Unfair student loan repayments and UC

[SLCUC]

I've name changed for this as mentioned situation to colleagues...

I currently earn around 28K and student loans deduct £53 a month from my wages. I have the possibility of promotion with just over 10k wage increase. This would mean SLC would deduct around £130 a month. Universal credit take my total wage before student loan deductions so therefore they see that I'm earning more than I actually am receiving, so I'm losing an extra 55p for every pound SLC take. I need to UC due to high rent and childcare but because of the double deduction I will barely be any better off. New role will bring a lot more stress and expectations of unpaid overtime. AIBU to say the method of student loan repayments is really unfair and no other debt penalises people in this way? And It's really not worth getting a higher paid job at the moment given the added stress and lack of financial benefits 😔

Surely the benefit is that you pay off your loan quicker?

Agree!
it’s really hard to calculate how much you are going to get because you have to factor in student loan deductions as well.
that £50 could be the difference in paying a bill in full or having a full food shop.

@Darkstar4855 on a £28k salary you aren’t likely to pay off a student loan before it’s written off

The OP is talking about a ~£40k salary though.

My loan is never going to paid off. I owe 20k and have 12 years left. I'm 44. It's so depressing. I know that doing the degree was the right thing at the time but I really wish I hadn't bothered right now

You’ll pay your loan off quicker and then you’ll have a higher income.

I know, I have thought of that angle. But I need to be able to survive now, and it's a significant amount of money to lose, plus the extra stress the role would bring will definitely not be insignificant

So you're going to be on £40K? Surely you won't be entitled to any benefits at that salary? Aren't they meant for people who actually need them?

This

The problem is that messaging around a student loan is all 'it's not really a loan, it's more a tax' when you take it out. You're told not to worry about it, that it is not like other forms of debt etc etc.

But in this instance it is being treated as a personal loan. UC wouldn't take into account if you had credit card debt to pay and then reduce your recognised salary buy that amount. They are treating this in the same way. They are treating the student loan, as a loan.

There are pros and cons to both ways of treated a student loan, but it is all a bit contradictory to want to treat it both as a loan and not like a loan at all. Which is what the gov really is trying to pull off.

My calculations might not be right, I don't know the situation. Students loan are only taking around an extra £80, it's because you are coming off UC, that is £450+ (55% off every extra £1). It isn't a nice step, I know but your moving to a better job and hopefully you can earn more in the future.

At your new salary, I think it has a good chance of being paid back.

12 years at 130pm = £18700. Considering there is a good chance your salary will go up again in that time, if just by inflation, I think you will pay it off, tbh.

Yes this is mad. they should have raised the repayment threshold in line with the cost of living to stop it interacting with the benefit system

In £38,000 job you will gain experience and can probably earn at that level if you move jobs or get pay rises.
At £28,000 plus benefits you are at mercy of government. If they decide to stop or cut in work benefits you would struggle whereas £38000 is more secure income.
Presumably your top up benefits will reduce as children age out of childcare.

Would the promotion open up roles with other employers? I'd focus on whether taking this promotion might mean you could apply for another job that pays more in a year or two. Then that money would all be yours to keep and you won't have to deal with DWP anymore.

It's frustrating but just accept this as a hump you need to get over and then you will be in a better position.

Your new wage after taxes and student loan etc will be about £500 month more.
you say you will lose 55p for every pound of student loan extra which comes to about £43. So you will still be £450 a month better off.
even if you also lose 55p for every £ of that you will still be a couple of hundred pound better off won’t you? Plus once you lose the childcare or the kids grow up you will lose all you universal credit. At least with the pay increase that will be yours whatever plus you will be less reliant on benefits and any cuts that may happen to that

It's a bummer, and I hate the whole bloody system, but if your UC was assessed on your pay net of the student loan deduction, the DWP would be effectively covering your repayments.

This.

Your promotion could lead to further promotions, or an even better paid job.

You also won’t be paying childcare forever so should see more of an increase in salary in the future.

Tax credits also tend to end when your dc turn 18 so you’ll lose that money then anyway.

If you turn down this promotion, it may not be something that you’re offered again in the future.

Back in the day I got family tax credit and 95% of it was the childcare element but they included the income and not the childcare costs.

I ended up reducing my hours slightly so then I was better off!!

Perhaps you could work the new job at 0.8FTE or a 9 day fortnight or similar? Ask for it as a trial?

One word: pension! You will accrue a much better pension as your salary goes up.

Look at it another way, why should the benefits system pay for your student loan, which is what would happen if your income was assessed after the repayments? You chose to do the degree and get the loan, you knew the t&cs. You will still have more money than you do now if you take the promotion.

You're absolutely right I know. I guess I'm just having a bit of a panic.

Let me spell it out for those asking why I get top up benefits...I take home around £1750 currently and my rent is £1100, not a lot I can do about that. Plus childcare. Salary calculator says I'll take home around £350 more on new wage, so yes I'd still be entitled to some UC. Trying to think if the longer term... pension etc.

I don't need the degree to do my job. And yes it is depressing, both because of the fact I might never pay it back but also because as a pp said the repayments should have been adjusted given the current situation.

Not sure if new job would open doors elsewhere, it's public sector but would give me more transferable skills.

Appreciate all views to be honest