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 2006. I still owe the same amount I borrowed despite working full time for intervening years. Although I haven't worked for the last 2 years, I am now self employed. I doubt I'll pay it off before it gets written off.

I don't imagine I'll ever pay mine off, it will just get written off one day. At the moment the interest each year is higher than what I'm paying back so the debt is increasing. I don't use my actual degree subject in what I do but it has certainly helped me to get to where I am.

Graduated 2011, £9000 student loan paid off in 2019 - the month before mat leave. I did a shed load of overtime in 2018/19 and ended up paying about £3000 in the last year. Probably would have taken a couple of years longer if Id just done my normal hours.

Graduated in 2000 first loan taken in 1997. Never been above the threshold to pay it back so will likely be wiped before I ever pay anything. Although I am thinking of going full time next year which would take me over the threshold. I keep getting settlement offers every year now and last time given the option to settle at 25% of the original debt but I’ve read that partial settlement can affect your credit rating.

I have got about 50k in plan 2 and masters loans. I am paying sod all of it off at the moment but I've just interviewed for a job that is double my salary, thanks to my MA. I dont plan on paying more off to clear it earlier, it is what it is.

I think when you're young you don't realise how much of a burden the studen loan actually is in reality.

I am not saying we would have made a different decision but its something I didnt really think of at the time.

Yes its based on your salary but in my opinion still a considerable amount to pay for a very long period of time, particularly for those who have their loans until retirement- this is insane!!! I think the fees going up £9k a year has caused problems. I hate loans/debt etc so perhaps I'm more sensitive to it than others and I do also appreciate that you do have to pay for a service etc but I'm not sure the ramp up in prices was the right answer.

Thanks OP, I thought I had 17k left but it's only 12.5k! Glad I checked. I have 5 y to clear it. It was totally worth it. Before I went to uni I learnt 13k a year in an admin job. I now earn 5x that.

I'm pleased that I will have paid it off when my dd is just starting her second year of uni, the extra money in my pay packet will come in handy then.

Graduated 2010. Vocational degree. Paid via paye and tax return. I think I completed it in 2015.

I graduated in 2008 with a loan of approx £13k. This was back in the day of only £1.2k per year tuition fees (my year was the last year of that before it rose to £3k and then £9k). I would have paid it off around a year or two ago I think but I’m a reasonably high earner. However I cleared it a while back with some inheritance. I know people say you shouldn’t pay it off early but like some previous posters, I knew I would pay it back and didn’t see why I should pay more interest.

I do feel student loans are slightly missold. You’re told it’s not really a loan, it doesn’t affect your credit rating etc which is all true, but when I bought my first house I was given a mortgage in principle based on my gross salary and then when the time came for the actual mortgage offer to be made, they reduced what they would lend me by approx £20k because my student loan repayments at the time were about £200 a month which they said affected affordability. It really messed things up and I wouldn’t have been able to go through with the purchase had I not been able to borrow some extra money from my parents. I felt really resentful at the time that I’d always been told student loans weren’t real debt.

How can people not pay back loans, it’s a farce. A colleague of mine has a huge SL, has no intention of ever earning enough to have to pay it back.

I graduated in 2013 and have barely paid any off, think with interest it’s now more than it was originally. At first I didn’t earn enough and just when I would have I went on mat and now work part time, so only pay any back when I get a bonus

I graduated in 2013 and paid off my last chunk of student loan last month! Over the moon to no longer have to pay approx. £450 a month.

I had to do my degree for my profession. Luckily being Scottish I paid no university fees so my loan was only for four years' accommodation, bills and food.

I do hear the advice generally is not to put paying off your student loan debts early ahead of paying off other higher interest debts (e.g. credit cards, mortgage etc.)

if you know you're earning enough that you will definitely have to pay it off then yes pay it off as fast as you can, as its just a normal loan with interest. it took me 7 years I think. felt great to be free of it and the extra money was available just at the right time for house purchasing and kids.

@maddiemookins16mum whilst i dont entirely disagree with you and i get your frustration but I think its the interest rates, not so much under plan 1 but definately plan 2. People end up owing thousands and thousands of pounds more than they ever actually borrowed!

