. First they have to get elected, then they have to still at that point be determined to do it (and they don't even sound wholly convinced now, it's more of a speculative idea at this stage), and then they have to garner enough support to push it through commons.

    If they did pull it off, I would imagine that if they went as far as to wipe all debt they'd also have some sort of compensation for those who've already paid, especially in very recent years.

    Overall, this perhaps isn't what you want to hear but if you're going to be earning over £100k, you're going to be in an extremely comfortable position regardless of which you decide to do. Do what makes you feel most comfortable, and don't lose sleep over worrying about this. If you decide to pay it off and end up losing money, take solace in the fact that you've at least helped fund the education system that got you your job.
    • silvercar
    • By silvercar 21st Jul 17, 9:42 AM
    • 35,866 Posts
    • 151,014 Thanks
    silvercar
    • #5
    • 21st Jul 17, 9:42 AM
    • #5
    • 21st Jul 17, 9:42 AM
    http://www.telegraph.co.uk/education/2017/07/19/labour-retracts-tuition-fees-pledge-angela-rayner-says-no-plans/

    Should set your mind at rest!
    • Voyager2002
    • By Voyager2002 25th Jul 17, 12:09 PM
    • 11,569 Posts
    • 7,824 Thanks
    Voyager2002
    • #6
    • 25th Jul 17, 12:09 PM
    • #6
    • 25th Jul 17, 12:09 PM
    As others have said, Labour never did "pledge" to write off student debt. Their policy is to do away with tuition fees for future students. Corbyn was interviewed about this and recognised that doing so would be unfair on recent graduates who are still struggling with enormous student debt. He acknowledged the problem; expressed concern; and promised that a future Labour government would look at ways of dealing with it when and if public finances made this possible.

    As for being taxed "ridiculous amounts", the Labour manifesto made it clear that only people earning more than about £80,000 per year would see any tax increase at all.
    • studentmoneysav3r
    • By studentmoneysav3r 25th Jul 17, 6:16 PM
    • 4 Posts
    • 5 Thanks
    studentmoneysav3r
    • #7
    • 25th Jul 17, 6:16 PM
    • #7
    • 25th Jul 17, 6:16 PM
    It literally doesn't matter.

    1. Labour are not in power and a lot can change in 4 years.
    2. You may not be earning as much as you hope in 4 years (again, a lot can change).
    3. Labour aren't eliminating student debt, only pledging to get rid of tuition fees.
    4. Pay it off if you have the money and it won't inconvenience you so much but ONLY if you're 100% sure you'll be a high earner and you WILL pay off the full balance. It makes more sense cos then you're paying less interest.
    • infected.1994_
    • By infected.1994_ 28th Jul 17, 12:17 AM
    • 3 Posts
    • 2 Thanks
    infected.1994_
    • #8
    • 28th Jul 17, 12:17 AM
    • #8
    • 28th Jul 17, 12:17 AM
    I'm in the same boat, daily deciding one thing then changing my mind. The best I can come up with is to pay off roughly £1800 a year, on top of the amount that is already deducted. Approx 2.5k per year, at least whilst I can. I'm not going to count on Labour or any government helping me, since it was the government who raised student fees in the first place. I don't trust any of them. As I get older and my responsibilities grow, I'll pay less voluntarily but my salary would rise which means I'm still paying the compulsory amount which I hope still covers the years interest and some of the debt too.
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