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  • FIRST POST
    • Ciwan
    • By Ciwan 9th Sep 17, 11:14 AM
    • 162Posts
    • 21Thanks
    Ciwan
    Student Loans Confusion
    • #1
    • 9th Sep 17, 11:14 AM
    Student Loans Confusion 9th Sep 17 at 11:14 AM
    Hi all

    On July 2015, I called the Student Loans company to find out my balance. My balance at the time was £23,075.80.

    I called them today expecting a significant decrease and my balance was £22,120.88. That's only a £954.92 reduction.

    How is that possible? I've never been unemployed since that period. And at the time, salary wise, I was on £32,000 a year. Since January, I've been on £48,000 a year.

    Is the interest rate crazy high or something?
Page 1
    • grad101
    • By grad101 9th Sep 17, 6:07 PM
    • 11 Posts
    • 2 Thanks
    grad101
    • #2
    • 9th Sep 17, 6:07 PM
    • #2
    • 9th Sep 17, 6:07 PM
    When did you start and graduate university? It sounds like you're on plan 1 (started before 2012)? If so, your interest rate will be 3.1%. That's around £713 a year. On a salary of 32k you'll be paying a bit over £1280 a year for 2017, and I'm not sure how this stands for previous years - may be less. So yes, given the interest rates a reduction in your loan of only around £1000 over 2 years is not unusual (although depressing) as most of what you're paying is actually interest!

    Remember that if you graduated in 2015 you also wouldn't automatically pay your SL until the following April.
    • zippygeorgeandben
    • By zippygeorgeandben 9th Sep 17, 7:19 PM
    • 708 Posts
    • 886 Thanks
    zippygeorgeandben
    • #3
    • 9th Sep 17, 7:19 PM
    • #3
    • 9th Sep 17, 7:19 PM
    I've been on the phone to SLC today as well. It's such an archaic system. Why HMRC and SLC can't work together I have no idea. I don't trust the SLC. They'll be taking more than I owe for sure.
    End Sep 2016 End Oct 2017
    £8236.57 £0
    (Tesco 4.8%) £0pcm
    £6185.75 £0(Zopa 4.0%) £0pcm

    £5344.50
    £2610.04 (Sainsburys 0% until 06/19) £140pcm
    £2000.00 £1066.69 (Sister 0%) £133.33pcm

    Total debt
    £19.766.82 £3676.73 Original DFD May 2019.
    • Ciwan
    • By Ciwan 10th Sep 17, 7:55 AM
    • 162 Posts
    • 21 Thanks
    Ciwan
    • #4
    • 10th Sep 17, 7:55 AM
    • #4
    • 10th Sep 17, 7:55 AM
    I graduated in 2013, so yep I'm on Plan 1.

    That's so depressing. Once I get rid of my Barclays Loan, I'll focus all my efforts on the Student Loans
    • peter3hg
    • By peter3hg 10th Sep 17, 11:22 AM
    • 52 Posts
    • 58 Thanks
    peter3hg
    • #5
    • 10th Sep 17, 11:22 AM
    • #5
    • 10th Sep 17, 11:22 AM
    The interest rate isn't 3.1%. The plan 1 loans have a cap of the BoE base rate plus 1% so the rate is currently 1.25%. Prior to this it was 0.9% and 1.5%.
    http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678642&_dad=portal&_schema=PORTAL

    Did the figures they quoted include 2016/17 payments? They can be quite far behind sometimes.
    Last edited by peter3hg; 10-09-2017 at 11:25 AM.
    • fiisch
    • By fiisch 10th Sep 17, 11:21 PM
    • 201 Posts
    • 78 Thanks
    fiisch
    • #6
    • 10th Sep 17, 11:21 PM
    • #6
    • 10th Sep 17, 11:21 PM
    I had the same confusion. The way the student loan repayments work seems a bit odd.

    Money is deducted from your salary and held by HMRC until the end of the tax year. At that point, it is paid to the student loans company and the balance comes off the loan.

    However, if you change jobs (oddly enough, I am in identical circumstances - same dates and salary increase, and similar outstanding balance!), it takes awhile for the second job's contributions to get deducted from the balance. I rang a few weeks ago, and the second jobs' balance still hadn't been deducted, but they said to check back at the end of September....!

    Worse still, if you pay your student loan off mid way through a tax year, your employer will continue to take deductions from your salary - only at the end of the tax year will you get any monies owed come back to you.

    They should have explained this to you over the phone - worth double-checking, but I suspect this is what has happened, and a further deduction off the balance is due.
    • Ciwan
    • By Ciwan 11th Sep 17, 8:07 AM
    • 162 Posts
    • 21 Thanks
    Ciwan
    • #7
    • 11th Sep 17, 8:07 AM
    • #7
    • 11th Sep 17, 8:07 AM
    @Peter, yep they did include the 2016/2017 payments.

