Student loans

Pontoon

I have a Student Loan and generally I ignore this when thinking about my debt :embarasse but I'm aware that its there. As it is loan deferment time again I thought I'd see what others thought about this.

I know that there are various types but I'm Scottish (May be different ones south of the border) and took them(3 loans originally for about £1600 1 FOR ABOUT £1000) out between 1996 and 2000. They total about £7000 :eek:
Until last year I didn't realise that I could start paying it off gradually now :doh: , rather than waiting till I earn over the national average (This years calculation looks like its £24,000) and getting hit for £140 a month. I know that I am not likely to hit the national average anytime soon, but I noticed that I'm racking up £100+ in interest a year.
Just wondering if anyone has any advice.
I'm now paying £80 a month to try and put a dent in it, but I am also trying to save and thinking about becoming self employed in a couple of years time so want to have as little to come bite me when I do that.
Does anyone have any suggestions? I have already cancelled the direct debit that was set up as I've friends who previously got their deferment forms in a couple of days late and got stung.
This is specific to the loans for folk who were on the old Scottish grant system as I know the newer loans payment system is different. Though if there is stuff about other student loans I'd be interested to hear as would many others I think.

Rafter

There is really not much point repaying student loans any earlier than you have to to be honest.

Although there is interest, I believe it is only charged at the rate of inflation so in 'real' terms the debt isn't increasing. £7,100 in a years time is worth £7,000 today is one way to think about it.

You can also earn a lot more than the rate of inflation in a good savings account.

If you have any other debt, that should probably be your priority as it is likely to be at a higher rate.

£80 per month paid into a regular savings account could earn you 10% before tax, much better than creating a similar dent in your low interest student loan.

Good luck.

R.

Man-Alive

Cheers Rafter - I was hoping someone would give that answer!

I am currently making the minimum repayments on my Student Loan. At the start of the Year I started paying into a Halifax Direct Cash ISA earning 5%.
Planning to take a lump sum out at the end of each year and get it knocked off my Student Loan.

Pontoon

Thanks for that. Thinking about it now you are probably right. Earn the interest in my ISA (Which I managed to fill for the first time ever this year) and paying it off in a lump when I can afford it. I just didn't like seeing it gradually increasing every year.
I've heard folk talking about this before, but it just seemed wrong for a while.

Okay I'm off to switch my payments into my saver in preparation for topping up my ISA in April. I might continue to pay at least enough to cover the interest each year as it keeps it looking less scary.

Hoping to earn loads of money eventually, but I'm still scared I creep up to the "National Average" gradually and have to tighten my belt to make the monthly payments. It's a worry for another year however as I've already returned the deferment forms.

Star1979

I've just returned my deferment forms as well. I had 2 loans while at uni and am happily ignoring them. When I first left uni (in 2001) the salary they had as the minimum threshold was about £18k and now it is £24k so that it going up pretty sharply - I can't see myself hitting it any time soon and can't really see how the SLC can justify the costs of administrating loans that remain unpaid for for much longer so I'm keeping my fingers crossed that one day they will just write them all off - until then I am not too worried about them sitting unpaid as the interest rate is so low.

lynzpower

ive been paying mine off at 100 a month, and I can now see the end . Im glad Ive paid them off TBH as when I went for my mortgage my broker said that almost all of the lenders would minus my debt from what they would lend me. Having only a couple of grand left was manageable, whereas 7k would have made it impossible to get my flat.

just a thought!

savvy

Hi pontoon, have moved you over here to help others who may eventually be in a similar situation.
Thanks
savvy

pcyam

Just an added bonus, when you come to pay off your loan, pay it off on a cashback credit card, which means you get given money for repaying your loan (make sure you dont miss the payment though). You may not get much but its something for nothing.

guidarufino

I have just received my deferment forms and I earn more than the threshold for gross income by £80! Gutted. I have asked them if there is any flexibility in how much I can repay once I go over the threshold but they said no. So, for the sake of £80 a month gross, I now have to start paying £140 a month! Outrageous! Anyone got any ideas about how to get out of it? I'm self employed.

slcworker

Hey, i work at SLC, so i can give any advice needed. What i would advise mr guidarufino, is that as far as being self employed, you can also provide a letter from your accountant detailing what your income has been over the previous financial year. If this letter says you earn under £24,137.00 (annual) or £2011.42 (monthly) then you can be deferred. We do accept the letter from the accountant to be true.
I agree, its a large amount to be expected to pay, but with an income of £2011.42 - 140.00 it does still leave you with a considerable amount of income. But i do understand, there isnt alot of things taken into account, and no flexibility

frivolous_fay

I've just deferred my student loan payments for another year. Each time the gap between the minimum wage threshold and my actual salary seems to grow by quite a bit!

Just a warning... I'm pretty sure SLC will be unhappy that you have cancelled your direct debit. It's in your T&C that your bank details have to be correct. Even if the deferment didn't go through in time, worst case scenario is that you'll have made a payment or two that you didn't have to... but they would stop as soon as it had been dealt with.

My view on my loan... I hate knowing that £100+ is being added on each year, but my ISA alone is netting me about £400+ a year, so at the moment I'm better off taking advantage of my savings rather than paying off the loan (which I could do). My salary certainly isn't going anywere fast. And if you hit 60 don't they write student loans off? ;-)