Repaying Student Loans 2009/10 guide discussion

silvercar

rubuhoeikanaika wrote: »

I personally think this page needs to be improved in three ways, relating to whether people should make voluntary overpayments.

1) Even if you click the post-2012 tab (where you can see that current rates are up to 6.1% for many borrowers), the following text still occurs lower down: "With student loan interest rates at 1.6%, it's extremely unlikely most other debts – whether credit cards, loans or hire purchase – are costing you less, so always pay those off before even contemplating touching your student loan." This is straightfowardly incorrect I think, many people paying 6.1% will be paying more in loan interest than on eg a mortgage.

The issue is just more complicated than the page makes out. Even if you are paying 6.1%, if your balance is so high you are unlikely to pay it off, then you are throwing money away by making overpayments -- you will keep paying the same amount until it is written off.

2) I think it should also give more emphasis, rather than just mentioning in passing: "Plus student loan debt has the safety that it needn't be repaid if your income drops." If I have both a 20k student loan and a 20k credit card, even if I'm paying £150 a month on each and more interest on the loan, I should pay the card off first probably. If I lose my job, the loan won't be a problem but the card will.

3) I don't think there's any discussion of plan 2 borrowers who failed to graduate. These people will *not* have their loans written off, as far as I understand it. They may wish to consider paying them off if they have the income. (I think! Not seen much discussion of this point.)

I agree with point 1 - in fact I have highlighted this to the MSE team.

point 2, I think, has been emphasised again and again.

point 3 - I have not heard this - do you have a source? Even if their loans are not written off, overpaying may still be a bad idea, as it would be a debt that may never need to be cleared.

rubuhoeikanaika

silvercar wrote: »

I agree with point 1 - in fact I have highlighted this to the MSE team.

point 2, I think, has been emphasised again and again.

point 3 - I have not heard this - do you have a source? Even if their loans are not written off, overpaying may still be a bad idea, as it would be a debt that may never need to be cleared.

2) Agreed, but if this is supposed to be a 'one stop shop' page for the info, I think they should make a bigger deal of it. If I were them, I'd split it into "cashflow considerations" and "lifetime debt considerations".

3) Hmm actually now I'm struggling to find it.

Ed-1

rubuhoeikanaika wrote: »

2) Agreed, but if this is supposed to be a 'one stop shop' page for the info, I think they should make a bigger deal of it. If I were them, I'd split it into "cashflow considerations" and "lifetime debt considerations".

3) Hmm actually now I'm struggling to find it.

The write-off applies to anyone not in breach of the terms, not just those who finished the course.

jenny_f

I have a student loan, started in 2004 and graduated in 2007.

I have just under £4,000 left on it. I am paying around £70 per month out of my wage.

I am in a lucky position where I could just pay this off and clear it. I am obviously going to clear it through my wage anyway, this way would just mean it's done sooner.

I do have a mortgage (1.49% I think) so should I put towards that or just clear the student loan.

Mogley

jenny_f wrote: »

I do have a mortgage (1.49% I think) so should I put towards that or just clear the student loan.

The student loan interest rates are guaranteed to be BOE base rate +1% or RPI inflation, whichever is the lowest. So current rate is 1.25%. If I had the option then I would overpay the mortgage before the student loan with your current situation. There may be other options you should consider before overpaying the mortgage because 1.49% is a low rate which you could beat with savings.

MollyK

Hi I started my 3 year course in Sept 1998 and took out a student loan. I have a mortgage and do not earn above the threshold. When would my student loan be wiped off?

sheramber

MollyK wrote: »

Hi I started my 3 year course in Sept 1998 and took out a student loan. I have a mortgage and do not earn above the threshold. When would my student loan be wiped off?

If you mean you have a mortgage style loan

n some circumstances you may have any outstanding balance written off, as long as you’re not behind on your repayments. For example, if you:

reach the age of 50 (or 60 if you were aged 40 or more when you last took out a loan)
become permanently unfit for work due to a disability
die
haven’t paid back the full amount of your loan(s) 25 years after you start repaying.


https://www.nus.org.uk/en/advice/money-and-funding/how-and-when-do-i-repay-my-student-loan/

Mogley

MollyK wrote: »

Hi I started my 3 year course in Sept 1998 and took out a student loan. I have a mortgage and do not earn above the threshold. When would my student loan be wiped off?

When you are 65.

Budweiser_072000

I recently got a new job and my loan repayments have now started coming through (finished uni 3 years ago) my first one for this month was £155!

Is it just me or is that high? currently on £28k a year

Mogley

That is high. What was your first months's pay before tax?