Repaying Student Loans 2009/10 guide discussion

Brian_Cox wrote: »

This is STILL an issue no one talks about. And the post above is wrong.
The stated repayment threshold for student loans is completely misleading. If you are a contract worker or self employed and your income goes up and down during the year you can earn in total way below the threshold but still make substantial payments because the yearly total is averaged per month across the year. If, as many young people do, they earn above the threshold for one month then then very little for the rest of the year they will still trigger the repayment of the loan. The student loan company assumes that if you earn, say, £2,500 for one month and then £1000 a month or less for the rest of the year you will still make full loan repayments for the year as if you earned £2000+ every month.
Given that lots of young people have precarious and intermittent income after university this really should be shouted from the roof-tops.
Martin - please make this clear in you public statements about the student loan as it makes a huge difference for some people.
Brian

accountant12 wrote: »

Hi,

New here, just need advice regarding paying off the loan. I understand this may have been posted previously though just wanted clarity on my own situation.

I have a plan 1 and 2 so 9% is being deducted. Student loan outstanding is around £16,000 and my salary is £38,000. I have no other debt.

I have the money to pay the loans off, though unsure if this is going to save me any money.

My take on this is:

1) If I leave paying it off, I will end up paying through around £21,000 for the next 12 years through paye. This is the equivalent of around £14,000 of cash after tax/ni.
So with £16k in the bank, less £14k (payments over the years) leaves me with £2k

2) If i pay today, the £16k will be deducted leaving £0 in my bank, however over the years I will receive the extra cash of £14,000 due to repayment being stopped leaving me with £14k in the bank.

Clearly the second option leaves me better off as £16k paid now, will result in no cash for myself however extra net pay compared to before when there wasn't.

I just need to know if I am seeing this clearly. I've read the mse article on paying off however that is for low earners who will never pay their debt off so I understand for them there is no point. The way things are going, it will be before 30 years that I will pay the loan off through paye. I need to know which is going to be the cheaper or cost savings option. Pay off now or leave it to pay itself off.

Any advice or perspectives will be much appreciated.

cassie75 wrote: »

We have a similar question but more fundamental than actual numbers. My Daughter has plan 1 from 3 years at uni from 2008 to 2011 and plan 2 from 1 year at uni in 2018. The plan 2 has much bigger interest and is already almost as much as the plan 1 loan.



As both kick in a different points in the salary, and for different amounts, we are very confused as to how much she would actually be paying off. We can't find any info on it.


She doesn't have a job yet but when she does will expect it to be just over £24k in the first year rising to £35k over the next few years.


Can anyone point us to the relevant information please?