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

Oldernotwiser

jacquie wrote: »

Hi

I am starting a 4 year (foundation entry) degree next month. I am a mature student. By the time I graduate I will not have 25 years to work before retirement. Will I need to pay it back before I retire as I probably won't have over £15000 income when I retire. Thanks for any feedback.

Any money owing on your loan will be wiped off when you reach the age of 65 if you are in England.

From last year it's also wiped off after 25 years.

Chris2685

Chris2685 wrote: »

My last question is: Does anyone know when the loan gets written off (if it ever does)? I've seen a few people asking that question in this thread, but no answers seemed to be forth-coming.

I found out that
Loans are written off if:

• You reach 65 and it was taken out before September 2006.
• After 25 years if it was taken out in September 2006 or later.
• If you have a disability and are declared permanently unfit to work.

But is the entire loan written off, or do you still have to pay back the interest I wonder? Because if the whole loan is written off after 25 years, why would anyone bother to pay off the loan any quicker than they need to?!

Oldernotwiser

Chris2685 wrote: »

I Because if the whole loan is written off after 25 years, why would anyone bother to pay off the loan any quicker than they need to?!

Sensible peope don't pay off any more than they need to for just this reason. The SLC specifically states that not only the loan is written off, but any interest as well.

Chris2685

OK, cool. Thanks for the info That means that after 25 years of filling my ISA I will not only be more than 200k better off and own a house outright, but I will also have my biggest debt left written off

Great news for me when I reach 47

shopndrop

I would also like to know if the student loan is taken out of salary before or after income tax.

Oldernotwiser

Chris2685 wrote: »

OK, cool. Thanks for the info That means that after 25 years of filling my ISA I will not only be more than 200k better off and own a house outright, but I will also have my biggest debt left written off

Great news for me when I reach 47

That rather assumes that you'll never earn more than £15,000 pa. I doubt that you'll be able to fund ISAs and a house purchase on that income. Dream on!

Oldernotwiser

shopndrop wrote: »

I would also like to know if the student loan is taken out of salary before or after income tax.

Repayments are taken from income before tax.

Chris2685

Oldernotwiser wrote: »

That rather assumes that you'll never earn more than £15,000 pa. I doubt that you'll be able to fund ISAs and a house purchase on that income. Dream on!

The entire debt is written off after 25 years, so what do you mean? I will just continue to pay minimum repayments on the loan for 25 years until it gets written off.

martin2410

Can anyone tell me the answer to this?

My wife has a student loan and about 3/4 times a year, student loan takes a payment from her salary due to the bonuses she receives-fair enough. However, there's a rumour of redundancies at work and she has heard she would get £1000 for every year she worked there-in her case £4000. Student loan would have a field day on that. Would she still have to repay on a redundancy payout? I dont think she should because technically she will no longer be working. Any thoughts?

silvercar

I would imagine she would because if she found a job the very next day, that money would be a bonus. If she doesn't work for a while she will be making no more payments.

9% of £4000 = £360. If it was paid outside of the PAYE system I guess it wouldn't be taken.