Student debt getting wiped?

DotCapel · 19 December 2018 at 7:27PM

So I'm in fourth year of medical school (and will be graduating after six years)

I'm planning on attacking my student debt early, to reduce the interest and therefore the amount I will pay back from my loans, and have even taken a reduced loan this year. However, if my student debt is wiped before I pay it off (Labour have suggested they would, but who's to say whether they will keep to that), what will happen to the extra instalments I've paid (on top of the 9% above £25k as per normal?). Would I have effectively thrown away that money, or would I get reimbursed it? Or rather, what is the more likely scenario and in what timeframe?

silvercar · 19 December 2018 at 8:26PM

Most likely scenario is your loan won't get wiped.

sheramber · 19 December 2018 at 9:21PM

Who knows what conditions would apply to any wiping of loans. That would be determined as and when it happened

agrinnall · 19 December 2018 at 9:34PM

I suspect in the unlikely event of what you suggest actually happening then you would have thrown away any extra money spent on repaying the loan. Althogh as a taxpayer funding loans that are never repaid I'd be happy if you did spend more.

[For the sake of transparency I did my first degree long before there were any fees and I got a maintenance grant, and my postgraduate fees many years later were paid for by the Scottish government, so I have benefitted big time from the taxpayer]

DotCapel · 20 December 2018 at 11:43AM

So realistically its worth paying it back early, if would have paid off more (due to interest over longer time) due to the 9% over 25k, as either it pays off for the student (due to the unlikeliness of debt being wiped early) or benefits the tax payer (which I personally think it should be the student's responsibility to do so anyway, but those benefits for the individual would be fairly negligent compared to those of the student)

agrinnall · 20 December 2018 at 3:01PM

DotCapel wrote: »

So realistically its worth paying it back early, if would have paid off more (due to interest over longer time) due to the 9% over 25k, as either it pays off for the student (due to the unlikeliness of debt being wiped early) or benefits the tax payer (which I personally think it should be the student's responsibility to do so anyway, but those benefits for the individual would be fairly negligent compared to those of the student)

I'm not sure what has led you to this conclusion, it certainly wasn't what I wrote. If it was me I wouldn't repay any extra, at least until it becomes clear whether Labour get in in 2022 (or earlier if an election can be forced before then) and they can actually balance the books enough to go ahead with wiping the loans.

DotCapel · 20 December 2018 at 3:56PM

Well its based off your reply of "unlikely event of what you suggest actually happening"
and from Silvercar "Most likely scenario is your loan won't get wiped."

Both suggesting that it is very unlikely that it will be wiped prematurely, and therefore would accumulate alot of interest (hence costing me more than if I had wiped it earlier myself).

I have already taken a reduced loan this year (of around £7k), to reduce the amount I pay back in interest

silvercar · 20 December 2018 at 8:13PM

That's just my opinion, it's your call.

What you would need is:

a labour government

enough spare cash in its budget

a policy decision that the most sensible-est use of that spare cash is to cancel student loans already taken out.

Only you can decide if that is likely to happen

Student debt getting wiped?

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