Student Loan Repayments

Dracata · 1 Sep 2010 at 16:25

I left uni in 2006 and they didn't start taking a penny (nor did I update them about it..) until a few months ago. £220 suddenly disappearing from your monthly wage is annoying, then again it is a loan after all..

Basher · 1 Sep 2010 at 16:27

Pygmyshrew said:
I went for 2 years without paying back a penny, when I finally decided to control HMRC they were fine about it, didnt have to pay any penalty or lump sum they just started docking me £35ish a month. Kinda wish I'd left it longer now

But you'd of lost out due to paying more interest?

RobMunfy · 1 Sep 2010 at 18:08

Sorry to steal your thread a bit OP, but it's a similar topic:

I currently have enough money to pay off my student loan in one lump sum, but I believe that I am better leaving this money in a high interest account and gradually paying off the loan via deductions from my wages - is this correct?

Nanoman · 1 Sep 2010 at 18:38

RobMunfy said:
Sorry to steal your thread a bit OP, but it's a similar topic:

I currently have enough money to pay off my student loan in one lump sum, but I believe that I am better leaving this money in a high interest account and gradually paying off the loan via deductions from my wages - is this correct?

Yea I'd say so, mainly due to the probability of requiring the money later on in life and you will not be able to borrow from any bank with an interest rate and payback period better than what the SLC offers. Also interest made from your savings will cover student loan interest.

sniffy · 1 Sep 2010 at 18:42

Garee said:
One thing I love about Scotland: The government pays your university fees

Thanks for rubbing our noses in it!

Although I understand you need to take out accommodation loans at the high street rates?

dustofnations · 1 Sep 2010 at 19:48

Basher said:
But you'd of lost out due to paying more interest?

Only goes up with inflation, so it is like-for-like

PrOdiGy1 · 1 Sep 2010 at 20:51

Useful page over on Money Saving Expert with some up to date info about student loan repayments.

Glaucus · 1 Sep 2010 at 20:56

dustofnations said:
Only goes up with inflation, so it is like-for-like

Except it's not.
Also most people aren't getting inflation sized pay rises.

Jimmeh · 1 Sep 2010 at 21:43

Garee said:
One thing I love about Scotland: The government pays your university fees

Almost. The British tax payer does. Included in the British tax payers are English residents who are paying back a student loan having studied at a University in England. Go figure.

mangobreeder · 1 Sep 2010 at 21:46

ive moved over to direct debit, just 8 more months to go before i get my stop notice.

then ill be 260 a month better off, TAX FREE yippie!!!

Basher · 1 Sep 2010 at 22:08

dustofnations said:
Only goes up with inflation, so it is like-for-like

I'm not entirely sure it's that simple.

sigma · 1 Sep 2010 at 22:10

Won't you end up paying more interest the longer they leave it?

dustofnations · 1 Sep 2010 at 22:33

AcidHell2 said:
Except it's not.
Also most people aren't getting inflation sized pay rises.

"There's no 'real' interest cost because the most you'll pay is the rate of inflation - the rate which prices are rising."

It is actually the lesser of the March RPI or BoE rate + 1%. At the moment it is 1.5%.

And true on the second point, but that doesn't mean the debt is growing, you're just being paid less. Perhaps you meant something different, could you substantiate what you meant with your first statement?

some decent sources: http://www.moneysavingexpert.com/loans/student-loans-repay
http://www.direct.gov.uk/en/Educati...StudentLoansCoursesStartingFrom1998/index.htm

sigma said:
Won't you end up paying more interest the longer they leave it?

The interest rate is pegged to the base rate or March RPI, so it will vary depending on those factors, not the length of time you leave it

Basher said:
I'm not entirely sure it's that simple.

If the situation changes (policy change or large differentials appearing in salary versus wage increases), then it may be worth paying it off faster. Also remember you can put the extra money you would have paid back into high interest investments.

edit: I'm talking about post 1998 loans incidentally

sigma · 2 Sep 2010 at 00:00

Doesn't the interest start accumulating the day you get your first installment?

So if they don't start payments for 2 years, you'll have 2 years worth of extra interest.

Or do I have that wrong?

dustofnations · 2 Sep 2010 at 00:04

sigma said:
Won't you end up paying more interest the longer they leave it?

sigma said:
Doesn't the interest start accumulating the day you get your first installment?

So if they don't start payments for 2 years, you'll have 2 years worth of extra interest.

Or do I have that wrong?

Yes there is interest (check out my previous post), but at the moment the metrics it is based on means it does not become more "expensive" as time passes. At the moment you can easily find bank accounts that will give you more than 1.5% interest.

sigma · 2 Sep 2010 at 00:05

I see, thanks.

The_Abyss · 2 Sep 2010 at 00:09

Salary sacrifice, for pension contributions or other benefits, is a good useful method for graduates to lower their income as much as possible to lower these repayments.

Student loans have been going for a while - I went to uni in the early 90s and took out a couple, albeit for far smaller amounts than you can get today.

Phoenixdancer · 2 Sep 2010 at 00:15

i was told that the student lone is a intrest free loan from the goverment???

dustofnations · 2 Sep 2010 at 00:18

Phoenixdancer said:
i was told that the student lone is a intrest free loan from the goverment???

Well, they were misinformed sadly. It was zero interest at one point due to the lack of inflation, but that was just the economic situation, not the loan being interest free.

Phoenixdancer · 2 Sep 2010 at 12:00

so whats the intrest on a 3 year course when im getting 3.5k tuition and 3.5k in maintaince

:0