Tax - Wheres the incentive to earn more

smeemi said:
Mine is over £40k and going up by £5k per year, less £4k of contributions. Pretty tough..

Yes I agree can always pay it off, but there are better options like getting on the housing ladder which I have done. I could go into another rant on my buy to let property. Make zilch on that.

My rant for the day..
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Humble brag is humble. Let me counter your humble brag with boo hoo, let me know when you have to worry about additional rate.
 
Pudney said:
If it makes you feel better, I largely disagree with what you've said, however, the rate of interest charged I agree is a bit stupid. You're effectively being charged a commercial rate of interest on the loan with the "benefit" of no fixed repayment schedule. Being charged RPI is fair, being charged slightly more is ok, being charged the same amount a high street lender would charge is a bit off imo.
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That is my main point, the interest rate, if it was RPI I'd be quarter/ half way in paying it off by now.
 
Similar circumstances to yourself, when I hit the 40% tax bracket I just upped my salary sacrifice pension contributions. More money in my pension, student loan payments dropped and I still take home basically the same give or take a bit. If I get a bonus then a lump sum is normally taken but that is what it is, without my student loan I don't go to uni and probably don't hit this level of earnings so....meh?

I honestly don't even look at the student loan amount, if I pay it off or not it doesn't really matter. I certainly don't think I will ever make my own contributions on top to lower the amount, a lot more I would rather do with my money.
 
smeemi said:
Lol I probably haven't come across well on this thread. I don't mean to come across as entitled but life is pretty tough for graduates compared to the older generation. No DB schemes, no free education, could go on.
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I would say you fall out of the typical envelope of graduates. Put yourself in some of their shoes earning less than half of your salary and seeing their student loan balance increase each year because their contributions aren't even clearing the interest.

It's compounded anyway, so it might not look like you're clearing much at the start, but look at it after 10 years and you'll probably be clearing at least half of it.

BTW i don't disagree that the interest rates suck - i for one am glad my loan was on plan 1.
 
smeemi said:
That is my main point, the interest rate, if it was RPI I'd be quarter/ half way in paying it off by now.
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Yes, your OP is terribly written (that's me being harsh but fair rather than insulting) but it was evident the interest rate looked to be your main complaint.
 
Semple said:
I would say you fall out of the typical envelope of graduates. Put yourself in some of their shoes earning less than half of your salary and seeing their student loan balance increase each year because their contributions aren't even clearing the interest.

It's compounded anyway, so it might not look like you're clearing much at the start, but look at it after 10 years and you'll probably be clearing at least half of it.

BTW i don't disagree that the interest rates suck - i for one am glad my loan was on plan 1.
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My contributions are not clearing the interest? And those on lower salaries pay less interest. The interest rate is stepped based on salary, which is another joke.
 
If you're happy in job i can't see the issue. Maybe if you live in a super expensive area, London f.e, things might be a bit tight?

You should direct your frustration at the bums, and big business. Lower earners can't be expected to pay more as they have not much to start with. Without the lower earners the world wouldn't move, talking nurses, bin men, etc.

Part of the reason i never went to uni was the debt, the other part was not knowing what i wanted to do, so yeah needless debt for me.

Though i know you know this all already and you're just frustrated for the same reason we all are.
 
smeemi said:
Mine is over £40k and going up by £5k per year, less £4k of contributions. Pretty tough..
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Btw the maths on this doesn't make a lot of sense. £5k interest on a £40k loan is about twice what I'd expect.

smeemi said:
Yes this happened to my brother he started earning less when he got a payrise. Moved to HK and now earning £££££.
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This is unlikely unless your brother was in a very unique set of circumstances (e.g. pension contributions exceeded annual/lifetime allowance).
 
Pudney said:
Btw the maths on this doesn't make a lot of sense. £5k interest on a £40k loan is about twice what I'd expect.



This is unlikely unless your brother was in a very unique set of circumstances (e.g. pension contributions exceeded annual/lifetime allowance).
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I'll check my balance but was increasing compared to contributions.

Was the case.
 
smeemi said:
Where is the incentive to earn more?
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The incentive is the extra money in your bank account.

You knew the loan situation before you started your degree, so you knew what you were getting in to. With the salary you're earning it will be a piece of **** to pay off that loan in a few years, if you want to do something about rather than just moan.

I've lived in countries with <10% tax take, and those with >50%. I'd much rather live in the countries with a high tax take....but things like healthcare, infrastructure, pensions are things that don't seem that important when you're young.

For the record, I think rewarding people for educating themselves and providing skills to the workplace, by loading them down in debt, is absolutely ludicrous....but that's the retarded way this country works.
 
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cheesyboy said:
You lose child benefit incrementally between 50 and 60k.

Annually, two kids gives you £1828 benefit. Earn an extra £1k and you lose 10% of your benefit, so £182.80. That's 18.3% extra tax on your £1k pay rise.
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Gotcha. It is a strange way of looking at it but I guess it makes sense. I have a similar situation where I claim £2k in tax free childcare but I have to keep my adjusted net income below a certain level otherwise I have to pay back £2k which would actually cost me something like £6k in salary.
 
dLockers said:
Gotcha. It is a strange way of looking at it but I guess it makes sense. I have a similar situation where I claim £2k in tax free childcare but I have to keep my adjusted net income below a certain level otherwise I have to pay back £2k which would actually cost me something like £6k in salary.
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It gets taken back through your tax code, or through a tax return, rather than by reducing the benefit payment, so it's sensible to think of it as a tax
 
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