It's daft to pay off student loan

[Home77]

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.

It gets said a lot that you shouldn't pay off a student loan. I accept that it is more of a tax than a debt.

BUT, it affects affordability calculations so can stop you getting a mortgage, and it is another big chunk of income gone.

My instinct would be to pay it off, it's one less debt to worry about.

I don't agree with charging for uni education - we need the skills that it provides. However, if we must, I would prefer to see it framed as an actual tax eg another 5p on income tax so it isn't something you "owe" and it's not something that is considered a debt. This hybrid is no use at all.

Tinkerbell

None of that is right. Not one damned bit. Incredibly simplistic.
I am paying mine back through my wages. I neither know nor care how much longer it will take. Just as I dont count up how many years I have to pay Income tax

It is what it is

It will only affect a mortgage applications from the affordability aspect, it doesn't affect your credit rating.

The thing is, loans from the late 90's/early 00's aren't going to be repaid to the government/taxpayer anyway. They have been sold off to -a bunch of criminals debt collection agencies.

I have zero moral guilt about avoiding repayment to them. As a PP has said, I also feel ripped off because my degree has not given me anything like the higher earning potential promised.

Home77 People I know whose loan has been sold on have forgotten to return letters and have had monies taken for their loan.

I think recovery of unpaid loans will increase as more of the debt is sold off. those companies wouldn't buy it if they didn't think there was money to be made from it. Some of the companies can be quite aggressive or so I understand. I managed to pay back all of my maintenance loan in the first three years of teaching, and that was hardly highly paid.

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

How do you think education is paid for, or do you expect the facilities to be built, the course materials to appear and the teachers to give their time for free?

Or is it that you feel that you shouldn't pay your way but its ok to rely on others to subsidise you?

Tinkerbell the student loan system doesn't impact on the price of tuition fees. The government pay these upfront to the universities and the student is paying the government back.

Some friends of mine have paid their childrens' student loans from inherited money. They're both higher rate earners, in their late 50s and own substantial property and investments, so when they die there will be a largish inheritance tax bill for their children to pay from their estate. She is in remission from breast cancer, and both her parents died before 65 so she reckons she's only likely to last another 15 years max, his family all the men on his Dad's side have heart attacks pretty much as soon as they've retired, so they can't see themselves lasting as long as the duration of the student loan repayments. One child is destined to work in finance and likely a high salary, the other is also a clever child and most probably will end up well paid.
They were advised the children would be better off since it's likely they'll have paid more (40%) inheritance tax on the money than 8% or whatever the interest rate is on the student loan before the loan would be fully paid off.
So it's not the same situation for everyone.

redriver Precisely, far too many who are not capable of going have been encouraged to go to university. I think consideration should be given to restricting the numbers again.

Only counts as a debt for mortgage payments if you are actively repaying it, not if it's currently deferred.

I paid my pre-tuition fee loans off when I got an inheritance. I only owed about £2k at the time, and it is fucking humiliating deferring payments when you are a SAHP. I would have had to get my husband to write me a letter saying he was keeping me and how much money he gave me. I decided I'd rather pay it back than go through that every year.

If she's in her 40s and started uni pre 1998 then none of the repayments will benefit current or future students, the government sold those loans in 2013 to private companies for a fraction of their value

www.theguardian.com/business/2013/nov/25/student-loans-sold-160m-pounds-government-debt

On that basis, and if she was legitimately deferring the loans as per the original T&Cs, then I agree it was madness to pay them off.

Ariela that makes sense from an IHT point of view (as any gift would under those circs) but I can’t see why they would have used it for the loan repayment and not just made a capital gift?

I don't agree that it's 'morally right' to pay it back ..... students shouldn't have to 'borrow' such an enormous amount in the first place to get an education.

But almost 50% of school leavers now go to uni. When I left school only 10% went.

How do you propose the government pays for this increase??

I'd pay it off, assuming you've enough inheritance?
Its debt (however its dressed up) affects your disposable income and who is to say it will stay at 30years before its written off?

I suspect the tories will extend it to match the retirement age, rather than write off billions.

Its a cruel system, the 6% interest rate is extortionate, as is the 9% payable on earnings above 25k - for what should be free or at least a nominal amount charged.

This was also education, which should also be free at the point of service. Same as A-levels and GCSE's.

Jeez, by the time kids leave school they've had 13 free years of school.

How far do you take that, Balls? Would you fund people up to PhD level, wouold you agree to people permanently being students so they never have to work?

It's pretty easy to return letters, they sent them now...well in last few weeks, you just tick the boss and sent in the stuff about benefits etc.

You can also keep their details in case of that happening, it's not that difficult.

I do think it's a bit strange someone who has had to give up their profession due to illness and now on PIP / ESA and people think they should be paying back out of that even though below the threshold, for moral reasons. I'm surprised at that.

Another one here who thinks she is crazy. I had a friend at uni (back in the days when grants were being replaced by loans so most people had half-half), who refused to get a loan or student overdraft. She lived a miserable existence on Kwick Save food and no social life.
I was in the same financial position as her, but took the loans and overdraft. My overdraft got paid off within 6 months from a low paying bar job, and the loans were finally paid off 10yrs later after deferring them until I was 27, then again from 29-30.
As this was in the 90's, my loans only totalled £6000. But there was no point when I worried or stressed about the debt because I didn't see it as debt. Either I earned enough to pay them off, great, or I didn't and they got written off, fine.

DS has the one from between 2006 and 2012 which is written off after 25 years apparently. Obviously if things change I imagine we will end up paying it off for him anyway but at the moment he just pays it out of his monthly salary, his total loan was about £20k and it is very slowly being chipped away.

If we were to give DS any money at the moment it would be towards a house deposit certainly not the student loan.

But then guess I'm humiliated enough having to apply for PIP in the first place, deferring student loans is a breeze in comparison.

Home77.
How do you think we should fund higher education if people like you intend to take the tuition but not pay for it?
Through general taxation?
Through limiting access?
Some other way?

Money Saving Expert has written at length on this. His view is to not pay off anymore then the statutory amount

www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/

I think if you accepted the loan it should be paid back. Or did I miss that money started growing on trees?
If you have no intention of ever paying it back don’t take it.
No wonder this country has no fucking money!

Also, if anyone like me is reading, I just found this. It may well be written off anyway...

www.studentloanrepayment.co.uk/portal/page?_pageid=93,7950697&_dad=portal&_schema=PORTAL

www.studentloanrepayment.co.uk/portal/page?_pageid=93,7950697&_dad=portal&_schema=PORTAL

sorry