Student Lon repayments

MeestaDimples

Hi,

I graduated in 2000 and owe the Student Loans company £6000. I have deferred repayments every year as my salary is beneath the required amount for repayments (I earn £21k pa). However I am due a £1000 payrise soon which will make me eligible to start repaying this loan. Unfortunately I have other debts and outgoings and I do not have any spare money left over to allow for any more outgoings. The Student Loans co want to take £120 from me every month which will leave me unable to fully pay my other debts. At the moment I am just about managing to make repayments on all that I owe and I'm worried sick about the situation I'll face when my salary increases. What can I do?

cupid_s

I don't really understand. I thought you had to start paying as soon as you earned 15k (it's 10k for me and OH unfortunately)

MeestaDimples

It's different for me as my loans were taken out prior to rules for repayment changing, or so I believe.

Sand_Man_2

That's right.

I have to pay back my loan as i earn more than £15k. However, the replayment is worked out as a percentage of anything above £15k or what ever your repayment thresehold is. Therefore, if i only earned £16,000 a year, I only pay the student loan company a percentage 0F £1000 as am only £1K over the 15k thresehold

Therefore, the problem you think you face is not there as you income will increase when you get your pay increase. You may lose a pecentage of your EXTRA income through repayments, but your overall take home pay after your salary increase will go up.

you may already be paying student loan without realising as i can't beleive you are not paying anything on the salary you currently earn

dreamalittle

According to the Student Loans Company website, the current threshold for repayments on the old-style loans is £2,034 a month gross, i.e. a salary of £24,408. So, you'll still be well within the limits if your salary is going to be £22k. The limit gets raised every year, I think, in line with average earnings.

morg_monster

Sounds like you will be OK from dreamalittle's post - but if this wasn't the case - that is insane! Getting an increase in pay of £1000, say translates to approx a £700 increase in takehome pay, and they want you to pay £120*12 months = £1440 of your pay!!! cheeky barstewards!

the way the calculate the repayments on the new loans is much more sensible. (ie 9% of anything over 15k) as sandman says this means you are only ever paying a proportion of the EXTRA income each month when you get a pay rise, you never pay more than the pay rise in loan payments.

dreamalittle

Yep, it is pretty ridiculous. I'm on the new style loan fortunately, but my fiance is on the old-style. So far he's been able to defer every year, but he's getting closer to the threshold so eventually he'll be hit with it. It just seems stupid that as soon as you get to the repayment level, you must pay the whole lot back in 5 years, regardless of other circumstances.

MeestaDimples

Thanks everyone for your help - I don't need to worry for a little while.