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 😔

Don't forget UC pay 85% of childcare up to relevant thresholds.

That did not come up in any of the calculations, it was there but said I wasn’t entitled to that help.

Irrelevant now as DH and I are fine.

Difficult to know why without the individual details.
One obvious reason would be if your partner didn't work or have LCWRA. Another may be if you weren't using a registered provider.

Ignoring pension contributions, about which you have given no details, an extra 10k/year is £833/month (gross). Assuming your tax code is normal you will pay an extra £166 tax and £103 NI each month so your extra net pay will be £564. It is this £564 that is subject to the 55% UC taper rate so you will receive £310/month less UC (assuming you receive more than this) . You will then pay 9% of the monthly gross extra student loan repayment - £75/month.

So overall, you will be 564-310-75= £179/month better off.

This isn't a lot extra for a £10k pay rise, but it is wrong to blame it on the student loans, when the UC reduction is the largest deduction (that's you paying for yourself instead of "us" paying for you), the second is tax and the third is NI (that's you paying a fair contribution for things like health, education and others receiving UC). The student loan repayment is the lowest reduction.

YABU. You had benefit of the loan for education. You knew it was a loan. Now it is time to start to pay up. Why is it unfair?

As unfair as it is, I do agree with PPs that the less you have to rely on the government, the better.

UC, tax credits, whatever benefits - it's very easy for them to later send you a letter and tell you that you need to repay them a lot of money, usually because of some miscalculation on their part. The more income you can get from an employer - as part of an agreed salary - and the less of what the government seems to cynically consider an 'elastic handout', the less beholden you are to them both for ongoing payments and any historical recalculations that thus become sudden debts.

Exactly ! It would hardly be fair on all those others earning a lot less who still have to pay all their loan back just because they aren't entitled to any benefits.

You will still be better off. It might not be as much as you’d like but you’ll be earning it yourself not getting it from UC and that puts you in a much better position for your pension, future emolument and generally not having to rely on benefits and the whims of the government. Presumably the high childcare costs won’t be for more than a few years too.

*future employment

On the higher salary your percentage pay rises each year will be worth more, so it will be worth it in time

I'm not sure what you're complaining about? UC isn't (or shouldn't) be a forever benefit that you feel entitled to, surely?You borrowed the money, of course you have to pay part of it back (this will fluctuate depending on your income, obviously)

I do think the student loan system is a crock of shite. But also having worked up from very low paid to now relatively high paid, and paying just under 10x per month more than OP in student loan repayments (got a masters loan 6 years after undergrad) without ever receiving any benefits, I struggle to sympathise with the premise of not taking the better paid job.

I do think everyone should claim what they’re entitled to and that benefits should be more generous overall. I don’t think it’s reasonable to turn down this job for the reasons you’ve given.

OP, this exactly what should be happening… you have been getting help, you’ve made your circumstances better by getting a degree, you do need to pay more on the loan, you should be looking for work that uses the degree to earn even more.

You are 40, you have 20+ years of work. Keep advancing!

Congrats on the promotion! Your future self in 20 years is going to thank you so much for the increased pension… don’t let your future self kick your now self for giving up the opportunity.

Still unlikely to ever pay it off if it's recent, i.e, £9k pa tuition fees plus living grant, so probably £50k, with interest added yearly too. These days you need to be earning more like £50-£60k to pay it off fully within the 30 years.

Obviously a lot different for older people whose fees were only £3k per year - they had more hope of paying it off!