AIBU to ask if you have a Student Loan, what is the estimated time-frame of clearing it? Was it worth it?

[christmastreesparklex]

Hi all

I graduated in 2013 and have £10,000 remaining on my student loan (Plan 1). I have calculated on my current salary that it will take me approximately 7 years (assuming a year out for maternity leave in the future) before I will have paid it off completely. On my current salary it is deducting approximately £150.00 each month, so definitely a noticeable deduction. The interest on the PAYE statements is currently 1.75%.

I am in two minds whether to start making additional payments to pay the salary off early to reduce the total amount paid due to the interest. I am also mindful that the earlier I pay it off, the higher my monthly salary will be in the future, particularly during the years I (hopefully) have children and nursery fees will be extortionate! I was looking for some advice if possible and also welcome a general discussion from those who also have a loan- if you are interested, you can calculate an estimate on when you will pay the student loan off via the link below:

www.student-loan-calculator.co.uk/

For those who don't mind sharing (AIBU!) what is your estimated time period for you paying off your Student Loan? Do you think it was worth the loan and would you have still gone down this route if you could go back in time? For me personally, I did a vocational university degree so I would not have been able to progress in my career without it, so I would say it was worth it! My DP does not have the same experience and is in fact in a completely different field which did not require any degree!

For those who have already paid their loan off, has it been noticeable on your monthly salary? I imagine it must have felt rewarding having made the last payment and finally free of your student loan!

I know with the Plan 2 student loans, the course fees and interest rates were higher and therefore; a considerable amount of students will not make the full payment in the time period before it is wiped. I suppose in this situation, making early payments would not be advised as you may end up paying more?

I graduated in 1997. I started paying my loan back last year, it gets written off in 2022 I think. I will have paid half of it back so for me it was worth it and worth not paying extra sums off.

I graduated in 2009, I took out loans for an undergraduate degree and a postgrad qualification. I paid all my loans off in 10 years and didn’t make any additional payments in that time.

I was fortunate to progress quite quickly in my career, which helped. I definitely noticed the difference in my salary once it was all paid off.

I was just about to direct you to the link you’ve already shared! I shared it on here a few days ago.

For me on a Plan 1 loan (one of the last years of it) it was most definitely worth it. I am earning more than if I think I would have had I not gone to Uni, my parents would have struggled to pay my tuition/maintenance upfront whilst also very kindly supporting me with my accommodation costs.

I am projected to pay my loan off in a few years, so will have paid it off in around 10 years at a reasonable repayment as a percentage of my salary, with the convenience/security of not having to pay it back should my income fall below a certain level.

DH will be paying his plan 2 off until into retirement. NHS professional.

Mine is plan 1, £200 a month for the next 4 years. I think you’d be mad to pay extra contributions!

Only advice is to keep on top of it. I had issues with them reducing the amount I paid without letting me know therefore taking longer to pay off than anticipated. A bit cheeky.

Why would you want to pay it off early?

I'm still an undergraduate but because I am training for a niche role I'm already working in the field as there is a shortage. I've almost doubled my previous salary. No way would I be able to earn what I do without the qualification so yes, when it comes to paying it back it will have been worth it. It depends on your degree surely? Then again if you do a generic degree you probably wouldn't pay it back anyway.

@DrManhattan

Only advice is to keep on top of it. I had issues with them reducing the amount I paid without letting me know therefore taking longer to pay off than anticipated. A bit cheeky.

It’s a standard repayment rate

@JacobReesMogadishu not too long to wait before it gets wiped off, do you mind me asking how long you had the loan for? I think under the new plan they get wiped off after 25 years? I am glad that it was worth it and 2022 will fly by I am sure :)

@Useruseruserusee you graduated a few years before me, without sounding patronizing what a fantastic achievement! I am tempted to pay mine off early to reduce the estimated time period of 7 years - I groan every time I see it deducted on my pay slip! (Although reality hits me in the face when I remind myself how lucky I am to be in a job and also in my chosen career field choice, so the groaning is short lived :p)

@BernadetteRostankowskiWolowitz
Because it was money i owed

@CarpetTime
This was years and years ago. Just trying to be helpful

Plan 1, graduated in 2003 with a teaching degree and £16,000 of student loan. Finished paying it off in April this year...what a glorious feeling that was!

