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 don't think I'll ever pay it off. My wage has been relatively low for the last 5 years and I'm not even covering the interest monthly. We are financially comfortable so I just see it as and extra tax really. It would be nice not to have, but I'm just not sure it's worth the short-term hit to pay it off.

I gratuated in 2010.

I paid it off just doing the monthly salary deduction payments. I got the max and paid it off in 15 years.

I have a huge student loan. So does DH. Both graduated in 2010. Barely give it a second thought tbh. I definitely don't regret mine - I went on to do post graduate qualifications and then a masters. I hope to study further in the future. I wouldn't pay it off early - I don't see what the benefit of that is? It doesn't have any impact on mortgages or loans (we've got/had both and no one is ever even slightly interested in our student loans). If you have extra income I'd put it into savings rather than paying more to your student loan. But up to you ofc.

I graduated in 2008 and paid off my loan last year.

I graduated in 2008.
I still have about 7k to pay I think. On plan 1. It might be a little less will get a new statement in the next couple of months. I think it should be paid within 2-3 years. Paying about 250 a month so will make a difference once its paid off. Cant wait.
I definitely couldn't do the job I do now without it. But as my parents couldn't help me financially I have had to pay huge chunks out every month. Luckily it will be paid off soon. I feel sorry for the new graduates. Unless they get a lot of financial help, depending on how much they earn they will be paying it til retirement.

At least I will manage to pay mine off. It's a weight off my shoulders and it definitely makes a difference to my monthly wage. Its not just a token amount. Though it took about 15 years. I did have two mat leaves though in that time.

I graduate in 2004 with a plan one. Currently paying 260 per month and am due to pay it off this year - I need to swap to direct debit so I don't over pay. Can't wait, although likely to just swap it to pension contributions and savings - am not used to having that money in my pay packet so figured would be best used for something else than just spending!

Graduated in 2013 with £29K Plan 1 loan. Paid back the regular monthly amounts for five years (starting at £10, rising to £400 after (significant) salary increases). Overpaid like hell in the sixth year and paid the whole thing off in 2019. Aware of the whole "It's more of a tax really, read Martin Lewis, you're better off saving towards an ISA" crowd and I don't actively disagree with any of it, but for me it was a psychological thing. It just did my head in seeing it on my payslip every month, particularly because my current job in IT is entirely unrelated to my humanities degree. I started in an entry level position that didn't require a degree and worked my way up, so I couldn't shake the feeling I technically didn't need to have gone to university (although I enjoyed it) and was reminded of this every month. Also dealing with the SLC and HMRC was a nightmare, particularly since I became a consultant and responsible for my own payments.

@lurker101 thank you for your post, it all seems sensible tbh and definitely food for thought!

I don't have a student loan but you really need to google Martin Lewis and see what he advises, iirc this is a subject that he often talks about and really knows his stuff on the different schemes and scenarios about whether you will ever finish paying it

I have 2 student loans on different terms that for some reason both count as plan 1, totally somewhere around £15k. As I can't remember information I gave them when I was 18 its pretty hard to get any detail on how much.

My undergraduate loan will be cancelled when I turn 60 or retire (not sure and do keep meaning to look it up but really it doesn't matter that much.) So at least 23 years away. The later part of the loan for my PGCE that I took out 4 years later will be cancelled after 25 years, so in 13 years time.

I have long accepted that working in education/charity sector I will never pay off my student loan. I have worked part time or not worked for nearly 10 years, I plan to work part time for at least another 5 years. By then the amount required per month so pay off the capital will probably be more than I will ever earn.

Was it worth it? To be honest, I worked really hard through uni to keep my student loan low, and wish I hadn't bothered as it impacted how much fun I had and how well I did academically. I should just have taken the full loan and had more fun.

Graduated in 2017 with 40k student debt. Thats quite low too for a 3yr course as i got minimum maintanence loan. Most people will leave with much more. With a plan 2 loan, unless you earn over 35k, the interest out paces your payments so it keeps growing. Like you say, a lot will get written off. I am classed as a high earner and I am projected to pay it all off eventually. Therefore, it is in my interests to over pay. But I won't until I decide if I want kids, or a few other significant life events that may lower my income. As soon as I'm confident I'm staying on the high earner track, I'll pay it off with intention.

What annoys me about student loans is the interest. It's set so that the high earners pay off the loans of the low earners, that get it wiped. I don't think it should be wiped. I think it should be wiped only if you pay off the amount you borrowed + reasonable interest. If you don't, the amount you borrowed, less interest and repayments should be recovered from your estate on death. As a STEM graduate from a good uni, I'm sick of funding useless degrees. And I'm not on about the arts. I mean degrees that are just fillers so you can go to uni at 18 cause school said it would be good, but you got Cs and Ds at A level so you got into a 3rd rate uni. Graduated with a 2.2/3rd and then had to do retraining that doesn't really need a degree to get a qualification you could have got straight out of school to do a job that earns you less than the repayment threshold. I shouldn't have to fund those students that spend uni just pissing it away, drugged up, or drunk. I'm a firm believer in apprenticeship schemes and on the job training. I wish I'd done an apprenticeship.

