MSE News: Student loan repayment costs to rise

Former_MSE_Helen

This is the discussion thread for the following MSE News Story:

"Hundreds of thousands of graduates face hikes in their student loan repayments this autumn due to inflation jumps ..."

Read the full story:
Student loan repayment costs to rise

koloko

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clairet707

I am one of those 300000 + people who hasnt paid back their pre 1998 loans yet

I started uni in 1997, but mid way through changed university (and ended up doing 2 placement years) so I ended up with 6 student loans

I have been deferring every year since I finished in 2003 as I do not earn enough to pay it back, unlike post 98 loans where you pay a % of your salary back, pre 98 loans you have to pay the full amount back every month even if you earn only £5 over the threshold (which this current year is £26,449) so for my student loans I would be having to pay back over £200 a month (you get to pay it back over 84 months if you had more than 5 loans).

As I have just got my first payrise in 3 years which worked out at a whole £9.60 per week after tax extra, I cant see myself paying the loans back any time soon as Im still over £2000 under the threshold, and thats with a science degree, a masters and 8 years of experience (inc my placement years)..

I think (my loans are split 4 SLC, 2 HSL) my total balance at the moment is about £18000 and now rising as I havent paid a penny of it back...

runmichellerun

Hmmm. Now I'm unsure what to do. I'm a post-1998 loanee who is just coming to the end of my 'real' debt. My plan was to not pay back my student loan (currently around £11,000) and save up my money instead.

Should I start paying off my student loan or not? Genuinely worried the debt might start going up despite paying some off every month through my work pay. Maybe I should set up a direct debit for £150ish a month to get help get rid.

Any advice?

ElmerFudd

clairet707 wrote: »

I am one of those 300000 + people who hasnt paid back their pre 1998 loans yet

I started uni in 1997, but mid way through changed university (and ended up doing 2 placement years) so I ended up with 6 student loans

I have been deferring every year since I finished in 2003 as I do not earn enough to pay it back, unlike post 98 loans where you pay a % of your salary back, pre 98 loans you have to pay the full amount back every month even if you earn only £5 over the threshold (which this current year is £26,449) so for my student loans I would be having to pay back over £200 a month (you get to pay it back over 84 months if you had more than 5 loans).

As I have just got my first payrise in 3 years which worked out at a whole £9.60 per week after tax extra, I cant see myself paying the loans back any time soon as Im still over £2000 under the threshold, and thats with a science degree, a masters and 8 years of experience (inc my placement years)..

I think (my loans are split 4 SLC, 2 HSL) my total balance at the moment is about £18000 and now rising as I havent paid a penny of it back...

I was in a similar situation til last year. My payrise brought me over the deferment level. The annoying thing is if the deferment level had remained the same as the previous year I would have been able to defer it (it was about £12 a month over what I actually earn).

My student loan was about 2k a year for a 4 year course. I then did a masters afterwards. Wasn't earning enough. Deferred til last year and racked up more debt on the credit cards (which began due to my bank freezing my bank account despite it having money in there) in order to buy groceries etc.

Lately I have used the cards for various unexpected life events and it all spiralled from there. For the first time in ages I was able to service the debts then was smacked with having to repay the student loan earlier than I had expected. Paying the loans off at a cost of £166 a month, which is £166 a month which could be going toward the bad credit card. Live and learn. I swear I will never be in this posisition again once I am clear of it.
Still on the plus side I will be clear of the student loan in about 4 years max.

Poolie

runmichellerun wrote: »

Hmmm. Now I'm unsure what to do. I'm a post-1998 loanee who is just coming to the end of my 'real' debt. My plan was to not pay back my student loan (currently around £11,000) and save up my money instead.

Should I start paying off my student loan or not? Genuinely worried the debt might start going up despite paying some off every month through my work pay. Maybe I should set up a direct debit for £150ish a month to get help get rid.

Any advice?

You should not over pay as the rate will only rise in line with BoE base rate. The base rate is now not expected to rise for a short to medium term as this will impact the growth we need as a country to get out of the debt hole we are in.

Poolie

Just to note that Pre-1998 loan there is no if abotu the rate rise. The loans were signed in accordance with the Consumer Credit Act and therefore the interest has to match the rate as of March RPI.

payless

Pleased to see the article has been revised since this morning- as it was a bit strange ... ie need to budget ( when repayments would not alter).

A bit surprised the article been released though..a bit of a non-story.. rates might go up soon or they might not. Surely its the same for anyone with a variable rate loan/mortgage/ credit card , albeit students won't have to pay more each month ( unless they want to make an overpayment) and more importantly they possibly won't be affected from the following year if inflation falls a lot following any possible rate rise

whitfreak

Koloko. While its surprising, there are prefectly legit reasons for it when you consider that the repayment threshold is 85% of the Average Income so changes each year (normally upwards). This year's threashold is listed as £26,449 for this year.

So start on a career below the repayment threashold and never catch up. Work part time, not work at all.

Its also an all or nothing deal, you either can defer or you are liable for the whole year's repayments. So it wouldn't surprised me if there were some who make sure that they are below that limit, rather than just go over it.

melancholly

payless wrote: »

A bit surprised the article been released though..a bit of a non-story.. rates might go up soon or they might not.

well student loan rates only change once annually (unless the whole base rate situation changes) and a lot of graduates don't realise how it's calculated or understand when it changes. for that, the article is very useful!

payless

melancholly wrote: »

well student loan rates only change once annually (unless the whole base rate situation changes) and a lot of graduates don't realise how it's calculated or understand when it changes. for that, the article is very useful!

Not saying it not good information- but its not really "News"