Student debt - what you should really know

HGLTsuperstar

Well of course if you can, but in the real world my loan meant I could pay my tuition, rent, food etc and I didnt have any social life so I was not one of those "p*&(%^& it up against the wall". 5 1/2 yr course and was screwed right at end by uni, so 28K p.a. starting salary career lost forever, now looking for grad progs that wont start until September, last statement showed just over 20K owed and interest is clocking up at about £50 per month. Theoretically I wont have it paid off by the time I'm 65yrs and have stopped worrying; I used to have plans to overpay a bit each month but my anger and dismay at the whoe Government and Education system means I will pay the bare minimum and concentrate on building my wealth elsewhere. If you are tempted to overpay though, remember it does not get added onto your balance until the end of the tax year so an extra payment in say June, means they sit on your money and gain more interest for 10 months. Better idea is to stash the extras in a high-interest saving account then pay back as a lump sum at the end of March, and in the meantime you get interest on it and its there for you to take out if something drastic (or just more tempting like travel, house buying etc) crops up

Gem_

The other important thing to consider is if you are planning to pay off the loan via PAYE or voluntary payments. If you get it taken off on the PAYE system then it comes off prior to tax and national insurance therefore the amount that wage would have been taxed before it hit your pocket will actually go straight towards paying off your loan. 22% bonus payment if you are a regular rate payer. You dont get this advantage if you pay it off any other way.

I would agree with many posters that it is a totally confusing system and trying to figure out the APR benifits either way have got me totally lost.

G

emr_2

i've had a look at my slc docs and it seems my balance is not really reducing. graduated in 2002 and again in 2003. started repayments (PAYE) in 2004. it appears that i am barely paying the interest each year. i don't have a proper pension because the uni courses were to retrain me after bringing up a family. what is the best thing to do?will it really all disappear once i am 65? or whatever retirement age may be?

Snich

Actually, in percentage terms, the interest is going up. I did five years at Uni and one year we were paying 2.2%, the next (ish) was 2.6%. this year's is 3.2%.

My partner and I have been really considering whether or not it is worth paying off early. However, we have bigger debts to fry first so it's not an issue yet! My instinct is that debt is BAD so if it's my only debt left, I will overpay (especially as a soon to be higher rate tax payer, it will be very difficult to make money on the balance - obviously I fill an isa though...)

Snich x

fezzyear

The student loan is backward. I receive the maximum amount and out of that I have to pay my rent and living costs which means over 4 months i have roughly £200 to live off and textbooks have to come out of that!!! Im not fortunate enough to put it into an isa to gain interest off it as it isnt in there long enough.

The poorer you are the more student loan you get the more you have to pay back and be in debt!!! Does that sound right to anyone?!!!!! Give a poor person high debt!!! World has gone crazy all because we need a degree to get a decent job!

Each year you get your letter from the SLC informing you of how much you have to repay and at the moment im on about £20 a month interest payments!!!!

I feel so lucky to have this debt hanging over me till I'm about 30!!! (Not!!!!!)

Surely there has to be a better system like the time when you didnt have to pay to go to uni you got grants instead!!!!!

Ok so ill get off my soapbox now but it's just annoying when you hear on the news that the amount of people in debt is increasing and first time buyers are struggling! Maybe its because we have to pay to get on in life and then pay more to pay it off meaning less money to put towards saving for a house to improve them statistics!!!!

surfcat

fezzyear wrote:

The poorer you are the more student loan you get the more you have to pay back and be in debt!!! Does that sound right to anyone?!!!!! Give a poor person high debt!!!

All students are really equally as poor, given that they are studying. What you really mean is that some students' parents are poorer than others. Do you really think that well-off parents shouldn't be allowed to give their offspring their money? "I'm sorry sir, you can't give your son/daughter that gift because it would be unfair on the poor". Students with less well-off parents already get the chance to borrow more than the others. Remember too that just because your debt is growing doesn't mean that is is growing in real terms (ie relative to costs and wages)

Surely there has to be a better system like the time when you didnt have to pay to go to uni you got grants instead!!!!!

WHY DO PEOPLE NOT UNDERSTAND THIS!! If they brought back the grant, instead of paying student loan repayments, you'd all be paying more tax, for life, OR, student numbers would be reduced, and people (especially those who can't understand simple economics) would not have attended university.

fezzyear

If your lucky enough to have parents who can support you through uni then you can come out of it fairly debt free unless you still took out the student loan in which case you actually have a loan that could be used on a deposit for a house etc. If you don't then your student loan has to be used and you come out of uni skint and have to start saving.

I'd rather pay more taxes though on educating people than paying for people to sponge off benefits i.e. those who lie about not being able to work or are just down and out lazy. (I'm not having a go at the benefits system here just those who abuse it) Also paying for the luxuries that the people in government etc spend it on for themselves!

Grants meant students came out of uni with little or no debt therefore in a better position when entering the ''real'' world. Having a mortgage is one thing having a mortgage and student loan to pay off is another! plus anymore debt that people can have!!!!

All this talk of sticking a loan in an isa and earning money off it fine but the majority of people can't do that and have to use it for what it is intended for and it is only those whose parents are able to help their kids through uni are able to make money off the student loan!

Dora_the_Explorer_5

Can any student tell me why they have to get into debt? If they work full time during the holidays and part time during term time surely this generates enough income to live on throughout the year? I studied as a mature student, with no grants, worked at the same time, paid my way and incurred no debts whatsoever.

surfcat

fezzyear wrote:

If ... your student loan has to be used and you come out of uni skint and have to start saving.

No, you come out of uni with a debt which you do not have to pay back until income exceeds 15K per annum, and which is paid off at a low rate and accrues interest at the rate of inflation. If you are earning 14,999pa then you do not have to pay back your loan, and are only skint because you are spending too much. If you are earning above that amount then you will not be any more 'skint'.

Where does the saving come in?

fezzyear

Yeh on that salary you wont have to pay back ure loan but the whole point of a degree is to open up the doors in the world of work where you can earn considerably more than that!

At the end of the day its debt and its a debt to get an education where most uni's now care little for the students and more about being a business and making as much money as they can.

This student debt, whilst not taken as seriously as other dates when applying for a mortgage etc, still has an effect and has to be taken into consideration. The Student Loan Company and the Universities just want to make money out of us and if you aren't lucky enough to make money out of them then it proves costly (low interest rate or not).

If you are happy with your student debt and have been able to make money out of it then good on you but no debt is good debt even a mortgage isn't good debt. Addmittedly they are better than getting a loan.