Student Loan and not earning the threshold for repayment

Gems84

Hi all, I would really appreciate any advice anyone has to share regarding the following...

I took out a student loan in approximately 2003-2006. Since this time I have never earned over the threshold required for repayment due to only working part-time as I have a young family. Is there anything I can do to stop the interest adding up or do I just leave it be?

Thanks in advance!

AnotherJoe

You leave it be. When you are ?50? it will all be written off and since by the sound of it you'll likely only be making token payments to it there's no point whatsoever paying some back.

Gems84

Thanks for the reply, but if I should get a full time job once the children are older then I would be above the threshold and will obviously have gained a lot more interest?

AnotherJoe

Gems84, it doesn't matter because what you pay is a fixed amount dependent upon your earnings not upon what you owe.

From their website "you will pay 9% of anything you earn over £17,495 before tax per year"

So, you could owe a million or twenty five thousand, you'll pay the same amount irrespective how the interest clocks up, and you'd have to earn a LOT before it became worthwhile paying it off earlier. (at which point you probably wouldnt care)


EDIT: and here we go, here's a guide from MSE as to what to do http://www.moneysavingexpert.com/students/student-loans-repay

Gems84

Thank you I'll take a look!

rtho782

Let's say you're currently 30, it gets written off when you are 50, and in 10 years when the kids are older you will get a full time job earning £30k. That gives you 10 years of working before it is written off.

We'll be generous and assume you get a £1k a year payrise, so by 50 you are on £39k.

We'll be unrealistic and assume the income threshold for repayment never goes up from what it is today. This is the worst possible scenario for you.

With these figures you would pay back £15,304. It doesn't matter if your debt is £1,000,000 or £16,000 or any amount inbetween, you will pay back £15,304.

The only way it's worth paying anything off it that you don't HAVE to pay off it is if you owe less than £15,304. If you paid 3k a year in tuition fees and got that much again in maintenance loans, then you STARTED with £18k of debt.

And that's with pretty generous payrises and unrealistically harsh figures for repayment thresholds.

Don't pay it off.

AnotherJoe

Great explanation by rtho and I've corrected a minor mistake in my earlier post as a result

hamish05064

The interest being generated over the loan could not be stopped but u may try adding up atleast few amount to loosen up your burden since excess may panic u

tiggerbodhi

hamish05064 wrote: »

The interest being generated over the loan could not be stopped but u may try adding up atleast few amount to loosen up your burden since excess may panic u

What???? assuming you are not spamming to get a post count to advertise snake oil, any chance you could try again in English?

AnotherJoe

hamish05064 wrote: »

The interest being generated over the loan could not be stopped but u may try adding up atleast few amount to loosen up your burden since excess may panic u

Well, the words are English, but the sentence isn't ......