Graduated in 2004. Plan 1 pre-2006 loan so will be with me until retirement unless I pay it off earlier. I have no idea when that will be. I salary sacrifice my base salary down to the minimum with pension contributons and childcare vouchers so it currently falls beneath the minimum repayment threshold so I'm not making any repayments (despite having a base salary above the threshold). I think with Plan 2 loans unless you know that you will definitely be a high enough earner to repay the loan within the 30 year period it's not financially beneficial to make extra repayments as there's better ways your money could be used.

I have a small student loan, but I don't think I will ever earn the minimum salary necessary for repayments to kick in. sigh. So in my case - never.

It took me 8 years, it was so good to not see it on my wage deductions. I dread to think what the situation will be when my daughter goes to Uni and what debts she’ll come out with.

Graduated in 2005. Will finish paying it off in March! Had to switch to Direct Debit near the end so I don’t overpay. Old loan type so was worth it (although lived with my grandma whilst at uni so had low living cost so saved it and used it for my first house deposit). Cheapest borrowing ever!

I don't foresee ever paying it off and I'm not bothered by that. My repayments are low and I haven't made any sort of dent in the debt since I graduated in 2009. I could easily afford to pay much more but I don't see any incentive to do so. I just think of it as a means tested graduate tax.

No, I don't regret it. The degree enabled me to do a Master's abroad in a country with no tuition fees which in turn enabled me to get skilled work in a relevant field. My salary isn't massive but it's comfortable and I wouldn't have the job without higher education. My degrees are in humanities subjects although the Master's was quite skill-based as well as academic.

@amgine what do you mean so you don't overpay? I assumed that the SLC would only deduct the final amount for the final payment on your payslip😅 would they deduct more? Can you change it to direct debit so it doesn't automatically come out or your monthly wage

@christmastreesparklex they contact you near the end to tell you to switch to DD to avoid overpaying.

@christmastreesparklex repayments are deducted by HMRC. HMRC the money to the SLC once a year, so it's possible to considerably overpay as they dont know when you have paid all your loan. It's also why in the past it was so hard to calculate at any time how much you actually owed. Student Loans and the SLC are spectacularly crap in all aspects, which is why I now just ignore.

As long as your address is up to date they’ll start pestering you with 2 years to go! It’s something to do with the deductions being done at source and then passed to SLC. My DH overpaid his by about £300 because it stopped deductions at the end of the tax year rather than when he actually paid it off. But he never got pestered because all the letters went to an old address and only checked because I was getting letters and texts to remind me. So you do the last year by direct debit to stop the overpayment.

@MyDucksArentInARow I don’t think you understand how hard it is for people to pay back student loans under plan 2 with the interest.

I studied architecture. I needed to do 5 years full time at university to be able to qualify as an architect. Without this education I could never legally call myself an architect.

My student loan is around 65k including some interest.

I just looked it up, I would need to earn 60k for the next 28 years to be able to pay the loan and the interest off without it needing to be written off by the state.

It would take 11 years of earning 60k before my loan repayments were more than the interest.

This is all irrelevant given I currently earn just over 30k. It will probably take around 15 years of career progression for me to reach 60k.

What do you propose? That we shouldn’t train architects?

If I only earn 45k for the next 30 years then the total debt (because of the interest) written off will be over £100k. I will have paid off over 100k during my working life but under your proposal 100k would still have to come out of my estate when I die. Great.

I got A*s and As at A level and went to went to top universities. It wasn’t a gap fill, I didn’t doss about, I worked bloody hard.

Are you sure your current rate is 1.75%? I'm plan 1 too and am sure it was lower and this suggests it was lowered to 1.1% in April which makes sense given the low base rate www.gov.uk/government/news/change-to-plan-1-interest-rates#:~:text=Student%20Loans%20Company-,From%20the%207%20April%202020%2C%20the%20interest%20rate%20applied%20to,0.1%25%20on%2019%20March%202020..

In answer to your question, hmm not sure I don't think the degree itself was really "worth" it as I didn't seem to get much for my money; however even though I haven't need that (humanities) degree specifically all my jobs have required a degree so I suppose it was technically worth the investment. I got a slight reduction due to being welsh and going to a welsh uni (this grant only lasted few years until it was changed to any uni and has now been removed completely) - if I could choose again I would pay the extra and taken up my place in Oxford and read a different subject. However I was first in my family to go to uni and at that time the proposed £13,000 or whatever debt seemed huge enough so was discouraged!

I started repaying mine in about 2012 and think I've got about another 5 years left on my current salary, hopefully less if I get a pay increase at some point. I don't mind the standard deduction, it's only when I get paid overtime and the student loan takes a big whack of it I resent it!

Graduated in 2006 and to be honest I pay no attention to my student loan.... no idea of the balance or when it’s likely to be paid off.

Last time I looked was when there was a thing in the news about payments being deducted from wages but not credited to loan accounts. I checked all my deductions and credits then and it was all fine. Not looked at it since and that was a few years ago I think.

I only pay £2 p/m currently as I’m only working part time. Good chance I’ll never repay it...

Mine will take 5 years to pay off once I'm eligible. The loan is twenty two years old and will be wiped in three years.

Never graduated, plan 1. Current earnings see me paying back £12pm and I get charged £8pm interest.
Mine is pay off or wipe clear at 60. It will never be paid off, if I was paying £150pm I would be keen to get rid though.