MSE Student Loan Calculator - assumptions?

mdale

Hi,
I've been using the calculator to assess my son's situation.
I find that as I increase the assumed salary growth % I reach a point where the "when will the loan be cleared" box reduces below the 30 year limit (Plan 2).
I guess this means the calculator assumes some level of increased payment above the standard 9% is being made to reduce the outstanding loan balance - or am I missing something?
Can anyone shed any light on the basis the Calculator may be using to come up with its figures for clearing the loan...?
Thanks

Woodstok2000

If you increase the salary growth, his repayments will increase even at 9% constant repayments, thats why the repayment term decreases.

_Dolly_Rocker_

It's 9% of the annual salary over a certain amount so if the salary increases the repayment increases. 

mdale

Hi,
Thanks for the responses.
Yes, I agree that the payments will increase over time, being 9% of the (increasing) salary above the threshold. But my question is on what basis has the MSE Loan Calculator reduced the time to clear the loan (to 23 year in my particular case) as I thought that the 9% payments would simply continue for 30 years regardless of the loan amount and the cumulative repayment amount. 
Thanks

QrizB

mdale said:

But my question is on what basis has the MSE Loan Calculator reduced the time to clear the loan (to 23 year in my particular case) 

Because that's how it works.

If your 9% is more than the interest charges, the excess reducesnthe principal and you begin to pay down the loan.

It's how loans get paid off.

mdale said:

... as I thought that the 9% payments would simply continue for 30 years regardless of the loan amount and the cumulative repayment amount.

You are mistaken. If you pay enough, you can clear your loan before it is written off.

mdale

QrizB said:

mdale said:

But my question is on what basis has the MSE Loan Calculator reduced the time to clear the loan (to 23 year in my particular case) 

Because that's how it works.

If your 9% is more than the interest charges, the excess reducesnthe principal and you begin to pay down the loan.

It's how loans get paid off.

mdale said:

... as I thought that the 9% payments would simply continue for 30 years regardless of the loan amount and the cumulative repayment amount.

You are mistaken. If you pay enough, you can clear your loan before it is written off.

Thanks for taking the trouble to enlighten me.
I'm with it now.
Cheers