Student Debt repayments

CLAPTON

returning to your original question, i rather agree with kathfisch....best to keep your money in your ISA or what ever, incase of some financial emergency, given that you can gain more in interest with your savings than it costs in interest.


PS : having read the Student Loans Site, my view is unfortunately the loan repayment comes out of taxed income....the site is a bit confusing as the AMOUNT you pay is (gross pay-15,000) x 9% but it is actually paid out of taxed income (hope I'm wrong but dont think so).

lynzpower

To clarify the SLco issues

Yes, it is possible to take breaks in Student Loans repayments, but they usually are for things like a) being unemployed b) going travelling and they want to see your air tickets for example to PROVE you are really going. Check with the SLco but fairly sure you cant take a "holiday" as you can with some mortgages for example.

In respect of Slco taking it from your salary, via the PAYE route. Firstly, you cant go down this route if you took your loans out, I believe before 97/98. I took mine out in 96 ( first year) by mate took her first years loan in 97/98, she can pay by PAYE, I cant. If you CAN pay via the PAYE route, Ie direct from your GROSS SALARY, obviously this is given before tax. I have to pay out of my NET salary so therefore Ive paid income tax on my £100 a month, whereas my freind hasnt, saving her the 22% IT and not me.

My personal opinion, is, if there is any slack in paying for things, just pay it off. Its al very well saying "this is the cheapest debt you'll ever have", although it was costing me about £100 a year in interest. Im almost at the end of mine now 6 months, onl;y 6 more payments :beer: and I cant wait to have that debt gone, just so I can stop moaning on about "ive still got debts from uni and I graduated in 99, and am i using my degree? NO!"

zar

lynzpower wrote:

In respect of Slco taking it from your salary, via the PAYE route. Firstly, you cant go down this route if you took your loans out, I believe before 97/98. I took mine out in 96 ( first year) by mate took her first years loan in 97/98, she can pay by PAYE, I cant. If you CAN pay via the PAYE route, Ie direct from your GROSS SALARY, obviously this is given before tax. I have to pay out of my NET salary so therefore Ive paid income tax on my £100 a month, whereas my freind hasnt, saving her the 22% IT and not me.

Even if you pay by PAYE, it still comes out of your net salary i.e. the amount of tax you pay is calculated before you deduct the loan payment, not after. If your friend is getting tax relief then whoever is calculating her salary is doing it wrong.

e.g. my DH's latest payslip:

salary 1333.33 + overtime 28.84 => £1362.17 total pay
pension payment £80
gross pay for tax = £1282.17

DEDUCTIONS
tax £171.39
NI £88.86
student loan £10

net pay £1011.92

note that the pay for tax is only calculated on the total - pension, not -student loan payment.

Note also that the student loan payment is always rounded down, and the amount is (1362.17 - 1250) x 0.09 = £10.09 (then rounded down to £10).
i.e. you can't pay less by paying more into a pension, as the amount of repayment is calculated on your total pay without allowing for your pension payment.

This question was also discussed in this thread.

kar

Hi lynzpower

Just a quick note to say that if you took your loans out in the new system you have NO CHOICE the debt is automatically deducted from your wages upon reaching the required limit.

It isn't a choice thing about it coming out of your wages it purely depends on when you took out your loans. They did it like this to stop people defaulting on payments.

Just so you know why your friends come out of her pay packet and your don't.

kar