Student Loans: "Should I pay mine off?" article Discussion Area

MrsFraggle

Looking for some advice - I'm self employed, and have been since I graduated in 2001. My business has slowly been increasing and my profit last year was £14,500.

Martins artice very helpfully said the threshold was £15,000, (yet on the statement I received it says its £10,000).

I filled in my tax return before receiveing my latest statement, and as I believed I was under the threshold didn't tick the box which said I had repayments to make

What position does this put me in? I'm incredibly confused about the whole thing, and I think if you're employed and doing PAYE its easier, but no help for us who are selfemployed.

I presume I ought to phone them?

Snich

Hi
Found this article really interesting. I graduated in June 2005 and a couple of months ago, found myself in the fortunate position to start overpaying my loan by £850 per month. My student loan debt is over £16000 and I have an overwhelming urge to be debt free (helped by the excellent forum). I am a higher rate tax payer and I have filled my ISA up.

So, now I have a dilemna... To cancel my direct debit to the Student Loans Co - because I normally obey the Martin Oracle? or to continue the original plan?
We don't own a house, so maybe a new mortgage fund would be a better place to put it. The only difficulty is that the money will look so tempting once it's in a savings account and I can see a skiing holiday coming on!

Snich x

tr3mor

Snich wrote:

We don't own a house, so maybe a new mortgage fund would be a better place to put it.

You've answered yourself

If you have worries that you'll just take the money out and spend it then put it into somewhere that you're discouraged to withdraw from. Or put it in a joint account with someone stronger willed than you are

Tezza24

Does anyone know if its true that once your loan repayments are deducted from your salary, they only get paid off at the end of the financial year, allowing the HRMC to gain interest on the money? It won't make a lot of difference to individuals, but are they making a profit from all of us graduates?

Any info would be appreciated.
Tezza

morg_monster

I believe this is true. From the website:

"No information regarding repayments, balances and collection will be passed between the Student Loans Company and HMRC, other than the repayment information transfers at the end of the tax year when HMRC tell the Student Loans Company how much you have paid."

However I couldn't discover whether the SLC then retrospectively works out the interest you're charged, EG if you paid £100 every month to the loan, does it calc the interest based on that, or on £1200 paid at the end of the year? I'm assuming the former (or maybe based on £1200 paid in the middle of the year, which would be basically the same) - if not then I think that is a bigger rip off!

If the SLC do charge us the interest fairly, then surely at the end of the tax year HMRC would have to send the £1200 and the interest accrued at the SLC rate back the SLC so they are properly reimbursed. So maybe HMRC make a bit of extra interest on top of that.

To be fair it is probably one of those things it is much easier to only do once a year rather than continuously throughout the year. Plus HMRC probably aren't getting interest on it anyway - but using it to plug a hole so they pay less interest on some other £billion deficit ...

gflat223

Is there anyone out there who can relate their experience of starting to repay the Student Loan from abroad after having gone abroad without notifing the SL Company? How did you go about it? Did the SLC require proofs of how much you earn? Did they want you to prove when exactly your overseas income exceeded the repayment threshold? Were they punitive about your past failure to follow the rules or did they accept your intention to start repaying without punishing you for this "youthful misdemeanour"? There must be a fair few who get their degree, go off to see the world without notifying the SLC, and who would at a later date find it hard to furnish proof about their income. Any relevent experience or advice about dealing with this repayment situation would be appreciated.

Funky2603

I have four student loans, the first of which was taken out in 1993/94. I have not yet started to repay it as, initially, I was earning below the minimum threshold and, now, I am not in paid employment at all as I am a 'home maker'. I defer my repayments every Spring which, now I am not working, is a bit of a pain as I have to get to a rather remote tax office to get the relevant stamp on my derferment form. As I plan not to work (or if finances struggle, not to work more than part time) for the duration of my children's education which will be for the next 21 years at least, and then doubt if I will get a job that pays above the minimum threshold due to the length of time I would have been out of work, I was wondering if I should contact the Studen Loans company to see if they would consider writing off my loan as they are unlikely to ever get it back? In addition to this, it is currently costing them money to send out statements, deferment forms and to process my deferment forms. I realise that they wave the loan if you get to 65 and haven't started to repay it but I would just like to get rid of it now, if I could. Do you think it is worth a go?

Man-Alive

Great thread with some really good information on the posts.

I have a old type Student Loan which I had deferred for about five years after finishing Uni. I started repayments a few of years ago (even though I was still below the threshhold) around the time I got on the property ladder. About two months ago I decided that I wanted to see the back of the Student Loan and doubled my monthly payment. I suppose I saw getting the loan paid off in under two years as a attainable goal.
Reading through the MSE Article & the posts above has made me think I should re-consider. This article has made me think that I should maybe be making my money work smarter and look at the greater longer term benefits that I could get from overpaying on my mortgage.
I still want to make the standard monthly re-payment on the Student Loan, but I think I will look into directing the money I had used to double the repayment each month towards my mortgage instead.

tr3mor

Man-Alive wrote:

I still want to make the standard monthly re-payment on the Student Loan, but I think I will look into directing the money I had used to double the repayment each month towards my mortgage instead.

Good idea. Never pay any more than you have to on your student loans. You just lose interest on the money which can be gained elsewhere.

Stuart_W

I have only just come across Martin's original article - FANTASTIC!

It is very difficult to convince those from the "neither borrower nor lender be" persuasion that it does make sense to NOT pay a student loan faster than necessary. I graduated in 1999.

I just thought it was worth posting that I recently entered a mortgage for £100,000 - and the £12,000 in student loans my wife and I hold WERE NOT EVEN COUNTED AS A DEBT in the calculations of savings and borrowings.

Another plus point for not repaying (especially as part of our deposit for the mortgage was paid using some of our original student loan cash!!!).