Starting PGCE on new finance system, what happens to existing debt?

sjmon

It's been a long time but I got onto my PGCE course - very excited.

Lots of information was posted here so I called SFE to clear it up.

The old income-contingent loan will remain at it's current rate and repayment threshold (£15,795) and will not be affected by the new loan.

Incidentally, the chap I spoke to said that he wasn't aware of any plans to raise the repayment threshold to £21000 in 2016 for old income-contingent loans and it would remain at 15,795 indefinitely.

The new loan will be treated as a completely separate loan on the 2012+ system and will not be added onto the existing loan.

As the repayment threshold for the existing loan is lower, that loan will primarily be paid off through PAYE deductions. Once 21000 is reached, both loans will be paid off equally.

There is no option to pay off the higher interest new loan instead of the lower interest loan first.

I'll do some maths, then I'll be back.

MartinSpoon

I posted a thread about this topic a few days ago, if you're interested:

https://forums.moneysavingexpert.com/discussion/4496363

brummierebel

sjmon wrote: »

Incidentally, the chap I spoke to said that he wasn't aware of any plans to raise the repayment threshold to £21000 in 2016 for old income-contingent loans and it would remain at 15,795 indefinitely.

While I am unaware of old income-contingent loans moving up to £21k in 2016, he is wrong on the second point. The £15,795 is moving up this April to £16,365

http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3866911&_dad=portal&_schema=PORTAL

The new loan will be treated as a completely separate loan on the 2012+ system and will not be added onto the existing loan.

As the repayment threshold for the existing loan is lower, that loan will primarily be paid off through PAYE deductions. Once 21000 is reached, both loans will be paid off equally.

There is no option to pay off the higher interest new loan instead of the lower interest loan first.

I'll do some maths, then I'll be back.

According to MartinSpoons link on the other thread, once £21k is reached, you will be paying of only the second loan BUT as far as I am aware, this will only start in April 2016. Before that, you would continue to pay off the first loan.