Student Loan - never debt free?

hayley_jayne · 14 June 2008 at 11:48AM

Northern_girl I am a bit confused about what the repercussions can be? I haven't lied about anything, moved address or avoided paying. I would have thought all they could do is start me making payments again. I do know you'd be in trouble if you were working abroad and didn't declare your overseas payments.

In my last job (with the NHS) they just came out each month and I was never asked by my employers about a student loan so always thought it was directly linked to the tax system.

hayley_jayne · 14 June 2008 at 11:55AM

Right thought I would check this out and found the following:
http://www.hmrc.gov.uk/csl/index.htm

It is clear that it is my employers responsibility to collect student loan payments from me not mine. I also checked the P45 used on changing job and it is clearly marked with a Y against continue making student loan repayments. So I am comfortable that there can be no repurcussions on me other than starting to make payments again.

kittykitten · 14 June 2008 at 11:58AM

I've just made my first student loan payment last month. I owe about 4.5k, they took £35 from last month's wages. I have savings that I could use to pay it off if I wanted to, and have been deliberating this, but I can make more by putting this money in a good savings account than I'm paying in interest on the student loan, so it makes no economic sense to pay it back early.

Yet I know quite a few people who make extra payments to try and clear it, and I can understand why. While it's never going to result in having the bailiffs knocking on your door, there's still something slightly uncomfortable about having this debt that I could afford to pay off but don't. But all financial journalists, advisers, etc (obviously the most importnat being Martin!) say don't pay more than you have to, so I'm trusting their advice.

notanothergreyhair · 14 June 2008 at 12:02PM

jak wrote: »

I don't even consider it a debt! It isn't on my payback agenda, nor do I think it will ever be...

I agree entirely.

LilacPixie · 14 June 2008 at 12:22PM

Idiophreak wrote: »

On the subject, I find the amount of people who don't consider this real debt a little bit weird - I mean it's still money you've borrowed. Would people be the same way if they had one of these 3% for life deals on £10 - £20k of CC debt - would they just pay the minimum and forget about it as "not real debt". Not having a go, I just think it's an interesting way of looking at it.

I think its because it is deducted automatically at source just like tax and NI rather than a physical bill. Add that to the low interest rates it just doesn't really pop onto the radar for me anyway.

You will find alot of people are the same way with their mortgage. I know my DFD is when my loans/cc etc are clear but not my mortgage. I guess i personally see my mortgage as just something that needs paid like insurances, utilities and council tax and not as a 'debt' even tho it is.

redrabbit29 · 14 June 2008 at 12:38PM

I don't consider my £11K student loan an issue. In fact I rarely even think about it, as it's always taken out of my pay before I get the net amount anyway.

If I had a mortgage, I wouldn't count it as a debt either. Debts to me are "bad" debts such as credit cards, bank loans, etc...

For the first time since leaving Uni (got a HND in the end - great!), I'm on a decent wage, so I'm paying back around £140 a month. It varies depending on overtime.

IWantToBeFree_2 · 14 June 2008 at 12:40PM

Both me and my OH have student loans, however as we only lasted less than a term a Uni, they are quite small.

OH is above the threshold and used to pay for his every month until he moved jobs, he has never paid in his new job where he has been for over a year now... He's not going knocking on Payrolls door to tell them to start deducting though!

I've only ever made a few payments to mine, I do earn above the threshold, but because I have a car on salary sacrifice it brings me below it, however, won't for much longer. Only time I've paid is when I have had bonus's or they've screwed up and not took a car payment.

Don't tend to class them as 'debt'. If they don't ever get paid off, they don't ever get paid off, although I suspect mine will do because once I qualify I will earn significantly above the threshold.

dudleyboy · 14 June 2008 at 12:41PM

hayley_jayne wrote: »

Right thought I would check this out and found the following:
http://www.hmrc.gov.uk/csl/index.htm

It is clear that it is my employers responsibility to collect student loan payments from me not mine. I also checked the P45 used on changing job and it is clearly marked with a Y against continue making student loan repayments. So I am comfortable that there can be no repurcussions on me other than starting to make payments again.

I think the "repercussions" to which Northern_girl refers is basically the SLC one day realising that you've not been repaying what you should have, when you should have, and rather than them merely saying "well, if you don't mind, can you start making the repayments again at the start of next month?", they could be saying "You owe us £ X,000 in missed payments. Failure to repay this debt by DD/MM/20YY will result in...[lots of legal jargon about court dates, CCJs, that sort of stuff]"

I strongly believe that we're going to be in a recession, or even a depression, over the next decade (or more!), with high costs of living, high inflation, high interest rates and high unemployment. Given the choice of repaying £100+ PCM now when you can afford to it, compared with £1,000+ in one go when you can't... well, I know which I'd go with.

Unfortunately, I too am still repaying my undergraduate student loan and have been for the last decade (I'm also paying off a postgraduate loan too) and while money can sometimes be a bit tight I'm happy in the knowledge that my payments are keeping the wolf from the door.

Student loans are cheap (well, undergrad ones are), should be paid off slowly and be the lowest priority of all debts, but not repaying them when you know you should be, intending to point the finger at a (previous?) employer ten years down the line and saying "it's their fault!" when you get caught is a bit of a risk IMHO.

They won't care. There's no fine or prison sentence, as far as I'm aware, that they can bestow on the employer for failing to pick up on a ticked box. They'll just go straight to the person who owes them the debt and ask for it (or take it) back. With a mortgage to pay, and hungry children to feed, clothe and shelter, that might be a quite a problem.

I just don't think it's worth the risk.

greyster · 14 June 2008 at 12:41PM

hayley_jayne wrote: »

I haven't paid any since I started my new job 3 years ago and have no idea why. I work for a government agency and pay the right tax. I don't worry about it and never will. If they start charging me again in the future that will be fine but I'm in no rush to pay it back.

They are charging you... but you are not repaying. Not that that is a problem, but just letting you know you are being charged.

Oldernotwiser · 14 June 2008 at 5:26PM

undersecter wrote: »

It may sound stupid but i know loads of people that rty to pay of there studnet loan staright away

Even £40 a month is a lot of money if you earn 20k.

Well my cousin who is a neawly qulified teacher is paying back £75 a month and he earns just over 20k

If you earn £20,000, £40 is not a lot of money, about 3% of nett income. Your cousin is likely to be earning around £24,500 if he's paying back £75; again a very small percentage of his take home pay.

I'm afraid that trying to pay off large amounts extra, soon after you've graduated, is just plain daft.

Student Loan - never debt free?

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