How to repay maintenance loan after just first term?

pensionpawn

In the summer my daughter successfully applied for the baseline maintenance loan to help fund her student accommodation. We no longer need the maintenance loan for this academic year (although may do for her second and third years) and wish to stop the payments before the next two terms and repay the loan currently accruing interest. We've crawled all over the SF website and unsurprisingly this option does not exist. For example it asks are you withdrawing from her course (she is not). We can't find any contact details specific to discussions regarding just the maintenance loan (we don't want to accidentally trigger an end to her course fees student loan). I (we) would be very grateful if you could point us in the correct direction through an email address, or failing that, phone number. Many thanks. 

sheramber

The Student Loans Company

Twitter: @SLC_Repayment
Facebook: @SLCRepayment

Telephone: 0300 100 0611 (England, Northern Ireland or Scotland)
Telephone: +44 (0)141 243 3660 (outside the UK)
Monday to Friday, 8am to 6pm

Telephone: 0300 100 0370 (Wales)
Monday to Friday, 8am to 6pm (not open on bank holidays)

silvercar

It should be possible to repay any part of the student loan whenever you want. 

Whether that is a good idea is a moot point, if she has a student loan
She will be making statutory repayments when she is earning irrespective of the size of the loan, so repaying this element now will be money wasted unless she will be a long term high earner. 84% of students don’t clear their loan and the final outstanding amount is written off. By repaying some now all you could be doing is funding that write off!

Spendless

I don't really understand why you'd want to do this. At the end of her course she'd owe around £27-28K for 3 years of tuition plus any maintenance for years 2 and 3, assuming the minimum for each year a further £8K. So she has £36K (plus interest)worth of debt plus whatever she borrowed this year, so let's round it up to £40K. This money may never be fully repaid, but for some reason you want to reduce it by a few thousand. Why? If you've found you've got surplus money this year to what was anticipated, let her have it now or put towards something useful once she graduates.  

pensionpawn

Thanks for the contributions. I did eventually find the correct contact details. Basically she returned home to study remotely after just a couple of weeks in halls and we were eventually released from her halls contract. Hence she wanted to repay asap £2k of maintenance loan that she didn't need (and would accrue interest) plus stop further payments in Jan and April. The tuition fees loan continues. She was studying in London and has been fortunate to extract herself out of £12k of hall fees!  

silvercar

So because she has a tuition fee loan she will repay 9% of her salary over the threshold when she starts work. Had she taken and kept the maintenance loan, she would not have anything additional to pay, so all she has done is reduced the government deficit. Should she eventually be in a position to completely clear her student loan (only 17% of students are forecast to do this) she will have saved on repayments in the distant future. For the remaining 83% who have their student loan written off after 30 years, it has saved her nothing.

pensionpawn

silvercar said:

So because she has a tuition fee loan she will repay 9% of her salary over the threshold when she starts work. Had she taken and kept the maintenance loan, she would not have anything additional to pay, so all she has done is reduced the government deficit. Should she eventually be in a position to completely clear her student loan (only 17% of students are forecast to do this) she will have saved on repayments in the distant future. For the remaining 83% who have their student loan written off after 30 years, it has saved her nothing.

I'm not sure why you said 'Had she taken and kept the maintenance loan, she would not have anything additional to pay'? She's studying for a degree / career that has a starting salary well over the repayment threshold and the more she borrows the longer, at the prevailing repayment rate, she will have to clear her debt. Hopefully when the world is back to normal(ish) and halls are again an option for year 2 she will again apply for a maintenance loan. Neither of us see any advantage to continue with a loan that you don't need and which attracts interest at 5.6%. 

silvercar

pensionpawn said:

silvercar said:

So because she has a tuition fee loan she will repay 9% of her salary over the threshold when she starts work. Had she taken and kept the maintenance loan, she would not have anything additional to pay, so all she has done is reduced the government deficit. Should she eventually be in a position to completely clear her student loan (only 17% of students are forecast to do this) she will have saved on repayments in the distant future. For the remaining 83% who have their student loan written off after 30 years, it has saved her nothing.

I'm not sure why you said 'Had she taken and kept the maintenance loan, she would not have anything additional to pay'? She's studying for a degree / career that has a starting salary well over the repayment threshold and the more she borrows the longer, at the prevailing repayment rate, she will have to clear her debt. Hopefully when the world is back to normal(ish) and halls are again an option for year 2 she will again apply for a maintenance loan. Neither of us see any advantage to continue with a loan that you don't need and which attracts interest at 5.6%. 

as her repayments will be the same as if she had kept the money, at least for 83% of students. Think of it as a graduate tax, she is going to make the same repayments irrespective of the size of the loan, until it is cleared. For 83% of students it is never cleared and the remaining amount owed after 30 years is written off. So unless she is in the top 17% of earners and consistently works throughout her career, she will have the excess un- repaid loan written off. What she will have done is reduced the total loan, in all probability she has reduced the amount that will be written off.
The monthly student loan repayments are based on income not loan size. 

pensionpawn

silvercar said:

pensionpawn said:

silvercar said:

So because she has a tuition fee loan she will repay 9% of her salary over the threshold when she starts work. Had she taken and kept the maintenance loan, she would not have anything additional to pay, so all she has done is reduced the government deficit. Should she eventually be in a position to completely clear her student loan (only 17% of students are forecast to do this) she will have saved on repayments in the distant future. For the remaining 83% who have their student loan written off after 30 years, it has saved her nothing.

