2005 Student Loan...

morecambe.bae

Hey, quick question...

I checked online re: my student loan I took out in 2005-2008 and it says any outstanding amount will be struck off when I am 65. If my PAYE contributions continue this way, the debt will not be paid off at this rate.

But it'll be struck off so... should I care? I've never cared or even thought about my student loan, but sometimes I'll chat to someone who is *voluntarily* paying theirs off and I think..why??

Mogley

Having looked at your signature, you certainly shouldn't think about paying additional student loan before other debts. Continue down the debt free wannabe path (ignoring your student loan). As long as you are willing to see it as equivalent to an additional tax for the remainder of your working life then you don't need to think about it.


Your current rate of earnings may not reflect your earnings in 20 years time by which point your student loan contributions maybe forecast to be paid off before 65. Even if this is correct, you are usually better off just continuing to pay the minimum through PAYE and save/invest any additional money elsewhere.


The MSE guide is pretty extensive on this matter:
http://www.moneysavingexpert.com/students/student-loans-repay

TrustyOven

Maybe they are earning a lot more (therefore SLC payments are higher) and don't want to be paying interest for a long time.

Mogley

Logic says that overpaying the student loan isn't the best use of spare money but the psychological benefit for some people outweighs the logic.


I have never overpaid my student loan and I am due to finish paying it this year. To me this is a real milestone and huge psychological benefit but I never felt the need to overpay. It also didn't bother me at the start of my repayments when I was not paying back enough to cover the interest being charged.

morecambe.bae

Thanks for the replies!

Having looked at your signature, you certainly shouldn't think about paying additional student loan before other debts.

Of course! It's the furthest thing from my mind. It was pure curiosity really, I wondered why people were making contributions. It's never occured to me that it's a debt, it's certainly not something that weighs on me psychologically. Maybe if I was earning 30K and paying £100 a month I'd feel that much more than the £35 they curently take. It's led me to call SLC and find out my outstanding balance though, and apparently I owe £14,561. Which sounds very close to what I owed upon graduation 10 years ago. That does make me wonder how much of my salary has effectively been flushed down the toilet to cover interest in the past decade...

Meh, maybe one day when I have loads of cash and nothing better to spend it on I will consider making contributions. Something tells me I'll always have something better to do though

Mogley

I don't think you will notice it when earning more because you will be already used to paying it as a tax.


One piece of advice from me is make sure you keep all your payslips and check them against your student loan statement each year. Especially if you change employers.


When my employer got taken over and changed names, HMRC did not account for all my student loan deductions via PAYE on the P11 form they sent to the SLC for that tax year. I had to provide evidence of the payments on my payslip. I only noticed this by coincidence two years after the event and luckily I was able to provide evidence.

TrustyOven

Mogley wrote: »

One piece of advice from me is make sure you keep all your payslips and check them against your student loan statement each year. Especially if you change employers.

When my employer got taken over and changed names, HMRC did not account for all my student loan deductions via PAYE on the P11 form they sent to the SLC for that tax year. I had to provide evidence of the payments on my payslip. I only noticed this by coincidence two years after the event and luckily I was able to provide evidence.

Another reason to pay it off quicker. Gets all the annoying hassle out of the way.
I track mine with a program and can see how much contributions i already made and what the outstanding satement amount is. And with those two it can work out how much i still owe. But if I had to print off the electronic payslips it would be such a nightmare.

morecambe.bae

Thanks for all these replies, it's given me a lot to think about