Repaying Student Loans 2009/10 guide discussion

Poolie

Oldernotwiser wrote: »

It's only higher rate tax payers who'll be paying the extra 3% though.

There are plans of a sliding scale from £21K to £41K for higher interest. Above £41K will be on the 3% interest.

They are going to have fun calculating the interest and could cause problems where people have had more than 1 job during the tax year. Also will be reliant on employers sending correct information to HMRC!

Poolie

dancingdandare wrote: »

it says they will be bringing in these changes in the 2012/13 acedemic year, does this mean the changes to our loans with regards to interest rates and penilties for early repayment will come in then too???

Interest changes will be made from 1st September 2012. The threshold will change in April before or after. I suspect before so they can charge us more interest as only 5 months difference rather than 7 months.

beefturnmail

How can they increase the interest rate for existing loans - surely there was some sort of written agreement in place when the original loans were taken out, which stated what the interest rate would be?

Thankfully, I should be due to pay off my student loan by January 2013 - so if the interest goes up on the 1 September 2012, I will simply pay off the balance a few months early, using a credit card or something. But seems somewhat unfair, for e.g. someone who's just graduated.

Will also be interested to see how the sliding interest scale is administered given the current the huge numeber of errors within the current system and the fact it can't seem to cope with people changing jobs. (I've had to spend ridiculous amounts of time monitoring mine and chasing the SLC and HMRC to make sure repayements are accurate).

Poolie

I am not sure if this could go to judicial review. Reasons I could see are 1) We signed agreements on the interest rates being no higher than cost of the loans over the lifetime of the loan. 2) There was no charges mentioned in our agreements if we wanted to pay the loan back early.

Now we know the Government is a law to itself as they set the interest rate to 0% when it should have been -0.4%. Also they added the BoE + 1% rule (which was kind of them). They have obivously worked out how much that has cost and think they can now claim the missing cash back.

Watch out you don't get caught by any early repayment charges they may have up their sleeves. It could be there is a limit on additional repayments and anything over attracts a 5% charge. Best option would be to wait and see what is the legislation and then charge as much as you can to a card. SLC do already charge for payments made by credit cards.

I can see the sliding interest being a mess. Imagine you have 2 jobs. You get a statement based on return for job 1 which has a lower interest amount. Then 2 months later the return from employer 2 comes in and it puts you into a higher interest rate charge the system will have to recalculate everything and the statement will show more interest.

It sounds like the Government is trying to use these plans to keep paying longer especially if you have a lower earnings level therefore it is nearly a graduate tax as it will be changed to 30 years before it is cleared (I suspect that will be for the new loans as they can't change that regulation on current loans)

dancingdandare

Basically, i have the choice that i could pay mine off at anytime, but have always not done simply because it does not make financial sense. Given the tables are about to turn i think i might have to do it so not to incurr massive fees!!! which are basically illegal if they apply them to loans which we are already paying back! Its not right at all. It will wipe out all my savings and so house deposit has gone the lot just because the goverment wants me to pay stupid interest cos they messed up the calculations! The one saving grace is that i have been to university and finished and given the changes now i would definately decide not to go again.

beefturnmail

Poolie wrote: »

I can see the sliding interest being a mess.

It almost certainly will be if the SLC and HMRC are administering it!:rotfl:

Oldernotwiser

Poolie wrote: »

Interest changes will be made from 1st September 2012. The threshold will change in April before or after. I suspect before so they can charge us more interest as only 5 months difference rather than 7 months.

Sorry, I'm pretty sure that you've got this wrong and the changes will only be relevant to new entrants. Equally, students on the current system are likely to keep the £15,000 repayment threshold that exists at the moment.

http://www.bis.gov.uk/news/topstories/2010/Nov/student-finance

dancingdandare

Sorry, I'm pretty sure that you've got this wrong and the changes will only be relevant to new entrants. Equally, students on the current system are likely to keep the £15,000 repayment threshold that exists at the moment.

I hope your right, but who knows, they are not giving anything away. Also if they dont apply it to other loans then they will not start making the money back for sometime to come? so i would assume they would change people in the post 98 system so that they can start making money?? thats just my assumption based on the fact that the country needs money and needs it now!! yet the terms and conditions state that you can pay it off when you want (i.e. pay extra) with no fees and also that its a non profit making loan so interest is alwasy below that of a commercial loan?!?! i would just like some clarification so that i know what is happening. grrrrrrrrrrr

Oldernotwiser

dancingdandare wrote: »

I hope your right, but who knows, they are not giving anything away. Also if they dont apply it to other loans then they will not start making the money back for sometime to come? so i would assume they would change people in the post 98 system so that they can start making money?? thats just my assumption based on the fact that the country needs money and needs it now!! yet the terms and conditions state that you can pay it off when you want (i.e. pay extra) with no fees and also that its a non profit making loan so interest is alwasy below that of a commercial loan?!?! i would just like some clarification so that i know what is happening. grrrrrrrrrrr

Well, the BIS seem pretty sure.

Any time the system has changed in the past, students on the existing scheme stayed on that; nobody's ever been changed mid stream and I don't believe that this is happening now.

Poolie

Oldernotwiser wrote: »

Sorry, I'm pretty sure that you've got this wrong and the changes will only be relevant to new entrants. Equally, students on the current system are likely to keep the £15,000 repayment threshold that exists at the moment.

http://www.bis.gov.uk/news/topstories/2010/Nov/student-finance

The threshold has changed before for post 1998 loans and it affected the whole loan book when it change from £10,000 to £15,000 so they have done it previously.

No where does it state in the statement that this will affect just NEW students only. The new system can mean whatever the government wants. I suspect they will do it everybody as want the cash to pay off the debt bill.

Also, government are now saying that it will not make any money from the 3% + RPI which is utter rubbish because that is exactly what they are going to be doing unless they are offsetting this against the no interest (just RPI) loans.