Help With Student Loans - HERE!

Savvy_Sue

Yes, I can see the difficulties. Hard to know what to suggest: is the funding you've got just to cover tuition fees? Wondering if there's any mileage in you reducing your work hours - I'd at least consider whether that would be possible, examine your budget under the microscope etc. 

So the next thing would be to say to yourself "I've got two years of funding, it's going to be horrible, I'm going to have to work really hard, but if I can get through the taught element in two years I won't be completely destitute while I do the dissertation because I've still got my job." I'd be surprised if many of the full-timers didn't also take an extra year to do the dissertation, and some of them won't have jobs at the end of the course, and won't have been working through the course. 

alweyn

Hi there

I have been browsing online for some info on whether or not it’s worth overpaying on my student loan repayments. Does anyone have any insight into this? I know the debt gets wiped off after 30 years however I’m conscious I might end up repaying a whole lot more than I borrowed.

I’ve read the MSE article on busting the myths of repayments and the advice to not overpay, however after some calculations I think it may benefit me.

I’m in my late twenties and earning £80,000 a year. My student loan debt stands at £44,500 and if I average my loan repayments over 12 months, I’m paying back around £395pm on my student loan.

I expect my salary to increase YoY (and with it my student loan repayments), and I have a while until the debt gets wiped so I’m toying over whether or not to increase my repayments by £100pm. An online calculator suggests doing so and potentially benefiting from a long-term 6% saving.

Has anyone had any experience with overpayments or can offer any advice? 

Thank you!

Wrath_of_Kain

Wrong forum

silvercar

alweyn said:

Hi there

I have been browsing online for some info on whether or not it’s worth overpaying on my student loan repayments. Does anyone have any insight into this? I know the debt gets wiped off after 30 years however I’m conscious I might end up repaying a whole lot more than I borrowed.

I’ve read the MSE article on busting the myths of repayments and the advice to not overpay, however after some calculations I think it may benefit me.

I’m in my late twenties and earning £80,000 a year. My student loan debt stands at £44,500 and if I average my loan repayments over 12 months, I’m paying back around £395pm on my student loan.

I expect my salary to increase YoY (and with it my student loan repayments), and I have a while until the debt gets wiped so I’m toying over whether or not to increase my repayments by £100pm. An online calculator suggests doing so and potentially benefiting from a long-term 6% saving.

Has anyone had any experience with overpayments or can offer any advice? 

Thank you!

They say that 83% of students don’t repay their loans in full. No statistics of how many pay their loans excluding the interest, but I expect it would be a few more percent.

Your starting salary is relatively high, so if your future plans don’t encompass a long career break, you could well be in the minority where it makes sense to repay early. Bear in mind that once repaid you can’t get the money back. Other suggestions are to use your spare cash for a pension or home deposit.

farenheit

I have a query i'm hoping someone would be able to advise on.
I'm starting my PGCE with QTS in September in Computer Science and wanted to know as it is only for 1 year, would it be beneficial to occasionally add extra payments to the student loan (£9250) after i have completed the PGCE and obtained QTS?
I am however currenlty repaying a student loan on Plan 1 (I graduated in 2003)
Also, is anybody able to advise the cost of the loan in 30 years assuming i start teaching at M1 and move up to M6 every year and stay at M6 after this:

Min M1	£25,714
M2	£27,600
M3	£29,664
M4	£31,778
M5	£34,100
Max M6	£36,961

Your help would be very much appreciated as i am in the process of making the application to Student Finance, however i would like clarification on the above before i proceed.

Ed-1

farenheit said:

I have a query i'm hoping someone would be able to advise on.
I'm starting my PGCE with QTS in September in Computer Science and wanted to know as it is only for 1 year, would it be beneficial to occasionally add extra payments to the student loan (£9250) after i have completed the PGCE and obtained QTS?
I am however currenlty repaying a student loan on Plan 1 (I graduated in 2003)
Also, is anybody able to advise the cost of the loan in 30 years assuming i start teaching at M1 and move up to M6 every year and stay at M6 after this:

Min M1	£25,714
M2	£27,600
M3	£29,664
M4	£31,778
M5	£34,100
Max M6	£36,961

Your help would be very much appreciated as i am in the process of making the application to Student Finance, however i would like clarification on the above before i proceed.

In your situation, your loans are added together and you continue paying 9% above the plan 1 threshold up to age 65 (unless you clear the balance of the plan 1 loan earlier).

Now this is where things get interesting given the government announcements last week:

If you take a plan 2 loan for the PGCE (by starting in September 2022), you'll be charged interest at RPI+3% while you study and then from RPI to RPI+3% from the April after leaving the course for up to 30 years.

The plan 2 repayment threshold is £27,295 up to and including 2024-25 after which it rises with RPI.

The plan 1 repayment threshold is £19,895 rising with RPI (so it will be around £24,000 in 2024-25).

