Student loans conundrum

projectjordan

will i ever manage to pay off my student loans?

i've recently had the statement for my last 4 years at uni.
My loans totalled £13000, however, due to monthly interest they now total £16000.

This as far as i can tell is due to the interest rate peaking at 4.8% causing my monthly interest to be £60! this was something i had not previously noticed.

I am currently working and not earning anywhere near the 12,000 pa threshold, for repayments. So i will defer.

However, with the interest rates the way have been, i will need to be earning £20,000+ pa just to meet the monthly interest charges....

Is this usually the case?

Why did the government withdrawn the 25 years of deferment/write off rule for loans between 1998 and 2006?
Cheers

Ryan

Lokolo

No idea why.

But the interest rate is 2.5% at the moment. Not 4.8%.

MrsManda

It's not really something you need to worry about. Student loans don't have any effect on your credit rating so if you don't ever pay it all off it doesn't matter.
However I'm presuming the government removed the write off rule because it removes the incentive to go to uni, get loads of loans, drop out and just not get a job. You've borrowed the money so ought to pay it back, the rates are very good, especially for a first class education which should open doors for you in your career, so why should the government not recoup it back?

Anyways, like I said, don't worry about it, it doesn't affect anything.
(I'm in about 20k debt and have only started my course - dropped out of the previous one due to serious illness, hence all the debt so far so I've no idea when/if I'll pay back all mine )

jewliscrumptious

hmmm..
following the original post...
I was under the impression that interest didn't accrue until you finish studying, however my partner has been charged interest every month throughout her entire degree .... is this right? (excuse my lack of knowledge!?)

Lokolo

Yes it is. As with any loan or savings account, interest is accured daily from the deposit of monies.

whitfreak

Interest is charged from the moment the loan is taken out. And that has always been the case. So you can either see the repayments as a graduate tax until its gone (which personally I dont mind) or as an impossible burden.... Bare in mind that interest is just inflation (ish) and the repayment and right off rules still make it preferable to other loans in the long term.

Ryan, loans between 1998 and 2006 never had a 25 year write off. They're written off at 65, death or neverworkagaininjury. The 25 year write off term was introduced when the tutition loans were. (Sencible government, double student debt and half the time to repay....)

The repayment threshold is £15k not 12k on post 1998 loans, and if your talking about the pre98 "fixed term" loans then you can defer as long as your Gross income is less than £25936. But Pre98 repayments arnt proportional to income....

But either way its not something you can really do anything about, so I wouldnt worry about it. As long as you make repayments when you are required (i.e. earn enough to make them) then they are not going to chase you for money, its not going to affect your credit rating, and in the worse case it will be written off.