Write-off for loans from different courses

Ed-1

Obviously under the new plan 2 student loan repayment system, the write-off could well be the most important feature in determining exactly how much is paid. For those that have loans under both systems, the write-off under the plan 1 system could also come into play due to the size of the plan 2 loan. However, the guidance is actually quite vague on what the exact write-off date is and whether all loans are written off at the same time or only certain ones. For example, if we take the plan 1 system, the write-off date is 25 years after the loan came into repayment and 30 for plan 2. However is there a separate 25 (or 30) year period for loans from different courses?

Interesting, if you log into your student loan repayment account (www(dot)studentloanrepayment(dot)co(dot)uk), there is now a new column entitled 'loan for course that started in'. For plan 1 loans it just says N/A but for plan 2 loans there is a separate date for different courses. Are loans for different courses now been kept as separate balances under plan 2 (presumably they were all added together under plan 1? In which case are they all written off together? In which case is this 25 years after the April in which the first loan entered repayment or 25 years after the April the last course entered repayment?). If loans for different courses are kept as separate balances, this makes me think that they will be written off separately which obviously makes the repayments potentially longer than 30 years. If they are kept as separate balances how is the overall repayment amount distributed across the different loans?

For example if you have a loan for an undergraduate course (3 years) and then do a PGCE (1 year) the PGCE loan does not enter repayment until the April after that course finishes. Is the first loan for the undergraduate course written off before the PGCE loan?

If you have a loan for an undergraduate course taken out under plan 1 and take a loan for a PGCE out under plan 2, presumably the undergraduate loan is written off first (25 years after the April in which it enters repayment) but then is the plan 2 loan written off 30 years after April 2016? This could potentially make a big difference to repayments if the plan 2 loan is not paid off before the first loan is wiped.

Does anyone know (or can find out) the actual rules on the write-off date(s), or are the government just leaving it up to future governments to interpret how they see fit? (Wouldn't surprise me!)

Poolie

Students should not end up with loans on different plans unless they do a PGCE course following their main degree. This is the same thing that happened when ICR loans were introduced starting 1997. Those already on the older scheme continued to receive their loans under the original terms and conditions they signed. Those starting new courses will receive their loans under the new conditions therefore students should not end up on both plans apart from the case mentioned above.

Your write off as slightly out. Plan 1 has to portions. For loans originally taken out in or before academic year 2005/06, these loans are not written off till 65. For loans originally taken out in or after 2006/07 are written off 25 years after they enter repayment status. You are correct on plan 2 loans.

In your example, both sets of loans will receive repayments split equally therefore your previous post about thresholds means both plans have to remain the same for employers to action the deductions correctly. However, the loans would be administered under the terms they were signed. If the original undergraduate loan is pre 2005/06 academic year then they won't be written off till 65, otherwise potentially they could be written off earlier however the loans for the PGCE will be significantly smaller than the undergraduate loan and therefore in theory should finish earlier anyway.

In your second example, it all depends on the when the original loan was taken for plan 1, but I will assume you are referring to a loan taken in the 2006/07 academic year. The repayments on the total loans are split equally therefore given the size of the loans, the PGCE should complete earlier due to the smaller loan amount before the original undergrad loan is written off.

All the current rules are listed on the student loan repayment site.

Devon_Sailor

It seems that all your posts thus far have been about writing off loans.

Instead of obsessing about it, why not just man up and repay your loan until a) it ends or b) it gets written off, like everybody else that gained the benefit of a university education from it?

Regards,

DS

Ed-1

Devon_Sailor wrote: »

It seems that all your posts thus far have been about writing off loans.

Instead of obsessing about it, why not just man up and repay your loan until a) it ends or b) it gets written off, like everybody else that gained the benefit of a university education from it?

Regards,

DS

I wouldn't call a response like that appropriate for what's supposed to be a money saving expert forum. (And by the way to put it into context, I've only made two posts so far and as it happens this is what I'm interested in finding out at the moment!) For something that's going to be with you for the best part of your working life, I don't think it's unreasonable to want to know the details and what to expect to potentially inform future financial decisions - like a decision I'm about to make which is whether to get saddled with a LOT more debt by taking out a PGCE loan under plan 2 after a 4 year undergrad course under plan 1 or whether to just pay the £9000 up front, remembering that this is money that potentially might not ever be repaid. I can only make an informed decision on this point if I know this information.

From your response I'd guess that you have loans under plan 1? If I had all my loans under plan 1 then I'd agree with you as it's clear cut. But plan 2 loans are a whole different ballgame as the system's essentially been designed as a graduate tax. Again, if you start on this system then it's clear cut. Taking loans under two different systems is not clear cut.

CKhalvashi

How much the actual additional debt would be, would depend largely on how much you were earning for those 5 years.

I did my formal degree education through the Russian/Georgian systems (BSc, MSc Equiv), which came at no cost to me, as a CIS citizen, and then my PGCE at Cambridge on the 1997 system, and I'm now fully-paid.

By the looks of things, and for reasons stated above, I can't vouch for exactly how much extra you'll pay, however you've hit an anomaly in the system.

Is it really that big a deal anyway, if you wish to go into teaching? I did it to teach, not to worry about student finance.

CK

Devon_Sailor

Ed-1 wrote: »

I wouldn't call a response like that appropriate for what's supposed to be a money saving expert forum. (And by the way to put it into context, I've only made two posts so far and as it happens this is what I'm interested in finding out at the moment!) For something that's going to be with you for the best part of your working life, I don't think it's unreasonable to want to know the details and what to expect to potentially inform future financial decisions - like a decision I'm about to make which is whether to get saddled with a LOT more debt by taking out a PGCE loan under plan 2 after a 4 year undergrad course under plan 1 or whether to just pay the £9000 up front, remembering that this is money that potentially might not ever be repaid. I can only make an informed decision on this point if I know this information.

From your response I'd guess that you have loans under plan 1? If I had all my loans under plan 1 then I'd agree with you as it's clear cut. But plan 2 loans are a whole different ballgame as the system's essentially been designed as a graduate tax. Again, if you start on this system then it's clear cut. Taking loans under two different systems is not clear cut.

Ed,

I think you are over-thinking the issue massively.

If you have made the decision that you want to go into teaching or some other career that requires a PGCE then you pretty much have three options:

1 - Pay up front in already held cash.
2 - Get a career development loan or similar from a bank and pay.
3 - Get a student loan and pay.

Keeping it MSE-is, if you had the money, option 1 is clearly the best IF you plan on getting any sort of career where you will earn enough money to pay a loan+interest if you had taken a student loan instead.

If you can get (3) you would be nuts to get (2). The interest difference is monumental AND as you say, after a certain period SLC may knock it on the head.....a bank wont!

I stand by my earlier post. If it is your dream job etc and you need a PGCE and you don't happen to have the spare cash floating around to pay up front, a SL is by far the best option of covering it. Focus on working hard, getting a good result and then making the best possible use of that PGCE in the workplace, and the repayments will take care of themselves, ultimately!

If, as you seem to imply, you might have the cash, but are u undecided as to whether to pay because under the system rules if you took the loan you MIGHT not have to pay it all back, well, that becomes more of a moral judgement call not a financial one.

I admire your financial awareness and desire to make the best possible call - but at the same time, you are a LONG time working. Sometimes it is better to let your heart have the lead just a little or else you may find yourself in some awful job that you hate and loath just because of a worry over payments which are actually pretty darned affordable despite what the Leftish parties and media will tell you.

DS