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It's daft to pay off student loan

(282 Posts)
Home77 Wed 06-Mar-19 15:09:47

with inheritance when you are SAHM? friend says they did this...can't help thinking it is a shame as they could do with the money. they are in their 40s and surely student loans get wiped off after a certain number of years.

Purpleartichoke Wed 06-Mar-19 15:10:51

Do you not understand how debt works!

hazell42 Wed 06-Mar-19 15:11:29

Totally agree. A student loan is not a loan. It's a tax. No one would pay income tax on wages they haven't earned yet. People are silly

hazell42 Wed 06-Mar-19 15:11:56

A student loan is not debt either

m0therofdragons Wed 06-Mar-19 15:12:18

@Purpleartichoke student loans are cancelled at a certain number of years. I'll be 44 when mine cancels but I'll probably have just about paid it off by then.

Star81 Wed 06-Mar-19 15:14:04

I see where you are coming from as you only repay when you are earning which as a SAHP they wouldn’t be. If they never planned to work again it is u likely they would ever need to repay it. But I’d they did it just sits gaining interest during your non working time.

However, maybe they just felt it was the right thing to do ?

RedRiverShore Wed 06-Mar-19 15:16:29

Definitely daft if you are a SAHM, was she going back to work in a very high earning job?, only worth paying off if you are a high earner, I think there is a certain amount you have to earn which is quite high where you are better to pay it off but average earners will get it wiped anyway as they will never pay it all.

EmmaC78 Wed 06-Mar-19 15:16:37

I also feel like it is the right thing to do. You borrow money, get an education and then pay it back when you are able to so someone else can benefit. If everyone just sat and waited for them to be written off the system would not work.

summerisgone Wed 06-Mar-19 15:16:55

Obviously it depends how much the inheritance is.

If it's £55K then you'd be mad to pay off your student debt (which will probably be £35K to £45K these days.) But if the inheritance is half a million, then yeah I would pay it off. Would be nice to get rid of it and not have it hanging over you. But it would have to be a substantial inheritance to pay off £40K ish of student debt.

Namechangeforthiscancershit Wed 06-Mar-19 15:18:03

Presumably she’s done it because she thinks it’s morally right?

CallipygianFancier Wed 06-Mar-19 15:18:54

I think it depends what rules they work to now? It's been years since I had mine, and on that, absolutely, leave it sat there unless you have to pay something. Not sure if that's the same now.

Namechangeforthiscancershit Wed 06-Mar-19 15:19:04

Or she’s calling it a student loan but it’s actually a student overdraft or a career development loan or some such?

Home77 Wed 06-Mar-19 15:20:33

Yep, it's because it is morally right. I guess I am just maybe not such a morally correct person then. I'd have put it towards savings for DC before doing that.

Home77 Wed 06-Mar-19 15:21:06

It's student loans from two degrees i think, so quite a lot. Student loans from the 1990s

Home77 Wed 06-Mar-19 15:21:36

Think you have to pay in back if earning over 21K a year.

CobaltRose96 Wed 06-Mar-19 15:22:07

Student loans are not debt. You only need to pay it back if you earn over a certain amount (currently £25,000 I think). If you don't earn more than that, you don't have to pay it back. It is written off after 30 years (or 25 years if your course started between 2006-2012).

I know people who have forgone going to uni because of the fear of 'getting into debt' and it's so frustrating as it's not really a debt as most people understand it.

But to answer your question OP, no, you're not BU. Seems silly to pay it off when, as a SAHM, she presumably wouldn't be earning so wouldn't need to! But perhaps she just wanted to wipe the slate clean.

SuperLoudPoppingAction Wed 06-Mar-19 15:23:48

I paid mine off.
My great aunt would have wanted me to pay for my degree with my inheritance.
The letters they used to send made me anxious and I didn't know how to prove I wasn't in work.
I realize I would probably never be able to repay it in full but I would have less income per month if I were repaying it.
Also I was with my financially abusive ex when I inherited so it would have gone up in smoke.
This way, my outgoings were low enough for me to save up for a mortgage when I did get a job and for me to be able to show I didn't have previously existing financial commitments.

It was an emotional decision but I am still glad I did it.

RedRiverShore Wed 06-Mar-19 15:25:23

They all work from different rules and interest rates, DS's is the one from pre 2012 where the interest rate I believe is quite a bit lower than the current ones, though the earning threshold is lower as well

Home77 Wed 06-Mar-19 15:26:44

I'm the opposite, I have five years worth, one from 4 year degree then one fro postgrad course. Plan to not pay any of it back. i don't care if letters make me anxious- paying back money I can not afford would be worse.

Home77 Wed 06-Mar-19 15:27:19

Why does the interest rate matter if it is wiped out anyway?

Celebelly Wed 06-Mar-19 15:27:42

https://www.moneysavingexpert.com/students/student-loans-repay/

I wouldn't repay it, but kudos to her for her morals!

RiddleyW Wed 06-Mar-19 15:29:19

I wouldn’t pay it off in those circumstances, no. DH has never earned enough to pay any off his and he’ll probably end up with it written off.

RandomMess Wed 06-Mar-19 15:29:39

For the first lot of loans - early 90s they started the earning threshold is currently nearly £30k gross...

That wasn't a good decision confused only 3 years until mine are written off! Only took them out for political reasons at the time!

squeezysparklyballs Wed 06-Mar-19 15:30:05

I don't think it is the morally right thing to do.

Education should be free. I see the repayments as a form of tax.

I wouldn't have done what your friend did but if it gives you peace of mind I can see why you might.

AnneLovesGilbert Wed 06-Mar-19 15:33:01

It’s a graduate tax not a loan as such. She’s not earning so she doesn’t need to pay any of it at the moment. The whole thing is a total sham anyway. Fair enough if she wants to do it but most people aren’t expected to pay it now so I wouldn’t bother.

It’s all changed since I was earning £15k, spending £xxx on commuting and paying it all back while barely being able to afford to eat!

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