Student Loan Debt

mariemcg · 17 January 2011 at 2:55PM

I was feeling so proud of myself. After years of paying credit cards (0% of course!) by direct debit, and making extra payments by selling stuff on ebay, teaching evening classes etc, I am about to make the final payment at the end of the month. I have been deferring my student loans for about 10 yrs as I still do not earn enough (The Threshold for my "old style loans" is £22K/yr) but I had been planning to use the £126/month that I had paying towards my credit card to make "voluntary" repayments to my student loans.

Anyway, I was sooo chuffed about paying off the credit card that I called the student loans company for my balance. The balance is:

(Drum roll)

£8,850.67 :eek:

If I had been eligible to pay back my student loans the recommended payment is about £126 a month anyway with 70 months to pay. Now I now feel totally depressed! Will this never end????

clarabell13 · 17 January 2011 at 3:14PM

Sorry I'm not able to offer advice with the loan as I'm not up to speed yet with how student loans work (I clicked on the thread because DD1 is starting uni this year and am trying to gather all advice possible!) but I did want to say...really well done on paying off all the credit cards! That's a great thing to have worked towards and cleared off so at least give yourself a pat on the back for that!

Then try and apply that same sense to tackling the student loan. Hope someone will come along with more specific advice for you.

mariemcg · 17 January 2011 at 3:32PM

Thanks Clarabell. At the moment your moral support is just what I need! I'm just starting to calm down now. I will still be elibile to defer my loans again this year as I still do not earn enough. I am due a small payrise at the end of the financial year (2 or 3 %) which will make a difference when it comes to making the "voluntary" payments, but will also mean that I will be eligble to pay back my student loans come April 2012.........

Regarding your daughter, I would urge her to work as much as she can during the holidays and as little as possible during term time. I got carried away, worked too much (an average of 32/hr a week during term time) started hanging about with the full time staff who had full time wages and consequently spend too much money on fancy clothes. So not only did I work too much and not get the degree I should have done, but I still spent my wages, as well as the student loans and am still paying the price now I am in my thirties. I know that kids never listen to their parents but I am hoping that I am still "young" enough (ha ha) that if you show her this, she might listen to me.......

missworks2jobs · 17 January 2011 at 4:59PM

Hi, I would try not to worry about it. More and more people are going to have student loans as fees continue to go up, you only pay it back "IF" you earn enough and the interest on it is teeny (in comparison to a lot of other things). You only pay a % of your wages I think its 2% or something like that. Lots of lenders dont take it into account when getting a mortgage/loan etc, just ask how much you pay per month towards it.

I graduated in 2001, I only got a loan for the first 2 years (I worked my !!! off doing 3 part time jobs in 3rd year so as not to have to get another years worth). I have to pay it back as soon as my wages exceed £11,000. Basically my loan was originally just under £4k, and 10 years later its £5k. I've been paying it off since day 1...(I started working full time for £11,400 pa the day after my last exam). But it hardly reduces the balance.

I'm currently paying £24-30 a month off it - which barely covers the interest! I dont think its never going to be paid off. But so long as they dont (and I think i'm right in saying they cant) demand me to pay the whole lot in one go. I'm not worried. The payments are manageable. I'd rather use any extra money I have at the end of the month as a deposit for our own place (we're living with the in-laws) or to pay off the last of the credit cards (higher interest rate).

The MSE rule is to pay off the highest interest first and the lowest last....so your student loan should be the last thing you pay off. You've done the right thing in getting rid of your other debts first.

At the rate i'm going I will never pay mine off.:( Its always at the back of my mind but most of my other friends still have theirs - I only know of 1 person who's close to paying his off and he had an inheritance and is earning a fortune as a teacher. Some of my friends born a couple of months before me (and in the academic year above me) missed out on fees & loans and got a grant for the full 3 years of study (2 of which were the same time I was at uni and having to pay) and didn't have to pay any fees.

Labour got into power was it April/May 1998, introduced the loans & fees straight away and I went to Uni that September. Everyone who started the year before didn't have to pay. If only i'd been an august baby!

Its annoying but thats the cost of an education unfortunately.

mariemcg · 20 January 2011 at 1:10PM

Now that I am going to have paid off my credit card (at last!) I don't like the idea of having debt hanging over me - and I really would like to change my car, move to a bigger house house, start a family oh and maybe open a pension :eek: - and I feel that I can't do any of these with over £8 1/2k of debt hanging over me.

Oh yes and my husband has no idea how much my student loans are.

Sharon87 · 20 January 2011 at 1:32PM

Don't worry too much about student loan, if you've got a mortgage that you can overpay I'd recommend that (especially if moving to bigger house). It'll save you money in the long run.

Don't worry if you don't pay student loan off by the time you retire you don't have to pay it back!

I've only paid £72 off my student loan, graduated 2.5 years ago. I'll only pay it if I had to or had loads of savings and no debts.

mrsb83_2 · 20 January 2011 at 1:41PM

Student loan debt is not the same as other personal debt.

You don't have to continue to pay it beyond retirement, it doesn't form part of your estate liabilities when you die, and it is irrelevant for the vast majority of credit applications.

Other than 'peace of mind' (questionable IMO)there is absolutely no reason to pay it off early. I only ever intend to pay the minimum through my employer, and don't consider it a real debt. I think of the repayments as a small 'graduate tax' I pay out of my salary.

mariemcg · 20 January 2011 at 1:43PM

Thanks Sharon & Mrs B. You really think that I should save the money instead? (Am I being stupid for not thinking about this?) :undecided

mirko · 20 January 2011 at 1:54PM

mariemcg wrote: »

Thanks Sharon. You really think that I should save the money instead? (Am I being stupid for not thinking about this?) :undecided

Do not pay the student loan back unless you have to. You'd be better off putting £100 away in a savings account rather than paying off your loan.

If (God forbid) you lost your income stream in a year's time you could be in one of two situations:
a) Have £1200 you've saved in the bank.
b) Have £1200 less debt that no one is going to force you to pay back as you're not working!

mariemcg · 20 January 2011 at 2:03PM

mirko wrote: »

Do not pay the student loan back unless you have to. You'd be better off putting £100 away in a savings account rather than paying off your loan.

If (God forbid) you lost your income stream in a year's time you could be in one of two situations:
a) Have £1200 you've saved in the bank.
b) Have £1200 less debt that no one is going to force you to pay back as you're not working!

Fair point. I do still feel a bit uneasy about not dealing with it and I don't want to get complacent as if I had no money worries. My inlaws don't "do" debt and would be horrified if they ever found out. Do you think I should just save as much as I can as quickly as I can so that I can pay it off if I have to which could also double up as a nest egg/emergency fund?

Sharon87 · 20 January 2011 at 2:18PM

Yeah I would save up, then you have access to the money if you need it. You could get a savings account that pays more interest to you than you pay to student loan company. So you could earn more money on it.

Student Loan Debt

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