9% of the difference in the thresholds repays Plan 1. 9% above the higher threshold repays Plan 2.

If you deferred entry to September 2023, the PGCE loan will be on Plan 5 which has a repayment threshold of £25,000 up to and including 2026-27.

So if the PGCE loan was on Plan 5, more of your repayment would go towards the Plan 5 loan and it would have a lower interest rate. So you may consider that better than being on Plan 2. Although given you're repaying 9% above the Plan 1 threshold until age 65, it probably won't make much difference whether you try and clear the PGCE loan balance or not given you will likely have retired by then, so you don't get a benefit from clearing it. If the Plan 1 loan had been taken out after 2006, it would be written off after 25 years so after that if you still had a PGCE loan outstanding you'd continue to make repayments at 9% above the higher threshold for up to 30 (Plan 2) or 40 (Plan 5) years (but again you'd likely be retired before that).

So you have to balance the options open to you but I certainly wouldn't be overpaying the loan.

PennyPiggy

Hi Money Saving Forumers,

Appreciate that the decision to repay student loans isn't an exact science with the possibility of interest rates rising/falling, salary adjustments, a new government body possibility wiping student loans permanently (although extremely unlikely!) etc - but I would really appreciate thoughts on my intentions to pay off my remaining student loan.

I graduated in 2016 (started in 2012 so Plan and to date my outstanding loan is: £25,598.83

I'm in the fortunate situation where I'm able to clear this and do not need the funds for any large purchases. I own my own property and currently earn £62,000 base. I've never made a voluntary payment to the Student Loan Company.

After reading Martin's advice, multiple other blogs, using multiple online calculators and discussions with Student Loans Company, it seems that doing absolutely nothing (assuming that the variables previously mentioned stay the same) the loan will be automatically paid off within 5 - 6 years. By paying the loan off today, it would save me around £5,000 due to the added interest that would occur during this time frame.

I wanted to double check that my calculations were correct and understand other member's thoughts on my intentions. Am I right in assuming that as I'm extremely likely to pay it off before 2046 (when the loan would be wiped due to the 30 year rule) I should pay it off now given that I don't require the money for other purchases and can avoid the added interest incurred by sitting still and letting it automatically get paid?

Greatly appreciate everyone's thoughts on this

Ed-1

PennyPiggy said:

Hi Money Saving Forumers,

Appreciate that the decision to repay student loans isn't an exact science with the possibility of interest rates rising/falling, salary adjustments, a new government body possibility wiping student loans permanently (although extremely unlikely!) etc - but I would really appreciate thoughts on my intentions to pay off my remaining student loan.

I graduated in 2016 (started in 2012 so Plan and to date my outstanding loan is: £25,598.83

I'm in the fortunate situation where I'm able to clear this and do not need the funds for any large purchases. I own my own property and currently earn £62,000 base. I've never made a voluntary payment to the Student Loan Company.

After reading Martin's advice, multiple other blogs, using multiple online calculators and discussions with Student Loans Company, it seems that doing absolutely nothing (assuming that the variables previously mentioned stay the same) the loan will be automatically paid off within 5 - 6 years. By paying the loan off today, it would save me around £5,000 due to the added interest that would occur during this time frame.

I wanted to double check that my calculations were correct and understand other member's thoughts on my intentions. Am I right in assuming that as I'm extremely likely to pay it off before 2046 (when the loan would be wiped due to the 30 year rule) I should pay it off now given that I don't require the money for other purchases and can avoid the added interest incurred by sitting still and letting it automatically get paid?

Greatly appreciate everyone's thoughts on this

I'm not disputing your calculations but have you factored in the recent announcements that the Plan 2 repayment threshold is to be frozen until April 2025 and then go up with inflation rather than earnings? If not, this should also speed up the repayment. RPI is being aligned with CPIH from February 2030 so Plan 2 loans will have naturally lower interest rates from September 2031 onwards.

Have you factored in the fact you could be earning interest on the money you use to pay off the loan and so you'd also be giving up this interest as well as saving on the loan?

Reytons123

Hi...my daughter is starting this September. I cannot afford to fund her fully, but could find £9k in Sept to initially pay the tuition fee, thereby not incurring the extortionate rate of 12% on this loan from Sept 22. She would then apply late for her loan, and receive the £9k in March 2023, thereby reimbursing me and also avoiding that initial interest rate spike until the interest rate cap is introduced in Mar23 and interest rates are lowered.
Does this make sense...is this possible do you know?
Thanks...

themilnes

I'm wondering something similar. I've saved up some money over the years to help my son out as he gets started with 'adulting' and I'm wondering if it would be sensible to finance the first year of his studies to avoid the high interest rates. I understand that this doesn't always make sense and you might never have to pay off the loan but my son is expecting to get a good salary when he leaves uni (don't they all?!) and expecting that he will pay it off in the 30 years. I presume you can apply for a student loan in your 2nd year if you didn't take it out in the first? It's so hard to find this info!