[Closed] Student loans - have I got this right?

Er yes, but you aren't under any obligation to actually clear it. So it doens't really matter what your total balance is..?

Except for the fact it's a massive PITA giving away that much money each month for the rest of your life!

I'm not sure that the interest rate is 3% - mine was at 1.5% I think when I finished paying it off last year. Mine was also 9% above 15k, not 21k. I believe that there is a section on the moneysavingexpert website that gives all of the necessary info.

Changed though hasn't it with £9k tuition fees and what not.

So if you are in one of those middly type income jobs - nursing, teaching, physio etc. - you're never goin to pay if off basically...........

Do they ever get written off? Could you die with a student loan outstanding?

I had £14k under the old system, and paid it back at 9% over £15K. It was a fair whack every month but managed to pay it off last month (helped by interest rates being near zero for much of the time!). Sadly, as you say it will be basically impossible for most people under the new system to ever pay it back even with decent jobs.

1) Under the old system the "threshold" was set at £15k and never increased ever. So, orginally £15k was an OK grad salary, after years of it never increasing it sucked more people in.
2) The payments are post tax deduction. So you pay tax on the money you pay back. So effectively retrospective income tax

I.e. don't trust the government

charliemort - Member

Do they ever get written off?

yes, after 30 years (i think)

Could you die with a student loan outstanding?

yes, but then it gets written off.

tomd - Member

Sadly, as you say it will be basically impossible for most people under the new system to ever pay it back even with decent jobs.

the 'most people will never pay it off' threshold was passed ages ago, long before the new £9k fees.

my fees were 'only' £1k/year, i graduated with a debt of £12k. After working for 12 years, making my monthly payments, i now owe around £10k. i will never clear my debt. (unless i get a massive pay rise, which is unlikely, as i'm an egineer)

under the new system, the total debt that students accumulate has gone up, but the monthly repayments have gone down.

it'll save most people a heap of money (£600/year for 25 years)

Except for the fact it's a massive PITA giving away that much money each month for the rest of your life!

Don't borrow it then ?

Could you die with a student loan outstanding?

They last 25 years and can then be written off.

So if you die within 25 years of graduation, then yes.

Haven't checked the OPs figures, but that sounds about right. It would have taken a fundamental shift in tax law to allow graduates of a uni to be taxed at a different rate to other people, but the government wanted a graduate tax, so that's how the "loan" system has been set up to achieve more or less the same objective. So long as government runs the loan scheme competently and doesn't go privatising it cheaply, it should achieve it's objectives. 🙂

Is it still possible to make penalty free overpayments?

Is it still possible to make penalty free overpayments?

Yes.

You can either set up a dd and pay monthly or just send them a cheque.

You have to work out if it is worth doing for you though. Cheapest loan you'll probably get so might be better saving for a house or paying off your mortgage in preference.

somewhatslightlydazed - Member

Is it still possible to make penalty free overpayments?

yes, but why would you?

you'd be better off taking the £50/month (or whatever) and paying off your mortgage quicker.

remember, it gets written off after 25 years. You could make thousands of pounds of additional payments, without it saving you any money.

I'm 65 years old and I want to study for a degree to further my career prospects. What's the maximum I can borrow?

thruppence.

It's not really a loan, it's graduate tax with a cap.