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

Chris2685

From what I've read of other people, it seems that it is best to let them know yourself, rather than leaving them to find out. If you tell them yourself they should be more leniant, whereas if they find out you have been 'dodging' it, they can do things like force you to pay back the whole thing in full.

pjala

Is the student loan payed from your gross income before tax?
Meaning if I earn £20000 per year, is the 9% taken from £5000, i.e. £450, or is the 9% taken from £5000 - 20%, i.e. £4000, that is then £360?

Obviously it amounts to the same amount coming off your wage above £15000, but the former before tax pays off your loan earlier. This also means that it effectively reduces your taxable income...
Anyone?

pjala

Unfortunately I have a feeling that it is worse that I mentioned.
Again, if someone can correct me if I am wrong, you appear to pay the 9% off your gross income, but you still pay the same amount in tax as you would have done without a student loan.

So in effect you should only pay 9% off your taxed income, as that is your real income i.e. £360, but you pay 9% off your gross income i.e. £450. But you still pay the same tax, so in effect you are actually paying 11.25% of you income over the gross of £15000.
This seems to me to be a big confidence trick. The figure is talked down (9%), and the details are never really well explained as to commitments. In fact if you don't earn over £15000 and don't tell them, you end up being in big trouble with potentially a massive debt. (currently £3000 + £4250) per year for at least 3 years.

In the same vain, even though students are over the age of 18, and can marry, die for the country, etc, etc. they are deemed to be dependent on parents. And even when they are living away from home. This is just ridiculous, and bears no relation to fairness at all. University education is all about being job trained these days, and without it industry would be up the creek without a paddle - yet parents and offspring end up being in hock to the government for the rest of their lives.
Scandalous.

Tax calculator:
http://listentotaxman.com/index.php?c=1&yr=2008&married=1&student=1&age=0&add=0&code=&pension=0&time=1&ingr=20000&vw[]=yr&vw[]=mth&vw[]=wk
Just put in £20000, both with and without a student loan to see what I mean.

The_One_Who

^^ There has to be some measurements to divide up the pie. It's a fact that plenty of parents are supporting their children, either through food parcels, paying their rent, sending them money, whatever. Just because they have turned 18, it does not mean that parental support stops completely.

To be honest, what comes off your student loan payment is not that much, in reality.

Oldernotwiser

Student Loan repayments are calculated and paid in exactly the same way as NICs; neither of them is tax free and no information given out would lead anybody to think they are!

pjala

Oldernotwiser wrote: »

Student Loan repayments are calculated and paid in exactly the same way as NICs; neither of them is tax free and no information given out would lead anybody to think they are!

It has been said it is regarded as a tax, hence it is taken from your gross income. Now the problem is, the 9% is worked out from your gross, but the resultant money is taken from your net. Tell me that is fair...

pjala

On another note, parental contribution is worked out from a thing called residual income. Now residual income is worked out from what are deemed to be allowable expenses, such as other offspring. You are allowed very little for other offspring, and nothing at all for other expenses that you have no way of getting out of.
It seems to me that, if you are parents in certain bandings, you are stuffed.
There has been a lot of talk recently called residual tax, which basically means the poorer you are the more relative tax you pay. Basically the middle income earners are hit disproportionately for University, reducing income banding considerably, if you call supporting offspring at University a tax, then the residual tax goes up considerably.

Nice to know we are forcibly being used to prop up the University sector - tax is being reduced from the centre, and disproportionately being taken from middle earners. Thanks.

pjala

The_One_Who wrote: »

^^ There has to be some measurements to divide up the pie. It's a fact that plenty of parents are supporting their children, either through food parcels, paying their rent, sending them money, whatever. Just because they have turned 18, it does not mean that parental support stops completely.

To be honest, what comes off your student loan payment is not that much, in reality.

If your tax went up by 12% to support the University sector, would you complain?

Oldernotwiser

pjala wrote: »

It has been said it is regarded as a tax, hence it is taken from your gross income. Now the problem is, the 9% is worked out from your gross, but the resultant money is taken from your net. Tell me that is fair...

Sorry, you've lost me on this point, as you have with your comment about everybody paying an extra 12% tax to cover university funding.

The_One_Who

pjala wrote: »

Nice to know we are forcibly being used to prop up the University sector - tax is being reduced from the centre, and disproportionately being taken from middle earners. Thanks.

It just so happens that the middle classes are the largest (both in number and in proportion) who go to university.

pjala wrote: »

If your tax went up by 12% to support the University sector, would you complain?

My tax isn't being raised to 12% though. I am paying off a loan that I willingly took out after fully knowing the terms and conditions of it. Would you rather be paying it off like a commercial loan at a much higher rate and with no chance of non-repayment if your income isn't high enough? Some postgraduate students have to take out CDLs and these are bank loans, if they don't get a job straight after graduation they're in trouble.