Employer won't make deduction

Its_all_Dinx

Hello.

I started a new job,  and I told my employer that I have a plan 1 student loan, they said they need SLC to instruct them.

On my online account I found a letter that said roughly....I am now due to make repayments for Plan 1 student loan please pass this onto my employer. They still refused this and said it needs to come direct from SLC.

On my online account it says HMRC will collect and pass it on.

SLC  said HMRC will instruct employer.

What should I do?

It's now coming up to my 4th payslip.

silvercar

Worst case is you make a payment after the end of the financial year through your tax return.

Its_all_Dinx

Nope I don't do a tax return anymore.

Its_all_Dinx

Hello again.

So my employer have started making student loan deduction again.

My question is should I pay my loan of early?

I am on plan 1 loan,  with a balance of approx £3,050,  around £65 a month is coming out of my wages to repay this. I worked out in the next 4 years I would have repaid in full.

But it will not wipe until I am 60.

I so have some space to save up this money and find an account that pays more than  3.2% which is what I am currently being charged on my student loan.

I am coming up to the young age of 40.

silvercar

When Plan 1 loans get written off

When your Plan 1 loan gets written off depends on when you were paid the first loan for your course.

If you were paid the first loan on or after 1 September 2006

The loans for your course will be written off 25 years after the April you were first due to repay.

If you were paid the first loan before 1 September 2006

The loans for your course will be written off when you’re 65.

silvercar

If the current interest rate is 3.2% and you can get more than that in a savings account and you have the money to put away, it makes more sense to open a savings account and not pay it off.

Especially as this would still give you access to the money in an emergency. 

Consider also whether you need the money for your pension.

saajan_12

Its_all_Dinx said:

Hello again.

So my employer have started making student loan deduction again.

My question is should I pay my loan of early?

I am on plan 1 loan,  with a balance of approx £3,050,  around £65 a month is coming out of my wages to repay this. I worked out in the next 4 years I would have repaid in full.

But it will not wipe until I am 60.

I so have some space to save up this money and find an account that pays more than  3.2% which is what I am currently being charged on my student loan.

I am coming up to the young age of 40.

Depending on your tax situation you likely can. If say you had an account paying 4.2% net of taxes, then the extra 1% on the decreasing balance would benefit you around £60 over the 4 years. Basically no harm, but up to you how much effort you put into crafting that. 

Its_all_Dinx

Thanks @silvercar, very helpful.

So my loan will be written off when I turn 65.

If I paid it off in full I would of course budget this in as an expense. 

I think I would let it be paid of via my salary and use that money for other things.

Its_all_Dinx

saajan_12 said:

Its_all_Dinx said:

Hello again.

So my employer have started making student loan deduction again.

My question is should I pay my loan of early?

I am on plan 1 loan,  with a balance of approx £3,050,  around £65 a month is coming out of my wages to repay this. I worked out in the next 4 years I would have repaid in full.

But it will not wipe until I am 60.

I so have some space to save up this money and find an account that pays more than  3.2% which is what I am currently being charged on my student loan.

I am coming up to the young age of 40.

Depending on your tax situation you likely can. If say you had an account paying 4.2% net of taxes, then the extra 1% on the decreasing balance would benefit you around £60 over the 4 years. Basically no harm, but up to you how much effort you put into crafting that. 

Something to think about now.  Also the thoughts from the budget. do I plough this into my pension and let it grow.  I would very quickly go over the 2k limit set in a few years time.  I would love to read the rules on this in more detail.