Should I Pay Off My Student Loan? 2008/09 article discussion

Oldernotwiser

Spectralis wrote: »

Well, I'm considering going back to uni and over the next 4 years will be borrowing £3,500 a year to pay uni fees and £6,500 for living costs. That's going to leave me at least £40,000 in debt by the end of it.
I object a great deal to paying for education which is basically training for work. Employers benefit from this training and contribute nothing towards improving the skills of the UK's labour force. Students are paying for it. It also discriminates against students who come from families on low incomes who are placed in much greater debt.
It's argued that students benefit through the potential of an increased income but this is not guaranteed. Especially in this climate of privatisation and attacks on wages.
Almost all leading members of the government who forced loans on students have benefited from free education at the tax payers expense.
After having paid taxes for years I object to now paying for "education" (job training) while billions are spent on war and the olympics that the majority of the population don't even want nor benefit from.
So, I don't agree that student loans are a good deal for students. They are a form of individual taxation for improving the skills of the labour force which benefit employers ultimately. I would be in full support of a campaign against loans in protest at this unfair taxation if ever one develops. I hope it does.

I think that looking on HE as "training for work" is inappropriate and unhelpful, although understandable if that's your personal motivation for going to university. However, you're wrong about students from lower income families being in greater debt. Because of the availability of the maintenance grant for such students, their maintenance loans are lower, as well as giving them a higher amount to live on. A student from the poorest household studying outside London will end up with student loans of less than £20,000 at the end of their degree.

Knysna

I have been looking into student loans a great deal and I am really miffed about how the whole system is geared against the graduates. The HMRC collects all our monthly payments and then repays it at the end of the tax year to the SLC, which is really unfair, as the HMRC probably earns an interest on the balance it accumulates from our payments, and in the meanwhile we get charged interest on the whole amount even though we are paying it off. I know its not a lot, but every little helps.

I had 15,500 outstanding when I left uni, and last year i made repayments of 590, but i got charged interest of 570!! I don't see how this loan should not be paid off...

My situation is that I have through hard work and savings managed to accumulate a cash balance of 11,500, which I am earning about 50 a month in interest, which i use to make extra contributions to the slc. I know some people may say why i dont repay the student loan with my savings, but we have a baby on the way and id like to have something in the bank to help pay for the baby's expenditure when it comes.

I wish that I could stop making contributions to the HMRC through my salary, and instead pay the same amount to the SLC directly. This way atleast my balance would reduce on a monthly basis.

Chris2685

You're making £50 a month from 11k savings. That is £600 a year.
From a 15k loan you are paying £570 a year.
That means you're making much more on your savings than you are paying back on your loan.
Although your loan amount is going up with all the interest, and the interest amount is getting higher each time, so would your savings if you kept saving the interest, and in the end your savings would be much higher than your loan amount.

That's why most people say not to bother over-paying the loan. You will be much better off saving the money you have in your account, so it is there if you need it. If you use it to pay off your student loan, and then find yourself in financial difficulties, you may end up needing to take a loan anyway, and it will be at a much higher rate than the student loan.

MrSafeGaz

I think there are two other things to consider when deciding to pay off a student loan which in my opinion are both worth sacrificing a few quid.

• Firstly, peace of mind. To some it may be quite relieving to be able to finally say that they are completely debt free, a weight off their shoulders.
• More importantly, monthly disposable income. If you have a house or are purchasing in the nearish future, with all of the associated bills, £100-£200 a month being taken from an account could prove to be a bit of a pain if times get tougher. That monthly payment may give some people a nice buffer against any further increases in bills and prevent the need to borrow on a more expensive medium i.e. credit card.

Personally, this year I was flung into the higher tax band and as my ISA is already filled, the interest rate I am 'offsetting' my loan against is at 6.55% gross. I will be settling my loan off next month due to that fact that the £5-£10 I will lose because of it is far less important to me than the combination of my two considerations above.

Just my take on things. I don't believe its as black and white as 'don't pay it off, you will be worse off'.

poorstudent_2

I graduated 3.5 years ago, been working in proper job and earning 20,500 a year for last 2 years but no student loan repayments have been taken yet. I thought it was all automatic and linked through my NI number by Inland Revenue. Should I do anything or just wait for them to catch up with me, maybe they have lost me?

jellybaby1610

I graduated in 2001 and took out a loan for the full 3 years of my degree, no payments have been taken from my wages even though I have been earning over the threshold for a number of years. does anyone know why this is?

Not that I want to pay back the money if I can help it, but I don't want to have to face a big bill later on.

also, if I went to Uni in 2008, does my loan fall into the post 2008 loan category or the pre 2008 category. I would have applied for it before the 2008 academic year began so am unsure.

I can't find any paperwork from this time and don't want to call the loan people for obvious reasons.

melancholly

hsuffyan wrote: »

I have been looking into student loans a great deal and I am really miffed about how the whole system is geared against the graduates. The HMRC collects all our monthly payments and then repays it at the end of the tax year to the SLC, which is really unfair, as the HMRC probably earns an interest on the balance it accumulates from our payments, and in the meanwhile we get charged interest on the whole amount even though we are paying it off. I know its not a lot, but every little helps.

what you're saying there is actually wrong. it only gets updated once a year but they calculate it as if you were paying monthly. there was a big uproar about it last year and many students got very angry - until it was made clear that they did not understand the system...........

i think you need to look into this a bit more, or choose better sources to make sure you get facts. it's such a shame that this misinformation is still being told to students.

here's some info about it:

http://news.bbc.co.uk/1/hi/education/6587897.stm
http://www.national-student.co.uk/national_news/pointless_petition.htm

confused222_2

I have 6 years left to pay off my student loan as I'll be 60 then. I took it out when I was 40. If I earn enough to start paying it, will the repayments be divided by how much time is left or, as there's supposed to be 84 repayments will some of it be written off? Does anyone know the answer to this? It would be really good to find out. Thanks

Oldernotwiser

confused222 wrote: »

I have 6 years left to pay off my student loan as I'll be 60 then. I took it out when I was 40. If I earn enough to start paying it, will the repayments be divided by how much time is left or, as there's supposed to be 84 repayments will some of it be written off? Does anyone know the answer to this? It would be really good to find out. Thanks

Anything outstanding when you reach 60 will be wiped off.

-suzy--

Hi, im wondering if anyone can help, my Fiance has a student loan and has been earning over the 15k per year for a good 4 years now however no payments has started to come off and if i can remember correctly we havent seen any letters or anything from them, is it likely that they could have 'forgotten' about it? Should we just carry on as normal or should i contact them and if so will this not just remind them about it?? Thanks