Repaying Student Loans 2009/10 guide discussion

pivotalgubbins

stumo24 wrote: »

Hi,

My parents have recently received a substantial amount of inheritance money and want to pay off my student loan so that I have no debt to contend with. I started in 2006 and graduated in 2009, and my current total loan figure is £20,075. Having read around on this topic I am not convinced that paying it off in one go is the best or most productive use of that money. For peace of mind it would be great to get it cleared off and repaid but surely it would be more beneficial to hold onto that money and make more interest off it? What would people recommend?

Currently I am pretty much paying off the interest on the loan per year via my salary so the loan amount isn't decreasing at all.

Any advice is much appreciated.

I think the key point here is that your PARENTS have received the inheritance and want to pay off your student loan. I'd be very reluctant to do anything else with that money unless they would be happy for you to put it to others uses (house deposit, etc). Otherwise, if you end up taking it and it ends up being used for other means (rainy day fund, new care, property) without their knowledge or consent and they subsequently find out your student loan is still outstanding they are likely to be very upset (mine certainly would).

Sit down and discuss it with them and go from there - £20k will do a long way so I can understand why you might not want to pay off a student loan with it. Do remember though that it'll be a LONG time before you see the back of this debt if you do choose to use the money elsewhere.

stumo24

Hi,

Thanks for your replies. Some interesting points to consider there. My parents aren't adamant that the money has to be put towards my student loan so I think I will encourage them to put it in a higher interest ISA/bonds and then use the money to potentially put something down on a house.

I will sit down and discuss this with them. Thanks again for your assistance.

moorea21

Hi, there was a link in this thread to this subject in a reply from 'MrsManda' (26-08-2009, 10:46 AM) but I get an error when I click on it... which is a problem, because I voluntarily paid back £1800 of my 2004/5student loan in ( I think) 2007/8, and now I would like to claim it back, as I didn't earn up to the threshold that year.
Anyone know how I can do this?

Poolie

moorea21 wrote: »

Hi, there was a link in this thread to this subject in a reply from 'MrsManda' (26-08-2009, 10:46 AM) but I get an error when I click on it... which is a problem, because I voluntarily paid back £1800 of my 2004/5student loan in ( I think) 2007/8, and now I would like to claim it back, as I didn't earn up to the threshold that year.
Anyone know how I can do this?

You cannot request voluntarily repays back from Student Loans. You can only claim back repayments through PAYE if you were below the threshold for the whole tax year.

moorea21

Thanks, Poolie. So HMRC will reduce my PAYE tax burden in order to repay my voluntary payment? Or does this only apply to involuntary overpayments? Ironically I've been mostly self employed since.

Poolie

moorea21 wrote: »

Thanks, Poolie. So HMRC will reduce my PAYE tax burden in order to repay my voluntary payment? Or does this only apply to involuntary overpayments? Ironically I've been mostly self employed since.

HMRC nor your employer know anything about the voluntary repayment you made directly to student loans therefore your expected repayments will still be (gross salary - threshold) * 9%

As you are self employed, when you complete your tax return, HMRC will calculate if any student loan repayments are due and will add these onto your tax bill.

mulder0

My son did 9 months of a degree and decided that he wanted to change to a graphics degree. He tried to catch up and the Uni told him he would not be able to catch up and so should start again on the graphics course in September. 12 months later he was asked to reply £800 + for that year as he did not complete the year. No one advised him that this might happen and he is umemployed and paying back £7.50 a week out of his £56 benefit. They asked for double this and I told them he could not afford this as we are already having to continue to look after him on our low incomes. I think this is totally wrong, especially after watching Martin Lewis programme on student loans. Anything we can do?

Lukasx123

A lot of Martin's advice about paying off student loans seems to focus on prioritising higher-interest debts over student loan repayments.

Unfortunately, I'm now in a situation where I have been paying off various debts since my uni graduation (back in 2000) and deferring my student loans (as Martin suggests), and even now I still have a long-term loan, two sizeable credit card balances and my bank overdraft to clear, but because my income has recently passed the threshold for deferment, I have finally begun paying about £120 per month off my student loans, whilst also making over £300 per month of payments on these other various debts.

Obviously, I would prefer to continue to prioritise paying more off my other higher-interest debts and continue to defer my student loans until the other debts are cleared (as Martin suggests), however I'm not aware of any available options for organising my debts in this way now that my income has reached the threshold.

Can anyone tell me if there is any way to make an arrangement with the student loan companies to clear other existing debts over a pre-agreed period (without creating any new debt),and then agree to resume payments on the student loans when my existing debts are cleared?

Lokolo

Lukasx123 wrote: »

A lot of Martin's advice about paying off student loans seems to focus on prioritising higher-interest debts over student loan repayments.

Unfortunately, I'm now in a situation where I have been paying off various debts since my uni graduation (back in 2000) and deferring my student loans (as Martin suggests), and even now I still have a long-term loan, two sizeable credit card balances and my bank overdraft to clear, but because my income has recently passed the threshold for deferment, I have finally begun paying about £120 per month off my student loans, whilst also making over £300 per month of payments on these other various debts.

Obviously, I would prefer to continue to prioritise paying more off my other higher-interest debts and continue to defer my student loans until the other debts are cleared (as Martin suggests), however I'm not aware of any available options for organising my debts in this way now that my income has reached the threshold.

Can anyone tell me if there is any way to make an arrangement with the student loan companies to clear other existing debts over a pre-agreed period (without creating any new debt),and then agree to resume payments on the student loans when my existing debts are cleared?

No there isn't. But you wouldn't be any worse off than when you weren't earning as much, just your salary increases have made you 9% less than you want.

If you are having debt problems you should head to the Debt Free Wannabe board and ask for some help and advice.

http://forums.moneysavingexpert.com/forumdisplay.php?f=76

Lukasx123

No there isn't. But you wouldn't be any worse off than when you weren't earning as much, just your salary increases have made you 9% less than you want.

If you are having debt problems you should head to the Debt Free Wannabe board and ask for some help and advice.

Thanks! I'll take a look.