Query regarding payments on pre-1998 student loans

IanRushFan

Hi all - I have a query regarding a couple of pre-1998 student loans I took out whilst at University and hope that someone has been through this process before.

Two of my three student loans were made between pre-1998. My first was 29/11/1996, the second was 13/11/1997. 

If I am reading the Moneysaving Expert help pages correctly, these two loans will be wiped 25 years after the first payment of my final loan with them. According to Erudio (the company that purchased these loans off the government) my final loan date was 05/01/1999.

Unfortunately I have never earnt enough money to initiate the payment of these loans, so have successfully been deferring each year. My understanding of the T&C's is that as long as my salary doesn't increase beyond the salary threshold before 05/01/2024, then these first two loans will automatically be wiped - is that correct? The third (and final) loan is post-1998 so I gather this would still be active as it is on different T&Cs.

Annoyingly, I have applied for a job that will provide an annual salary above the payment threshold. The interview is in early November, so if successful (big 'if') it's likely that I would be eligible to start making repayments on these two loans before I reach the 25-year anniversary.

My main question is - would I then be liable to pay back the entirety of the 2 full loan amounts (approx £7k combined) or just be expected to make payments until the loans reach this 25-year anniversary, where they would then be automatically wiped?

Is anyone able to advise please? If you need any extra info, please let me know - thanks!

MSE_ForumTeam5

We've moved this to our board for student finance questions

silvercar

Once your salary exceeds the threshold you make payments of 9% of income above the threshold. Imagine the threshold was £25,000. If you earned £31,000 that would be £500 a month over the threshold and you would pay £45 a month towards your loan. There is no back dating of anything and the write off date remains unchanged.

Your threshold for deferment is £38,255.

IanRushFan

silvercar said:

Once your salary exceeds the threshold you make payments of 9% of income above the threshold. Imagine the threshold was £25,000. If you earned £31,000 that would be £500 a month over the threshold and you would pay £45 a month towards your loan. There is no back dating of anything and the write off date remains unchanged.

Your threshold for deferment is £38,255.

Thanks for the info. So if I manage to get this new job (again, its a big if) with a start date of say 1st December, I would only be liable to make payments on the 2 pre-98 loans until they reach their 25-year anniversary? I wouldn't be expected to pay off the full £7k?

silvercar

IanRushFan said:

silvercar said:

Once your salary exceeds the threshold you make payments of 9% of income above the threshold. Imagine the threshold was £25,000. If you earned £31,000 that would be £500 a month over the threshold and you would pay £45 a month towards your loan. There is no back dating of anything and the write off date remains unchanged.

Your threshold for deferment is £38,255.

Thanks for the info. So if I manage to get this new job (again, its a big if) with a start date of say 1st December, I would only be liable to make payments on the 2 pre-98 loans until they reach their 25-year anniversary? I wouldn't be expected to pay off the full £7k?

Correct. Also, if your total earnings for the financial year are under the threshold I would expect you could get the payments refunded, at least you could with later loans, I’m guessing the early loans are the same.

IanRushFan

silvercar said:

IanRushFan said:

silvercar said:

Once your salary exceeds the threshold you make payments of 9% of income above the threshold. Imagine the threshold was £25,000. If you earned £31,000 that would be £500 a month over the threshold and you would pay £45 a month towards your loan. There is no back dating of anything and the write off date remains unchanged.

Your threshold for deferment is £38,255.

Thanks for the info. So if I manage to get this new job (again, its a big if) with a start date of say 1st December, I would only be liable to make payments on the 2 pre-98 loans until they reach their 25-year anniversary? I wouldn't be expected to pay off the full £7k?

Correct. Also, if your total earnings for the financial year are under the threshold I would expect you could get the payments refunded, at least you could with later loans, I’m guessing the early loans are the same.

Great news! Thanks so much to replying and providing me with the info!

building_with_lego

silvercar said:

Once your salary exceeds the threshold you make payments of 9% of income above the threshold. Imagine the threshold was £25,000. If you earned £31,000 that would be £500 a month over the threshold and you would pay £45 a month towards your loan. There is no back dating of anything and the write off date remains unchanged.

Your threshold for deferment is £38,255.

@IanRushFan
Pre-98 loans are the mortgage-style ones. Unless you defer, you pay your total amount owing divided into 60 instalments. silvercar is confusing the repayment scheme with more recent loans, plan 2 I believe. There is no PAYE with these loans- I have four, and I also earn below the threshold. 

All the loans are wiped 25 years from the date of the first instalment of the final loan. In my case my final pre-98 loan was taken out in Autumn 2000, because my course started in 1997. Linky (I'm assuming you were aged under 40 in your final year.) 

Your final loan was taken out in Jan 1999 so they would all be wiped in Jan 2024 if that was the date of your first payment for that year. (Your loans are all pre-98 presuming you took them out for the same course.) 

If you earn over the threshold, you'd make payments until Jan 24 and they then get wiped.

silvercar

building_with_lego said:

silvercar said:

Once your salary exceeds the threshold you make payments of 9% of income above the threshold. Imagine the threshold was £25,000. If you earned £31,000 that would be £500 a month over the threshold and you would pay £45 a month towards your loan. There is no back dating of anything and the write off date remains unchanged.

Your threshold for deferment is £38,255.

@IanRushFan
Pre-98 loans are the mortgage-style ones. Unless you defer, you pay your total amount owing divided into 60 instalments. silvercar is confusing the repayment scheme with more recent loans, plan 2 I believe. There is no PAYE with these loans- I have four, and I also earn below the threshold. 

All the loans are wiped 25 years from the date of the first instalment of the final loan. In my case my final pre-98 loan was taken out in Autumn 2000, because my course started in 1997. Linky (I'm assuming you were aged under 40 in your final year.) 

Your final loan was taken out in Jan 1999 so they would all be wiped in Jan 2024 if that was the date of your first payment for that year. (Your loans are all pre-98 presuming you took them out for the same course.) 

If you earn over the threshold, you'd make payments until Jan 24 and they then get wiped.

Accepting I may have the payments wrong, if you deferred for every year until a few months before the 25 year line, would you only owe those few months payments, so the principle applies that there is no back payments due of the payments that would have been made but were deferred.