Facing up to Student Debt - Advice on SLs needed please

Imelda

Firstly, welcome to the board!
Personally my student loan has been the last thing for me to worry about, the money goes out of my pay each month (so what you never had you'll never miss) and you can't really default if you pay tax via PAYE, you don't have to repay if you lose your job and it dies with you. It can however take a little while for the IR to sort it out (over a year in my present job) so I would make sure you put aside the amount you should be paying 1. so that you get used to the deduction and 2. so you pay it back quicker. If you have no other debt I would repay extra, I don't think they calculate interest on a daily basis (if you ring the SLC they will only be able to give you a balance as at 5th April) so just a one off payment just before the end of the tax year would probably be best. I cannot wait till mine has gone (August this year whoo hoo!) as it will be one less thing to worry about and my pay will be all mine! (anyone know if they just stop taking payments or if you have to contact them to say that you think they should stop soon???)

Kevicho

I agree with dinky and lynz

A debt is a debt, even more so when its accruing interest

Its not the worse debt to have, but it still needs to be paid, i think its better to put the money in an ISA/savings account with a higher APR, then pay it straight into the loan, just wait until you have saved enough to pay it off then use the savings to clear it

Annie_Fanny

I agree with Lynz & Dinkylou.

When I had my student loan (yes I have paid it all off!) I classed it as a loan even though it was low cost. I did not want the £6k hanging over my head for the rest of my life so worked like b*ggery to get it paid off. I just wanted to get shot of it as soon as possible and realised that I was in a situation were I could do just that - is also made me feel in control of my life as having someone deduct amounts from my wages for forever made me feel uncomfortable. I am so glad I made that decision now.

Moneysavinmonkey - if you want to overpay then I would just ring them and ask them what the protocall. You may be able to transfer it from your back account - I just used to send them cheques. Basically the SLS won't give a toot if you are overpaying - just as long as you pay it back!

Go for it!

Annie

Annie_Fanny

Imelda - I would just ring them in July and say that your final payment is due to go out and could they send you a letter to say that it is paid in full...

I sent them a letter with the outstanding amount and they sent me a letter back confirming it was paid off. Oh the relief!

Annie

moneysavinmonkey

Yes my debts are with the SLC. Thanks for info on interest rate and payments.

I originally finished uni in summer 2004 but then went on to do a Masters whilst working part time. SLC did write to me mid year and I sent back the form telling them I was a student + working but <15K. This seemed to confuse them no end especially as they said they couldn't find evidence of my tax code or something. They didn't write back and I sorta 'forgot' about it, as they knew I was still a student I figured it was all sorted.

I know I have to phone them and let them know.. especially as the company I now work for is pretty small and doesn't have a 'payroll' dept in fact it doesn't have any depts -so it'll be up to me to sort it out at either end!

They don't really send you statements or anything that often so I've no idea how much interest I'm paying.. Took the maximum loan out and was over 4 years (as scottish degree) + extra year of interest for masters.. scary. Will phone them tonight because it is the not knowing more than anything that is killing me.

I see what some of you are saying about SL not counting towards credit limit + minimal interest rate etc. but my gut instinct is agreeing with Lynzpower and dinklou.. I now feel like it is a debt hanging around my neck and I can't spend money on holidays/clothes/nice food until I have paid off my debt.

I'm currently earning £20,000 (so repayments should be £37.50 - is this right!! That means its going to take at least 25 years to pay off my debt!!!) and am 23 (no chance of writing off debt at 65 jitsuguy!)

If I open an ISA which is to collect 'overpayment' money for SL repayment and nothing else then I could justify to myself, that once this amount equals my SL debt, effectivley I have paid my loan...and technically I'm not in debt. This would be quicker than making actual overpayments on the loan as interest rates work in my favour.. have I understood this right?

Am still a bit worried that although you say SL doesn't count towards your credit rating, what if i'm supposed to be paying it back already but I haven't and so I have defaulted, would that give me a bad credit rating?

lynzpower

Id also say that if you cant afford to be paying off due to low income, you should try adn find a way where you can pay off at least the interest on it so its not getting bigger.

There is a difference in whether you can have your loan taken via PAYE i think its if you took the loan before 98 you cant, but you can after 98. I think anyways

lynzpower

moneysavinmonkey wrote:

Yes my debts are with the SLC. Thanks for info


Am still a bit worried that although you say SL doesn't count towards your credit rating, what if i'm supposed to be paying it back already but I haven't and so I have defaulted, would that give me a bad credit rating?

If you default IM fairly sure it does come up on your CR. Although not 100%

CLAPTON

just for the avoidance of doubt, student loans are paid out of taxed income whether or not it comes off directly from your salary.

ti1980

I think a lot of people say 'don't worry about it' with a student loan because it is at a low rate of 3.2% and the majority of people will be paying interest on other things that are at a higher rate such as a mortgage or various credit cards.
I am renting and have always done so I don't have a clue how much people pay in interest on their mortgages but I imagine that the rates there would be at least 4.5% for the best ones which means that you are better off paying more on your mortgage if you don't have any other debts rather than overpaying on the student loan.

It doesn't make sense to overpay on a student loan when the rate is at 3.2% if you are paying a mortgage that is on a rate of 7% for example.
Also there are savings accounts in which you can get 7, 8 and 10% interest if you save for a minimum of 12 months without making any withdrawals so you would be better off doing that than overpaying on other things that have a low rate of interest.

david_hellier

I wouldn't worry about it because it's a government stealth tax and the reality is you'll be paying it for the rest of your life, just like your taxes. In terms of worrying, worry more about the most expensive debt in your life and less about the little ones. Avoid debt, start saving.