Correct me if I'm wrong anyone but even if you don't meet the threshold to pay the loan back or even a small amount the interest still builds up each month so when you do earn enough you have a lot of money to pay.

It doesnt help that you're not only funding the course itself but to actually live for 3 or more years, its not possible to work full time and study to fund your lifestyle so people have no choice but to borrow money!

I graduated in 96 and will never pay mine off. I had very early terms and conditions because I'm very old, and could earn almost double what I earn now before I pay it back. I think it gets written off either when I'm 50 or 55, so not long to go now!

You’re right OP on plan 2 they add on 5.6% interest before you even graduate 🤣

I graduated in 2003 and started paying back from salary in 2005. In 2012 I took out a mortgage with enough left to pay off my loan so I did that. There wasn't a huge amount left but I just wanted it gone and it took me hours of admin every year as they miscalculated my repayments literally every year which lost me half a days work to sort out! To be honest if it wasn't for the faf I would have left it as the interest wasn't awful.

@tealcoat7 you don't get what I mean. I'm saying I dislike that the interest rate is set so high because there are people going to uni for no reason. If degrees like yours and mine were charged a reasonable interest rate then you wouldn't need to earn crazy amounts to pay yours off. You will be the most penalized group. With 65k of debt and a high interest rate you will pay much, much, much more than the amount you borrowed if you go into a high earner bracket. Your loan balance will go up for years before you earn enough to out pace it and it starts coming down. The compound interest will be insane. Yes it gets wiped off, but on your salary trajectory you'll still, most like, pay significantly more than you borrowed. The reason the interest rate is so high is because there are too many people doing pointless degrees where they aren't for a career or genuine academic rigour or enjoyment of a subject. They go on to never earn above the threshold and never repay their debt. I think the debt shouldn't be wiped off at 30 years. I think you should pay it off until retirement, then it is recovered from your estate. On the condition the interest rate is something more reasonable, and it's actually a fair price for the education and salary advantage or academic enjoyment it got you.

No one should struggle to pay off a plan 2 loan if it was actually worked out fairly.

In an ideal world, uni would still be free with only a maintanence loan. But it's not because uni is not done right. Its seen as a path for anyone. I'm not saying uni shouldn't be accessible, I'm say uni shouldn't be seen as the path for any tom, dick or Harry that wants to doss around for 3 years. Go to uni because you have a purpose and need to go. Go to uni for the joy of academics.

Since it can't be free, I also believe that an employer should have to pay off the student loans in return for x years sevice (progressively) if they make it a requirement in the job spec to hold a degree.

I have £37721.25 student debt to date on a plan 2 loan. I can't see how I will ever pay it off

I graduated in 2011, only paid off a small amount, highly likely it will be wiped rather than being paid off.

Graduated in 2004, paid it off last year via my salary so there were plenty years where I didn’t pay back much, and I had a baby as well. However overpaid by 1400, which I got back in time for going on holiday so that was nice. It was worth it. I couldn’t be in the job or career I am in as you need my particular vocational degree to practice.

My dh has just paid his off after 11 years - has ~£400 more a month now.
Large chunks of his was paid off when he was in a previous job earning bonuses. He's now a high earner.

I earn half as much, graduated 9 years ago and still have like £22k to pay off. Feels like I'll never pay it off and I earn a decent wage?

Student loans are a 9% graduate tax

extra payments will NOT affect the standard 9% deduction

therefore only fools do that

I graduated in 2009 with a plan 1 loan, for living expenses only apart from one year's tuition fees (which were ~£1100) - I started in 2003 so initially fee loans weren't available.

I am going to finish paying it off in March next year. Would have paid it off a couple of years ago but mat leave + going part time reduced my rate of repayment. I think because I've always had the deductions made, I don't miss that part of my salary. It'll just be a nice bonus when it's done!

Doubt mine will ever be paid off, I haven't earnt enough to start making any payments. In fact I think my loan is now worth more than my average salary. Yay for minimum wage I'm Scottish and went to a Scottish uni though so my loan is relatively small compared to a lot of other posters here.