Student Loan worry

Teerah

My loans started 1996 and I can distinctly remember reading in my terms and conditions the 25 year rule also. They may have changed the wording but it still applies as far as i know

zar

beccatt wrote:

I have a loan of around £9000 but am not currently paying anything back as I don't earn enough. The good thing is that it wasn't taken into account when I took out a mortgage earlier this year and it actually helps your credit rating so there's no reason to worry. I think it's more important for our generation to put spare cash into a personal pension or getting on the housing ladder than paying off these loans.

Something worth noting for graduates - I've just had a payrise up to £15,000 which I understood to be the payment threshold now but when I called the SLC they told me that they only start charging when you earn enough to make a minimum repayment of £1 a month. I haven't worked out exactly what this is, but they charge 9% on the amount that you earn over £15,000.

I just wonder how long it will be before the SLC goes bankrupt because of all the graduates who will never earn enough to pay back their loans. I'm sure that I will reach 65 with at least some of my loan left.

So am I! I have over £12k student loan started in 1999 and haven't paid any of it back yet. Although I keep an eye on the interest rate etc. out of interest, I think of it as a tax too and certainly don't worry about it at the moment. Though if what gizmoleeds said is true... :eek:

My husband is paying his back (less than the interest each month - he's on 16k) and its true that unlike taxes you only pay up to the nearest pound. Its calucalted on whatever basis you are paid so if you are paid £x monthly then the amount you pay each month is (x - 1250)*0.09 rounded *down* to the nearest pound.

So in order to start paying £1 a month back you'll need another payrise of £133.44, since the actual "threshold" is £1261.12 a month, or £15133.44 a year.

But if you are paid any overtime then because it calculated on a monthly basis (if thats how you're paid, weekly otherwise) then you may find yourself paying extra some months. e.g. If one month you got an extra £1000 for some reason, you would find £90 of it had gone to the SLC.

If you had a very variable income, and got £2000 more one month and £1000 less the next, you can work out what it would have been if you were paid equally for the whole year and claim the difference back if you want - but I think that would only be worth bothering with if you were really pushed for cash and had very variable finances - or maybe if you went from a high paying job to being unemployed for 6 months or more.

zar

Teerah wrote:

My loans started 1996 and I can distinctly remember reading in my terms and conditions the 25 year rule also. They may have changed the wording but it still applies as far as i know

Are you on one of them "mortgage-style" ones it says people who started before 1998 are on?

I was convinced that it had said it was written off after 25 years as well for mine (1999) and was surprised when I checked a few months ago and it said age 65. Lets start a conspiracy theory!

gizmoleeds

zar wrote:

Though if what gizmoleeds said is true... :eek:

http://news.bbc.co.uk/1/hi/uk_politics/3636442.stm

The Tories say they would abolish all university tuition charges, including Labour's controversial top-up fees.

To help pay for the plan the party would remove students' access to low-rate loans and charge a commercial rate of interest instead - as much as 8%.

As a student, and Labour supporter, I found it infuriating to hear people saying "I'm gonna vote Conservative 'cos they'll scrap tuition fees" and then watching their completely unperplexed expressions as they ignored me trying to explain compound interest! :mad:

Teerah

zar wrote:

Are you on one of them "mortgage-style" ones it says people who started before 1998 are on?

I was convinced that it had said it was written off after 25 years as well for mine (1999) and was surprised when I checked a few months ago and it said age 65. Lets start a conspiracy theory!

Hi zar, I dont actually know about the mortgage style thing I did have a statement recently and read about the 25 year thing briefly but didnt keep the leaflet relating to this as I hope to have my loan paid off in another 3-4 years.

zar

gizmoleeds wrote:

http://news.bbc.co.uk/1/hi/uk_politics/3636442.stm

As a student, and Labour supporter, I found it infuriating to hear people saying "I'm gonna vote Conservative 'cos they'll scrap tuition fees" and then watching their completely unperplexed expressions as they ignored me trying to explain compound interest! :mad:

Don't worry I wouldn't say anything silly like that! I had some memory that the tories had mentioned commercial rates of interest, but I didn't know if it was actual policy or not. If they did that and decreased the payment threshold and/or increased the % you paid back, then double :eek: - and I wouldnt be surprised if they did. :mad:

Do you think that if I start saving now, my not-yet-a-twinkle-in-my-husband's-eye children would be able to afford to go to university? :rolleyes: Hang on - somehow I have to save enough money to house and clothe them first!

As I said, I'm not actually bothered about my student loan because at the moment its a bit academic. If I was going to university after top-up fees and hence had a student loan of £24k (I did a 4 year course) then I suppose it wouldn't make any difference to having a £12k one if I'm not paying it back anyway. But I suppose there's less chance of ever getting to a state of not having to pay it back. So they may as well cut the beaurocracy and have a graduate tax instead? The only advantage of the loans over the tax is that rich people pay it off more quickly and then have more money than other graduates who are paying it back for 30 years or more... (I'm basically thinking aloud there so my arguments may well not be sound!)

pavlovs_dog

i took the loan beacuse i initially had to. as an independent student with no financial support from any family or relatives, it would have been a case of "no loan=no degree*.

however, i then got a job at argos, which has been one of the best financial moves i have made in my 20-odd years of live so far. because my earnings at least EQUAL and sometimes BETTER my loan, i can afford to save my loan (nicely building up a deposit for a house, the only real way i will be able to get onto the property ladder this side of 50 ), and live off my wages. bearing in mind this reflects certain lifestyle choices - i am not a big drinker/party animal/shopper.

i guess you could say im am very conservative for a student. my only luxuries have been my first foreign holiday in years (haggled to get an amazing holiday at an incredibly cheap rate) and driving lessons - which i see as more of a long term investment anyway (as a skill for life). my standard of living is higher than it has ever been, i want for nothing.

i work hard, i save hard for my future, i do not feel like i am going without.

i will graduate owing around £15-20k, all on student loan for my 4 year course, no overdrafts or credit cards (if my current situation prevails anyway).

unfortunately, debt whilst at uni, is in some shape or form inevitable. it largely depends on whether you have the common sense to take a "damage limitation" approach, and live, if not frugally, then at least within your means.


and as for paying back the loan: you know that earning over X amount means you will make payment of *y* per month. which, as the money leaves your possession before you even see your wage slip, means that in real terms your income is NOT £x , but whatever £x-y equals. something to bear in mind when thinking about what you expect from a post graduate lifestyle perhaps? if you want THAT house, THAT car, and so on, you will, in fact have to get a job which pays significantly more than you might expect, as by the time you deduct the money for loan/tax/pension contributions, what you take home will NOT be the nice fat figure you saw on the job ad.

Lady_K

Well looks like you were lucky to get a job that you could work around your degree, I'm glad it worked out for you. My daughter was on a heavy course and found it difficult to fit the time in to work as she was in every day all day and some late nights. She also had to do work experience as part of the course so getting a job was hard. She managed to get a couple of bar jobs but had to stop when it began to affect her course working till early hours then going to uni, she ended up at the doctors.

I thought you were not able to take out student loans if you have savings or have a job that you earned so much though?

pavlovs_dog

as i have independent student status, i have an income allowance of £10k per annum which the SLC cannot touch (not that i reach that)

Savvy_Sue

gizmoleeds wrote:

http://www.dfes.gov.uk/studentsupport/students/200_2006_entry.shtml


It is 25 years, but only for loans which are taken under the new system.

So under the new system, you are borrowing heaps more money (£3000 fees pa as well as living costs) but it is potentially written off sooner? Somehow the maths doesn't add up!