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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

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

184 replies

christmastreesparklex · 10/12/2020 17:24

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?

OP posts:
classiccars · 11/12/2020 12:26

I have about £24k in student loans, graduated 2003. I've never made a repayment due to the threshold and I don't expect to meet it as I can only work p/t due to being a carer. I did enjoy studying though and it was important to have had the life experience of being a student. It will probably get written off before I ever start paying it back.

MaskingForIt · 11/12/2020 12:32

@BernadetteRostankowskiWolowitz

Why would you want to pay it off early?
Same as with any loan -to o reduce the amount of interest paid.

The only reason not to would be if there was a likelihood of not paying I to off (death, retirement, pay cut).

ListeningQuietly · 11/12/2020 12:51

maskingforit
But student loan repayment
ARE NOT CONNECTED TO THE AMOUNT YOU OWE
you repay
9% of your salary over the threshold
whether you owe £1000 or £100,000

Student loans are NOT like normal loans
they DO NOT count as borrowing for a mortgage or credit rating

gillianan · 11/12/2020 12:53

they do get taken into account on financial viability for mortgages. as they're an outgoing.

gillianan · 11/12/2020 12:54

why would you want to pay 9% of your salary for longer than necessary to cover additional interest charges

ListeningQuietly · 11/12/2020 12:56

@gillianan

they do get taken into account on financial viability for mortgages. as they're an outgoing.
They count as a 9% drop in income whether you owe £300 or £30,000

most people will NEVER pay off their debts.
Early repayments will not benefit 90% of people

motherf88 · 11/12/2020 13:08

I have just under £4K left. Graduated in 2008. Earn less now I'm part time and will pay it back in just under 5 years. Once it's gone I'm paying the extra into my pension

Notemyname · 11/12/2020 13:31

I graduated in 2002 borrowed about £13,000 (fees were only £1K then). Paid mine off finally last year. My brother was two years ahead of me and chose to live at home after uni and overpaid and cleared his off early.

20 years later we both earn similar in the public sector, but neither of us has achieved a level that means we would have needed a degree.

So for me it probably wasn't worth it from a financial point of view, but I enjoyed my uni experience and met DH so overall I'm happy. It wouldn't have been worth the £40K debts we would have accrued if we were to start uni in 2021.

Moraxella · 11/12/2020 14:04

I wish there was a way to pause interest being added whilst on mat leave (receiving SMP), but there isn’t. 38k left to pay, graduated 2012.

Tippexy · 11/12/2020 14:09

@gillianan

they do get taken into account on financial viability for mortgages. as they're an outgoing.
No, they don’t. They really don’t.
VestaTilley · 11/12/2020 14:13

Definitely worth getting the loan/degree. I work in a related field to my degree and didn’t have a wealthy family so needed the loan to live on and later pay towards the fees.

Still paying it off, about £150 quid a month or so. I’m sure I’d appreciate having that money per month (I’m 34) but would just stick it in savings.

No point paying it off early in my view.

dsaflausdhfiushdfakdsf · 11/12/2020 14:36

To the people saying they don't get taken into account for mortgage purposes, I can confirm that they do.

You have to declare your full income and outgoings for the mortgage provider to assess affordability.

E.g. net income of £2000

£500 outgoing on car
£500 outgoing on bank loan
£100 outgoing on student loan

You might struggle being approved for a mortgage with a rate of £600 a month with a 40 year term because that would leave you with only £300 a month for bills/living costs, which isn't realistic. They won't lend to you if they think you might default on the payments.

In example above, the student loan has a minor impact (the car and bank loans are the big hitter) but it DOES come into play, and for those who are on the knife edge of being approved or rejected, it can tip you over the wrong side.

ListeningQuietly · 11/12/2020 14:41

dsa
Student loan counts as a reduction of income for mortgage purposes.

The amount you repay is tied to what you earn now what you owe
so paying bits off early
is UTTERLY pointless
as it will not affect your "affordability criteria"

mumtobabygilrl · 11/12/2020 14:46

Oooh I've managed to get in touch with the (thanks to this post for the kick up the backside I needed to get back in touch with slc) graduated 2005 and still have 5k left to pay. That will be approx 3 years at current rate of pay

gillianan · 11/12/2020 14:55

@Tippexy have you ever applied for a mortgage??it's literally one of the first things they ask. how daft to think when asking your salary they wouldn't consider the fact that 9% of it is taken away alongside all other outgoings you have to list.

HappyChristmasTreeRex · 11/12/2020 14:58

Our mortgage company were not interested at all in my student loan. I would only pay it off if you think you cannot save that money in another way, putting it aside gives you more flexibility.

gillianan · 11/12/2020 15:02

www.onlinemortgageadvisor.co.uk/mortgage-affordability/student-loans-and-mortgages/

"Can you get a mortgage with student loans?

Having student loans shouldn’t prevent you from being able to get a mortgage, although lenders will take the debt into account. Unlike other debt, student loans don’t appear on your credit report but, depending on the level of debt you have to repay each month, have a student loan couldimpact affordability checksevery lender carries out."

ListeningQuietly · 11/12/2020 15:04

gillian
I am an accountant.
I sign references for clients getting mortgages.

The AMOUNT of student loan is not relevant.
because it does not affect the amount of repayment

MaskingForIt · 11/12/2020 15:05

@HappyChristmasTreeRex

Our mortgage company were not interested at all in my student loan. I would only pay it off if you think you cannot save that money in another way, putting it aside gives you more flexibility.
They're not interested in it in terms of debt, but anything that reduces your income has an effect on what you can borrow. £150 a month on a student loan is £150 a month that can’t go on a mortgage.
gillianan · 11/12/2020 15:07

@ListeningQuietly
when did anyone say the amount mattered?

HappyChristmasTreeRex · 11/12/2020 15:09

@MaskingForIt I understand that, however they did not ask about it and did not even write down which loan I was on or even that I had one. I asked specifically if they wanted details and they said no and told me it was irrelevant. Perhaps our circumstances are not the same as others, I don't know, I just know this was our experience.

lurker101 · 11/12/2020 15:11

@HappyChristmasTreeRex if it’s listed as a deduction on your payslip, they didn’t need to ask because it’s there for them to see. That’s what our mortgage company did.

lurker101 · 11/12/2020 15:12

Great news @mumtobabygilrl good to know where you stand 😊

CuriousaboutSamphire · 11/12/2020 15:18

@maddiemookins16mum

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.
Because that's how it was set up. It allows those who can't afford to pay to back the opportunity to still gain a degree.

Those who can do, according to the T+Cs of the time.

www.gov.uk/repaying-your-student-loan/when-your-student-loan-gets-written-off-or-cancelled

It's 30 years before it gets written off now - for most!

PerfectPinecone · 11/12/2020 15:18

You need to look at the full picture. Do you have any other debt with a higher interest rate I.e mortgage. If so it's best to overpay on that rather than your student loan.