Student Loan Debts - How do you view these?

md_14uk

Apologise for the long reply... if it doesn't make total sense give me a shout and i'll try to explain things better...

The current interest rate on SLs is 2.4%, for this reason this should probably be the last debt you pay off. No doubt the 0% overdraft will gradually become chargeable as you're no longer a student.

The way I see it is that SL are like a mortgage, a necessary evil but instead of paying it off early you should put any spare cash into a savings account where you can earn more interest than you're being charge on the loan.

My SL debt is around 3k (was 6 ish) but it's being paid off gradually so I don't worry about it...

You'll be charged around £330 a year (14k *2.4% = £336) but could earn that much on half the balance in a decent ISA (7.5k * 4.5% = £337)

Your repayment schedule will go like this (based on paying 9% on everything over 15k)

Salary Annual Repayment

<15k £0
16k £90
17k £180
18k £270
19k £360

So earn 19k a year (gross) and you'll be paying more back than they charge you in interest gradually reducing your debt.

Depending on your salary you could try to pay some of the debt off early so that you're repayments are higher than the interest your being charged eg. Salary 18k repayment £270. Interest charged at 2.4% so debt needs to be reduced to 11,250 inorder for your annual repayment to be greater than the interest charge.

Hope this helps

bobbadog

I consider mine to be another subtraction of my wages, like NI etc. Though i've only been paying back £15 a month for 3 months. Come debt free day I will start paying money into a savings account and clearing mine in full, all £15 k of it

PeachPickle

I kind of ignore it to tell the truth! It comes out out my salary every month so I don't need to do anything. I don't include it in my 'debt' thinking as I don't have any problems with it! It's waaay down my list :rotfl:

vishpatel

afro wrote:

If you're lucky.

I've been paying back for over 2 years.

They have no idea how much I've paid, as the Inland Revenue haven't passed on any payments yet.

So they can't even tell me how much I owe.

Not had a statement since November 2003!

probably because you've changed address?

Imelda

Hi Lil'H,
I wouldn't worry so much about this debt for the following reasons:
1. As it has been mentioned it is at a low rate of interest.
2. If you earn less than £15,000 you won't have to make payments.
3. If you lose your job payments stop.
4. If you become ill/ disabled you won't have to pay it back.
5. If you are unable to, after 25 years (a long time I know!) it gets wiped off
6. It doesn't affect your credit rating for mortgages etc
However, it is still a debt!!
If you are worried about the balance creeping up I would put some money aside in an ISA rather than paying it off directly.
One other thing to mention, keep all of your payslips and P60s, the SLC are awful. My most recent balance is April 2005, they have no idea how much I currently owe. I have worked it out (roughly) myself and think that it should all be paid off next month. I have had to write to them with copies of my P60 and payslips to ask them to stop taking the money out of my pay (god knows how you will go about claiming money back!!)
Sorry for the long post....

Katharine

I still live in vain hope the government will see sense and cancel them all, you shouldn't be forced to get into debt before you even start earning! I wouldn't be surprised if they are contributing to people seeing it as acceptable getting into large debt at a younger age.

md_14uk

Katharine wrote:

I still live in vain hope the government will see sense and cancel them all, you shouldn't be forced to get into debt before you even start earning! I wouldn't be surprised if they are contributing to people seeing it as acceptable getting into large debt at a younger age.

I disagree totally, I have student debt.. I also have a good job that I wouldn't have if i didn't have a degree. I see the Student Loan as a graduate tax, taxes are paid by people that can afford them. Statistically graduates earn more than non-graduates... end of story.

http://www.prospects.ac.uk/cms/ShowPage/Home_page/Members___Log_in/Labour_market_information/Graduate_Market_Trends/Graduate_earnings_from_the_labour_force_survey__Spring_02_/p!eXdaLa#5671

As I recall most of the money I spent at Uni was on beer and having a good time I'm sure that that's what 99.9% of students spend their money on... if they don't want debt then they should cut back on the drink!

Thriftylady

Imelda wrote:

Hi Lil'H,

5. If you are unable to, after 25 years (a long time I know!) it gets wiped off

Its funny how 25 years sounded like such a long time when I left uni but 9 years down the line its edging closer. Having said that, mine is one of the old style student loans where you pay it directly to the loan company, not as a deduction from your salary, and you have to be earning a lot more than £15k before you have to pay it back. But even at the top of the payscale with my current employer, I would never have to pay it back. I started to pay it voluntarily a few years back and then realised that it was madness, when there is sadly a very good chance that I will never reach the earnings limit at all. I would rather earn more and pay it off, but I've not got the opportunity to earn more, so......

Its interesting that the government lowered the earnings threshold for paying it back, because to me it seems like another way of admitting that a university education does not bring you the riches that they would like to have every sixth form student in the country believe that it will. But I'd say thats a discussion for another thread!!

Katharine

md_14uk wrote:

I disagree totally, I have student debt.. I also have a good job that I wouldn't have if i didn't have a degree. I see the Student Loan as a graduate tax, taxes are paid by people that can afford them. Statistically graduates earn more than non-graduates... end of story.

As I recall most of the money I spent at Uni was on beer and having a good time I'm sure that that's what 99.9% of students spend their money on... if they don't want debt then they should cut back on the drink!

If thats true then they pay more income taxes over their life, and so pay for their education etc, the government are just greedy. There should be a grant to cover essential living costs (like there used to be it wasnt enough to pay for beer as well) and if students want extra money for fun then make that bit a loan or they can get jobs. To make students get into debt to allow them to eat and have a roof over their heads in insane. Not everyone has suitable courses at colleges/unis close to their parents.

lynzpower

How do I view student loans?

LIke on massive millstone. Im almost at the end of mine, owe 600, and I started Uni 10 years ago coming september. Cant wait for it to be paid off.