Student Loans Confusion

System

Ciwan wrote: »

Hi all

On July 2015, I called the Student Loans company to find out my balance. My balance at the time was £23,075.80.

I called them today expecting a significant decrease and my balance was £22,120.88. That's only a £954.92 reduction.

How is that possible? I've never been unemployed since that period. And at the time, salary wise, I was on £32,000 a year. Since January, I've been on £48,000 a year.

Is the interest rate crazy high or something?

You will never pay it off, try not to worry about it. I had around 14K - on the old system. Wage of around £32,000, took 14 years to pay. Yours will probably take the next 30 years - planning on working that long?

IAmWales

andydownes123 wrote: »

You will never pay it off, try not to worry about it. I had around 14K - on the old system. Wage of around £32,000, took 14 years to pay. Yours will probably take the next 30 years - planning on working that long?

If OP is below 40 it is highly likely that he will still be working in 30 years time!

tempus_fugit

IAmWales wrote: »

If OP is below 40 it is highly likely that he will still be working in 30 years time!

Not true. This is a myth being put around by the media. If people are prudent with their money and contribute diligently to their pensions then most should have the opportunity to retire many years earlier than the state pension age.

nkkingston

It's worth having a look at Martin Lewis's articles on student loans (I've heard him talk about them in person - it's facinating how passionate he is about them!). They are, essentially, a graduate tax. They were never designed with the idea that people would actually earn enough to pay them off in full - they would just keep paying them up to an arbitrary point and then they'd be written off. You don't have to pay them when you're not earning, there are no penalties for never paying them off, and there aren't really any rewards beyond the psychological for paying them off early. As long as you have other debts, you should focus on those, and after that you really need to ask yourself whether you'd benefit more in the long run from saving money rather than paying off the student loan. You can earn more interest on savings than you save in paying the loan off.