Paying back Student loan

dipika15

Hi MSE,

I've been paying back my student loan via HMRC but the amount I'm paying doesn't even cover the interest on my student loan.

I'm considering paying some of my student loan as the interest on my loan in the last 2 year has added £3,845.21 of interest on to my loan.

Any help is useful.

JayRitchie

Hi

In order to advise people will need to know:

- which type of student loan you have (generally from the year you started university)
- whether it is undergrad, masters degree or both
- how much you earn now and how much you reasonably expect to earn in the future
- the year you graduated (as that can indicate when the loan will be written off).

dipika15

Hi

- Its Plan 2 student loan (started university in 2013)
- its undergrad loan
- I earn around £40k
- graduated in 2016

dipika15

Is anyone able to help me on the above query?

silvercar

Eventually it all gets written off, so little point in overpaying unless you expect to be a very high earner.

JayRitchie

Hey, thats a great salary - 3 years post graduation? Which line of work are you in? You need to consider future earnings as part of the decision making process.

Will write some notes shortly.

JayRitchie

Hi

I had typed a load and lost it all on this site...

Next time I'll type in more stable software and copy the notes in. To use real data to give examples you could you note what your current loan balance is?

grumiofoundation

dipika15 wrote: »

Hi MSE,

I've been paying back my student loan via HMRC but the amount I'm paying doesn't even cover the interest on my student loan.

I'm considering paying some of my student loan as the interest on my loan in the last 2 year has added £3,845.21 of interest on to my loan.

Any help is useful.

Have you looked at

https://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/#tips-20

If you aren’t going to earn enough to pay back the whole balance of the loan (estimated 83% won’t) then paying back is a mistake since balance will be wiped and therefore you will have thrown money away - are you happy to take that risk?

Even if you are going to pay back the whole balance (unlikely you can be certain of that?) there may be better uses of your money at this stage.

For example
Do you have enough emergency savings?

Would you have to sacrifice e.g. living situation, pension contributions, saving for house deposit (see below) in order to fund the repayments

Lifetime ISA for potential house purchase (up to 1000 per year government bonus on house purchase), pension contributions

dipika15

JayRitchie wrote: »

Hi

I had typed a load and lost it all on this site...

Next time I'll type in more stable software and copy the notes in. To use real data to give examples you could you note what your current loan balance is?

Total loan borrowed - £38,278.00
Closing debit balance on 05 April 2019 - £44,558.49
Total interest during 06 April 2013 to 05 April 2019 - £8,201.49
Total repayments during 06 April 2013 to 05 April 2019 - £1,921.00