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?

@FudgeSundae it very much depends on how much the interest is going to be - my remaining loan will charge an average of £100 interest/year (once total interest payable is averaged over the remaining term) at current interest rates until I have mine repaid, so it personally wouldn’t be worth me paying it off to save that amount of interest, as the value of the capital is more important and the flexibility that if things were to change with my personal circumstances

It took me about 18 years to pay off. I didn’t have a huge amount left when I had my first baby, but two lots of maternity leave and then part time hours meaning the amount I repaid dropped significantly, added a few more years onto the repayment term

@Theworkwitch
It was because I had two different styles of student loan owned by different companies; one old which was a set amount and then the new style where a percentage of your wages are taken. I did 5 years in higher education overall (2 the first time and 3 the second time 5 years later) I complained to anyone who would listen but there was nothing anyone could do. The current amount is so high because I was forced to take out a personal loan because they demanded the whole outstanding amount last month (even though I was paying the full amount on time each month!) Apparently they had reviewed all old loans and mine was one of the ones where the full balance was due immediately. I decided to take the personal loan over 12 months just to get rid of it ASAP plus I only have 2 more payments until my newer style loan is completely paid off.
I hope this makes sense!

@Baws I have the same as you I think: old style mortgage loans and then a newer style loan. I've never been asked for a penny and your post terrifies me!

I paid mine off in about 10 years 2008-2918ish. It was a real struggle to afford the ridiculous amounts they expected me to pay (different calc as I was working abroad) and I had to borrow to pay it! But at least I don't have to deal with the fuckers any more.

2008-2018is obviously 🙄

@Theworkwitch
Sorry to scare you. It will depend on whether your old loan has been sold. Mine was sold to Honours student loans. They have a horrific reputation and quite rightly so in my opinion. There are numerous posts on the Martin Lewis site about them and some people are fighting them. In my case I decided not to as I only had 1400 left to pay and I didn’t want the additional legal costs or stress. I am still angry about it though. I’m hoping to start overpaying the personal loan I took out to pay it off from February onwards (when my new style loan has been paid off) so hopefully I will be student loan debt free by the end of next summer!

[quote FudgeSundae]@ListeningQuietly it’s not rubbish advice. If you have a profession and you know you will pay off your loan 20 years before it’s written off, paying more interest because “P45s can turn up any time” doesn’t make sense. I could see I would pay mine off within 2 years and we needed the income more than the capital because childcare was tight. Plus banks are paying a lot less interest than my loan was charging.

Agreed that if you might not pay off your loan it’s not worth it, and that will be the case for many /most. But not for everyone![/quote]
It's bad advice to simply state it's always better to overpay on it.

Most graduates will never pay their loan off. By overpaying graduates then end up paying more than they would if they had just paid the minimum and let the loan be written off. And it's a very valid point that if someone loses their job/ goes on maternity leave or whatever that they will have wasted even more money if they had overpaid.