To worry about student loans, or not?

mrbrightside842

Hi!

I started a uni course in 2002, which ended in 2005. I received student loans for each year I was there. I've never worked full time since coming out of uni, due to falling pregnant in my last year and having my children straight after leaving. So because I've never earned the amount that's needed, I've never repaid any of my student loan. I tend to forget about my student loan, but then when I do think about it, it worries me that it will be building up and by the time I get back into work and start paying it back, it will take me forever to do so, but don't know if I'm right to worry, or not.

MrsManda

Don't worry about it. It's not relevant to anything - doesn't affect credit rating etc...
Think of it as a tax rather than a debt. Just like income tax, you only pay it when you are earning above a threshold. If you earn below the threshold, like income tax you don't need to think about it
HTH

carolan78

I think she is more worried about the interest it is accruing while she isn't paying it off.

mrbrightside842

yeah, I'm pretty worried about it going up all the time that I'm not working.

MrsManda

mrbrightside842 wrote: »

yeah, I'm pretty worried about it going up all the time that I'm not working.

I still wouldn't worry about it, how much you owe has no effect on how much you will have to pay off each month once you start earning £15k+. As it works like a tax in that you don't pay it unless you are earning over a certain amount and it's a set % of what you earn over that amount, when you're not working it's irrelevant. And when you are earning over £15k, like tax, the payment gets taken before it reaches your account so you don't notice it's gone.
You may want to read the 'should I pay off my SL' thread to see how different people view the issue.

Oldernotwiser

Completely agree with MM; look on it as a tax rather than loan repayments.

If you aren't repaying anything then the amount will certainly go up but as it's only at the rate of inflation, in real terms it stays the same. You'll never have to pay anymore than 9% of any salary over £15,000 and it's perfectly possible that you may never pay it back, in which case it'll be wiped out after 25 years.

mrbrightside842

Thanks for putting my mind at ease, feel much better about it now. Didn't know it got wiped out after 25 years! Will have to read more about that, will go look through the suggested thread now. Many thanks!

Oldernotwiser

mrbrightside842 wrote: »

Thanks for putting my mind at ease, feel much better about it now. Didn't know it got wiped out after 25 years! Will have to read more about that, will go look through the suggested thread now. Many thanks!

Without wanting to be depressing, it's also wiped out if you die or become permanently disabled for work.

(Who says every cloud doesn't have a silver lining!)

mrbrightside842

Then I'll consider myself lucky to have to pay it back!

bumpoowee

Oldernotwiser wrote: »

Completely agree with MM; look on it as a tax rather than loan repayments.

If you aren't repaying anything then the amount will certainly go up but as it's only at the rate of inflation, in real terms it stays the same. You'll never have to pay anymore than 9% of any salary over £15,000 and it's perfectly possible that you may never pay it back, in which case it'll be wiped out after 25 years.

a ha ha, but this year the inflation figure was -0.4% and the interest rate is higher at 0%! so the loan is increasing in real terms (although not by a lot).

Anyway as much as it isn't nice having thousands of debt hanging over your theres not much you can do, it doesn't often make sense financially to pay the money back so don't worry about it.

Been paying mine for 3.5 years and still have 2/3 left! but what can u do.

aqueoushumour01

Oldernotwiser wrote: »

Completely agree with MM; look on it as a tax rather than loan repayments.

If you aren't repaying anything then the amount will certainly go up but as it's only at the rate of inflation, in real terms it stays the same.

well that's the theory. many have been paying above inflation as inflation as typcially fallen since the point at which the rate was reset. this could, of course, work in the opposite direction and be a benefit if inflation rises but you're still on the lower rate at which it was last reset. Then there's an argument of whether RPI is a good measure of changes in living costs - but then that's another discussion!