I'm not sure why you said 'Had she taken and kept the maintenance loan, she would not have anything additional to pay'? She's studying for a degree / career that has a starting salary well over the repayment threshold and the more she borrows the longer, at the prevailing repayment rate, she will have to clear her debt. Hopefully when the world is back to normal(ish) and halls are again an option for year 2 she will again apply for a maintenance loan. Neither of us see any advantage to continue with a loan that you don't need and which attracts interest at 5.6%. 

as her repayments will be the same as if she had kept the money, at least for 83% of students. Think of it as a graduate tax, she is going to make the same repayments irrespective of the size of the loan, until it is cleared. For 83% of students it is never cleared and the remaining amount owed after 30 years is written off. So unless she is in the top 17% of earners and consistently works throughout her career, she will have the excess un- repaid loan written off. What she will have done is reduced the total loan, in all probability she has reduced the amount that will be written off.
The monthly student loan repayments are based on income not loan size. 

I understand that it's a graduate tax and that the majority of students will never earn enough to pay it off, which is wrong. Effectively the system ensures that tax payers massively subsidise degrees that lead to careers that add little to the exchequer and penalise those who study degrees that lead to higher wage / skill careers. My daughter's career has a starting salary of  ~£28k with a average salary in the mid £50k after around 5 years work experience. I have absolutely no doubt she will start repaying her loan with her first post graduate job and will clear the loan by herself before she retires. Hence with interests rates at RPI + 3% the lower her debt the better. Monthly loan repayments may not be based on loan size, however the duration of payments is.
If I wanted to take the system for a ride my wife (she has three A levels, including maths, and a HND) could start a degree course when she retires knowing she will never repay as she'll never earn again (certainly above the repayment threshold) and we'd also enjoy a reduction in our council tax for having a student at home for three years!

Ed-1

pensionpawn said:

silvercar said:

pensionpawn said:

silvercar said:

So because she has a tuition fee loan she will repay 9% of her salary over the threshold when she starts work. Had she taken and kept the maintenance loan, she would not have anything additional to pay, so all she has done is reduced the government deficit. Should she eventually be in a position to completely clear her student loan (only 17% of students are forecast to do this) she will have saved on repayments in the distant future. For the remaining 83% who have their student loan written off after 30 years, it has saved her nothing.

I'm not sure why you said 'Had she taken and kept the maintenance loan, she would not have anything additional to pay'? She's studying for a degree / career that has a starting salary well over the repayment threshold and the more she borrows the longer, at the prevailing repayment rate, she will have to clear her debt. Hopefully when the world is back to normal(ish) and halls are again an option for year 2 she will again apply for a maintenance loan. Neither of us see any advantage to continue with a loan that you don't need and which attracts interest at 5.6%. 

as her repayments will be the same as if she had kept the money, at least for 83% of students. Think of it as a graduate tax, she is going to make the same repayments irrespective of the size of the loan, until it is cleared. For 83% of students it is never cleared and the remaining amount owed after 30 years is written off. So unless she is in the top 17% of earners and consistently works throughout her career, she will have the excess un- repaid loan written off. What she will have done is reduced the total loan, in all probability she has reduced the amount that will be written off.
The monthly student loan repayments are based on income not loan size. 

I understand that it's a graduate tax and that the majority of students will never earn enough to pay it off, which is wrong. Effectively the system ensures that tax payers massively subsidise degrees that lead to careers that add little to the exchequer and penalise those who study degrees that lead to higher wage / skill careers. My daughter's career has a starting salary of  ~£28k with a average salary in the mid £50k after around 5 years work experience. I have absolutely no doubt she will start repaying her loan with her first post graduate job and will clear the loan by herself before she retires. Hence with interests rates at RPI + 3% the lower her debt the better. Monthly loan repayments may not be based on loan size, however the duration of payments is.
If I wanted to take the system for a ride my wife (she has three A levels, including maths, and a HND) could start a degree course when she retires knowing she will never repay as she'll never earn again (certainly above the repayment threshold) and we'd also enjoy a reduction in our council tax for having a student at home for three years!

But the duration of repayments can't exceed 30 years.

Also, the terms of the loans are variable. The current government have a manifesto pledge to "look at" the interest rates on student loans "with a view to reducing the burden of debt on students". So the interest rate may not remain so high in a couple of years (look out for the Government's response to the Augar Review which is coming very soon).