To refuse a pay rise

[Iwanttobeadog]

I work in the public sector. My pay has been stagnant for five years. I've recently gained a new qualification and taken on more responsibility and have been summoned to see my director this morning for some 'good news'

I suspect I'm going to be offered a small salary increase

However, any increase will take me over the limit where I'll need to start repaying my student loan

We currently live hand to mouth with absolutely nothing spare and indeed most months have a deficit

Unless it's a fairly substantial rise ( which given the state of our budgets I know it's not going to be) then I'm actually going to be quite a lot worse off each month as the increase will be nowhere near as much as my loan repayments

Clearly I'd be bonkers to say thanks but no thanks but I can't get my head around how to deal with this

Any advice?

[MythicalKings]

You'll have to start paying the loan back some time - why not now? It won't get any easier.

[WhyCantIuseTheNameIWant]

Have you worked out what the loan repayment will be?

As I agree, £10 a week extra in pay won't cover £40 a week loan.

Could you reduce your hours? So you get the same amount of money for working less time?

[Purplepoodle]

Won't you increment anyway automatically in the next couple of years and take you over the threshold

[Iwanttobeadog]

It's 1% over the next three years, that won't take me over the limit

Now is not the time to start repaying the loan. For eg if I get a £1k rise my monthly increase will be about £60, Loan repayments will be £120, I cannot afford to have £60 less a month coming in. I just can't

[seaweed123]

Are you sure? I thought that loan repayments were x% of everything you earn over Y. So if you are at the threshold then you will only pay x% of the pay rise? (can't remember numbers... maybe 10% of everything over 20k per year-ish, maybe?).

Mine is a 1998 loan though, so maybe they have changed. If that is how they work now, it seems crappy.

[SellFridges]

I'm not sure your calculations are right. I pay about £100 a month back on my loan but I earn a lot over the threshold. Is it still 9% of your salary over £21k? It's only paid on the salary over that amount, not your whole salary.

[lostincumbria]

Have you checked your agreement? I thought you paid back a percentage of what you earn above the threshold, so youll pay a percentage of your pay rise only - not a percentage of your total wage.
www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678490&_dad=portal&_schema=PORTAL

[SellFridges]

Yep, what she said!

[Chippednailvarnish]

Ask for more holiday instead...

[Diddlydokey]

Can you take it but opt in for other benefits through salary sacrifice? our pension contributions and childcare vouchers are done this way.

[wonkylegs]

As others said I'm not sure your repayment Calcs are right SLC Repayments info

[ClaraBlara]

I would ask. Also, be aware that child benefit counts as income for the old style mortgage type loans - but not if it's paid to your partner.

[tethersend]

Can you ask for a rise large enough to cover the repayments?

[scarlets]

Hopefully you've worked it out wrongly as pp have said.

A better salary means a better pension and a better payoff in the event of redundancy. I'd be wary about rejecting a rise, especially if the monthly net loss due to student loan repayment is negligible.

[ClaraBlara]

The old loans you pay back in (I think) 60 equal instalments.

[treaclesoda]

Is it one of the old style loans? Mine is, and it's not paid back as a percentage of earnings like the modern ones; once you hot the threshold you pay it back over 5 years.

[Unthoughtknown]

I don't think that's correct op. I earned just over the threshold for years and my monthly repayments were extremely small. Call SLC and check

[Iwanttobeadog]

It's an old style loan. The £120 is what my last statement said would be my monthly repayments

[Iwanttobeadog]

I'm off to work so will find out soon what it is. It may not even be a rise, it might be the wonderful opportunity to take on yet more responsibility with no actual change to my salary so my angst might all be in vain anyway...

[LunchpackOfNotreDame]

Are you sure they'll be £120? When I was tipped into the pay back bracket I only paid back £20 a month

[ClaraBlara]

Unfortunately she will be correct. The old style loans are a fixed sum. Earning even a penny over the threshold will mean you pay back that fixed sum each month. It's pre tax income as well so childcare vouchers etc don't make a difference.

Good luck, op.

[MadAboutMathsMum]

I was previously in this situation - again an old style student loan, a pay rise meant I would have to pay back £170 a month and I would be worse off. My boss (was a private rather than public sector) gave me a rise to be a £1 under the threshold rather than what he was going to give me.
Recently to be able to defer I have transferred child benefit payments to my husband which keeps me nicely under the limit.

[wonkylegs]

Ahh the original style loans. The only bonus of those are they are likely to be for smaller amounts than the subsequent ones. I would have a look at what your boss says and balance up the pros and cons then,
speculation isn't always helpful and as others say there may be ways to mitigate it.

[rollonthesummer]

I'd just be honest with your employer and say what you've said here. You're hardly going to be grateful for a £60 pay cut, are you!?

[Hereward1332]

As Diddly said above, does your employer offer a salary sacrifice scheme for pension contributions? Public sector is very likely to. If so, take the pay rise, but reduce your salary to the loan payment threshold by contributing the excess to a pension. Salary sacrifice means that you don't get the salary, but your employer contributes it to your pension. Your gross salary is therefore reduced by the amount you contribute. Student loan repayments should be based on this gross salary, not the notional amount before sacrifice.