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

Oldernotwiser

surfsister wrote: »

I have heard of people marrying (need to be female) and coming back with new name so hard to trace!

You don't change your National Insurance number or your tax history by changing your name or everyone would be trying it on!

melancholly

surfsister wrote: »

I have heard of people marrying (need to be female) and coming back with new name so hard to trace!

seriously, if goes through the inland revenue with payment collection.... the revenue *never* forgets.... if people want to try it on and get in huge amounts of trouble, then let them! they'll find out the hard way. people who are that irresponsible and shameful to try and avoid paying back what they owe are just appalling in my opinion!

whitfreak

And if those who went abroad, then come back and then the SLC catches up with them, then they won't have the nice 9% over 15k repayment plan if the SLC company enforces the terms and conditions fully. The only way they will write off your loan is if you die, reach 65 or reach the maximum term (depends on when you took them out) or if you get certified that you can never work again. The only "problem" with the abroad thing is while there are mechanisms for repaying while abroad, there are issues enforcing those mechanisms while the student is abroad.

For those who have saved their loans (like me) but are thinking of repaying faster as saving rates are low. Think about any loans you might be taking out in the near future (say couple of years). I'm planning on using my loans for a house deposit, but you might need a car for work or something. Using your saved loan money will be cheaper than repaying your student loan then having to get car finance. And you still keep the advantages of the income related repayments. If you have no plans to borrow money and have a suitable rainy day fund then by all means repay extra. But otherwise don't.

CJ

wizard1998

I have been in employment since 2002 and only went into the threshold (£15K +) for repaying my student loan for a brief period. This is not because I do not want to repay my dept, but because I only managed to find a job earning over this amount shortly before going on Maternity leave. I am now working part time whilst looking after my baby and as a result am earning even less.
I am however very aware that my student loan is going up & up and the amount I owe is really starting to worry me!
Can anybody offer any advice on whether I should find someway of trying to repay it. If I do ever find a job in the future earning over £15K, I dread to think what my repayments would be and if I do not succeed in finding such a job how much will the debt build up to!!

wizard1998

Just reading the student loans terms & conditions and it states that the SLC will cancel teh loan plus any interest when you reach 65, die or become permanently disabled.....as long as......you have made all repayments based on your income to date. "HOWEVER IN CERTAIN CIRCUMSTANCES, THE GOVERNMENT MAY WANT TO RECOVER ANY AMOUNTS YOU OWE UP TO THAT DATE."
Anyone know what these circumstances are?

Oldernotwiser

wizard1998 wrote: »

Just reading the student loans terms & conditions and it states that the SLC will cancel teh loan plus any interest when you reach 65, die or become permanently disabled.....as long as......you have made all repayments based on your income to date. "HOWEVER IN CERTAIN CIRCUMSTANCES, THE GOVERNMENT MAY WANT TO RECOVER ANY AMOUNTS YOU OWE UP TO THAT DATE."
Anyone know what these circumstances are?

I'm fairly sure that this refers only to arrears because, if you've been eligible to defer up til that date, you don't really actually owe anything.

rjl89

Given that interest rates on savings are now around 3%, after 20% tax, this goes down to 2.4%, which is lower than the 3% interest paid for the loan, im not sure the argument is quite so clear cut anymore.

Although i suspect the interest next year could be something like 1%, given it will be based on the rpi in march.

For me, im still at uni in 2nd year, but wouldn't need the whole loan next year. However as i dont pay tax on my savings, im still getting above the loan interest now anyway.

On graduation in 18 months time, it might make sense to pay it off, if my savings interest is still 3.3% or lower, and inflation has started to increase toward 3%.

However, i suspect it will prove beneficial long-term, as long-term rpi should be around 2.5-3%, and interest rates more like 5%, and a spare 20 grand will come in useful for a house deposit. Nice moneysaver i hope.

Lokolo

The loan is 2.5% now.

And next year it will be even lower. Currently RPI for December is 0.9%. Down from 3% in November, thats lowering of 2.1%. By March is will more than likely be negative. So student loan interest rate will be 0%.

Interest rates in savings accounts will therefore be around 2-3% higher and you can gain lots of profit from this, even though you made a loss this year.

If you pay back now you will lose out on that profit next year.

whitfreak

Wizard, I don't know the circumstances. But I imagine it just means that those who have gone abroad and didnt pay what they were supposed to, or otherwise avoided paying the minimum payments illegally can still be chased for the money they should have paid even if they're dead, crippled or old.

Should you find a job paying over 15k the repayments will still be 9% over that 15k. Admittedly the total you owe will be more but in real terms it will be the same, so I wouldnt be too worried about it. Unless your on the pre1998 loans then theres different issues to worry about.

Numenor

Lokolo wrote: »

Currently RPI for December is 0.9%. Down from 3% in November, thats lowering of 2.1%. By March is will more than likely be negative. So student loan interest rate will be 0%.

Is that definitely the case? I know they base the year's interest on March's RPI, but I don't know if they had the forethought to put a clause in about not applying negative values. As such there's a possibility that our student loans will actually shrink next year... probably just wishful thinking, of course.