    @fiisch, thanks, it is so silly the way it currently works and causes such a headache. I've still got a long way to go, but I'm going to start tracking my own payments to them, I don't trust them
    • ManicRower
    • By ManicRower 11th Sep 17, 12:26 PM
    • 33 Posts
    • 42 Thanks
    ManicRower
    • #8
    • 11th Sep 17, 12:26 PM
    • #8
    • 11th Sep 17, 12:26 PM
    I once walked past a colleague photocopying a vast amount of docs and said something like 'blimey there will be no forests left when you've finished.' Turns out he had paid his student loan off many months ago, but due to the archaic HMRC/SLC system they had continued taking payments for a substantial amount of time after his balance had reached zero. He then had to photocopy and send off a load of his previous payslips as proof of payment so he could claim the money back off SLC.


    To avoid this situation, make sure you keep your address updated so you get the yearly update. Then when you get down to £5k or so left, start to pay a bit more attention to your estimated SLC debt-free date.


    Once you get to within a year of paying it off, start the process of switching to a direct debit payment rather than through salary sacrifice. This gives control to you and will ensure they don't continue to take money for months after you have paid it back.
    • dirtycredit
    • By dirtycredit 11th Sep 17, 1:08 PM
    • 142 Posts
    • 237 Thanks
    dirtycredit
    • #9
    • 11th Sep 17, 1:08 PM
    • #9
    • 11th Sep 17, 1:08 PM
    Once you get to within a year of paying it off, start the process of switching to a direct debit payment rather than through salary sacrifice. This gives control to you and will ensure they don't continue to take money for months after you have paid it back.
    They usually send you a letter to remind you to do this. They did with me anyway and there weren't any issues.

    DC
    LBM-May 2015 DFD-Dec 2017 Total debt £27077/5681(77% Paid)
    Halifax-3124/2690 Lloyds-4326/2991
    StudentLoan-1173/
    PAID Tesco-4616/PAID Home improvements- 11000/PAID
    MBNA-4014/PAID


    • Ciwan
    • By Ciwan 11th Sep 17, 1:19 PM
    • 162 Posts
    • 21 Thanks
    Ciwan
    @ManicRower that's awesome advice, thank you.
    Total Debts: £52,220.88
    • zippygeorgeandben
    • By zippygeorgeandben 16th Sep 17, 6:15 PM
    • 708 Posts
    • 886 Thanks
    zippygeorgeandben
    Yup - I've been through this and it'll be direct debts i think from November... student loan free in 13 months apparently. Only took me 8 years...
    End Sep 2016 End Oct 2017
    £8236.57 £0
    (Tesco 4.8%) £0pcm
    £6185.75 £0(Zopa 4.0%) £0pcm

    £5344.50
    £2610.04 (Sainsburys 0% until 06/19) £140pcm
    £2000.00 £1066.69 (Sister 0%) £133.33pcm

    Total debt
    £19.766.82 £3676.73 Original DFD May 2019.
    • andydownes123
    • By andydownes123 17th Sep 17, 1:19 PM
    • 104 Posts
    • 181 Thanks
    andydownes123
    Hi all

    On July 2015, I called the Student Loans company to find out my balance. My balance at the time was £23,075.80.

    I called them today expecting a significant decrease and my balance was £22,120.88. That's only a £954.92 reduction.

    How is that possible? I've never been unemployed since that period. And at the time, salary wise, I was on £32,000 a year. Since January, I've been on £48,000 a year.

    Is the interest rate crazy high or something?
    Originally posted by Ciwan
    You will never pay it off, try not to worry about it. I had around 14K - on the old system. Wage of around £32,000, took 14 years to pay. Yours will probably take the next 30 years - planning on working that long?
    • IAmWales
    • By IAmWales 17th Sep 17, 1:29 PM
    • 1,666 Posts
    • 3,441 Thanks
    IAmWales
    You will never pay it off, try not to worry about it. I had around 14K - on the old system. Wage of around £32,000, took 14 years to pay. Yours will probably take the next 30 years - planning on working that long?
    Originally posted by andydownes123
    If OP is below 40 it is highly likely that he will still be working in 30 years time!
    • tempus_fugit
    • By tempus_fugit 17th Sep 17, 1:43 PM
    • 299 Posts
    • 291 Thanks
    tempus_fugit
    If OP is below 40 it is highly likely that he will still be working in 30 years time!
    Originally posted by IAmWales
    Not true. This is a myth being put around by the media. If people are prudent with their money and contribute diligently to their pensions then most should have the opportunity to retire many years earlier than the state pension age.
    Retired at age 56 after having "light bulb moment" due to reading MSE and its forums. Have been converted to the "budget to zero" concept and use YNAB for all monthly budgeting and long term goals.
    • nkkingston
    • By nkkingston 18th Sep 17, 12:02 PM
    • 444 Posts
    • 501 Thanks
    nkkingston
    It's worth having a look at Martin Lewis's articles on student loans (I've heard him talk about them in person - it's facinating how passionate he is about them!). They are, essentially, a graduate tax. They were never designed with the idea that people would actually earn enough to pay them off in full - they would just keep paying them up to an arbitrary point and then they'd be written off. You don't have to pay them when you're not earning, there are no penalties for never paying them off, and there aren't really any rewards beyond the psychological for paying them off early. As long as you have other debts, you should focus on those, and after that you really need to ask yourself whether you'd benefit more in the long run from saving money rather than paying off the student loan. You can earn more interest on savings than you save in paying the loan off.
    Mortgage
    June 2016: £93,295
    November 2017: £80,096.79
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