I graduated in 2010 and paid it off last year. The actual degree has been useless but would I have got the chances I had without it? I can't say.

I graduated 3 years ago and my student loans add up to about 50k so probably never

I’ve had a similar thoughts to you OP. Mine should be paid off in 6/7 years but I could afford to overpay right now.

I decided not to, as the benefit of the student loan is that it is written off if for any reason you cannot pay. I can’t predict the future but what if something happened to me in 3 years time which meant I could never work again? I’d rather put that extra money in savings, it would be wasted on my student loan. Martin Lewis has some good advice around this.

The one thing I do contribute is a voluntary annual payment equal to the amount applied in interest each year. Last year it was about £300 and it makes me feel as though the balance is always decreasing and never ‘growing’. Probably pointless but it makes me feel a little better!

@BernadetteRostankowskiWolowitz
@CarpetTime

Just out of interest why do you think I would be mad to start paying it off early? I welcome any aversions to my initial thoughts below and perhaps it will be food for thought before I do make that decision!!

I currently have minimal outgoings particularly due to the fact myself and DP don't yet have children and therefore no nursery/school fees etc and I can 'afford' to make early repayments, I am also mindful that I am being charged interest on the outstanding loan each month. The more I pay off - the less interest I will pay overall and it is extremely unlikely that my loan will be wiped off (as you often see projected for Plan 2 loans). I suppose I am forward planning and anticipating higher outgoings in the future, predominately as mentioned above with having children in the next few years and having paid off the student loan would be really noticeable on my monthly payslip.

Also they add interest every month that is more than my current payment

Still a teacher now by the way and whilst the £150/£160 per month out of my wage for 16 years was a killer, there's no way I'd be on what I'm on now if I'd stayed in retail, so it was worth it

Graduated in 2002 and paid it off in 2011. Because it helped set me up for a career with good prospects, I wanted to pay it off sooner to avoid the extra interest of having it over a longer period. It was 9% of my salary and the interest rate was lower than it is now.

@Northernsoullover
'It depends on your degree surely? Then again if you do a generic degree you probably wouldn't pay it back anyway'.

I am not so sure to be honest - my DP did quite a generic degree and will definitely end up paying it all back!

Paid it off after about 15 years - did use part of an inheritance to clear it but as I wasn't earning at the time I didn't want the interest to keep building up.

Worth it? My degree is fairly useless but got me into a graduate track career and I met my husband at uni so I guess yes?!?!

@ZoeTurtle
@FlippinNoah

ahh I bet that felt amazing and I can imagine its a noticeable amount being paid into your account each month now there are no longer SL deductions!

I had about 25k of loans and took me 11 years to clear though I paid off the last 4k in one lump sum as was planning to buy a house a year later so didn't want it on my accounts...

I graduated in 2014 and should pay it off in 7 years, however that's if my salary stays stagnant. That's unlikely to happen (my company actively aligns to market rate and also should get promotion in ~3 years for an extra 10-15k) so will likely be sooner.

I could overpay but I'm not going to, instead I am paying into a Stocks and Shares ISA which is netting me more than the 1.75% interest I am accruing on my outstanding loan.

@christmastreesparklex because you can’t predict the future. The interest added to my loan is 1.1% which averaged over the lifetime of the term remaining equals £100/year for me. The security that should I gal unable to work, out of the salary band for repayment or stop working due to mat leave/young kids etc. My payments would be adjusted to reflect this or stop altogether, is worth £100/year to me.

I.e. if I was to pay remaining balance with savings I would have “lost” that cushion, and if I lost my job in 6 months time and had to take a lower paying job, my mortgage would be the same, loan repayments would have been reduced (but are now gone) as are my savings.