To wonder why anyone rushes to pay off their student finance?

[ChoppedChorizo]

A couple of friends of mine make regular overpayments with a view to paying it off quicker. Some have used inheritance to clear it. I don’t understand the motivation? The lot gets written off if you haven’t paid by X number of years.

Mine has continued to increase - I started uni in 2012 so my fees were around £7k per year. Plus living. It sits around £23k now.

Ive earned well enough but did a post grad (self funded) two years of training on the job and then had children and so two years of mat leave.

I don’t see the motivation to pay it off sooner.

My mortgage broker works on Affordability , whats so hard for you to understand that?

I know all the retail bean counters in banks look at gross salary, I would NEVER go to a bank for a mortgage, no-one whose serious about buying and selling property does, and you know that.

And what I say about it being a cheap loan stands, any financially literate person knows this also.

I was plan 1 too and it took me what felt like forever to pay off. If I could have got rid sooner, I would. I cleared it the same year my eldest went to university. I didn't know that other plans hit differently until reading this thread. So I do thank the OP for raising it and I do now understand more. I do think education should be fully accessible and - if not free - affordable. It's all quite depressing really!

mortgage broker...... I would NEVER go to a bank for a mortgage, no-one whose serious about buying and selling property does
Awwwww, that's delightfully funny. Someone talking down to a mortgage underwriter who doesn't realise their mortgage broker put the details into a bank or building society system to get checked... by the mortgage underwriter. It could even be cute if the ignorant one wasn't so rude.

Yes I don’t think anyone disputes that but it obviously enables you to select the best deal for you.

You took out a loan, from the tax payer. You agreed to pay it back. Just do it.

In answer to the OP my DD did an NHS degree 2015-2018 so her tuition was funded by the NHS. Her loan is therefore maintenance only and she only got the minimum (which was also less than the minimum for a non NHS degree) and we were expected to sub her.

She therefore was in an extremely privileged position of finishing university with a debt of around 13k. 8 years after graduation she only has a couple of grand left on her loan and I keep telling her the interest rate is awful and she should be over paying it. She doesn’t.

DS did a standard degree and even on the minimum maintenance loan his debt is huge and I would never suggest over paying that.

You need to do the maths on your individual circumstances surely.

What do you earn and will you likely have to pay it off or will some (and if so how much) get written off.

Apply the interest rate and see if it's worth it. If you're having to pay the whole lot off and paying interest on it then whether it affects affordability on anything else isn't really the point - it's interest you could avoid paying if you paid the loan off.

It's accumulating interest. If you earn enough to be paying off in full then you will pay less overall if you pay off quicker. It all depends if you're likely to pay off in full though!

I left uni in 2008 and I genuinely think the SLC is the scam of our times. We were all told it would be like buying a cd each week or buying shopping now and paying for it in line with inflation. It simply isn't that.

I left with £12k debt. As it was a recession, it took a while for me to earn enough to pay it back. By the time I did, it was £16k. I've been paying over a decade and it's still more than the initial £12k. Imagine if that was at today's costs of £54k leaving uni!

I have no issue with taking a loan and paying it back but the payment terms are unclear if not misleading.

@surreywilds so you don't have a mortgage from a bank? Your broker lends you the monies??
And this bean counter underwrites mortgages exclusively from brokers! From all over the UK!

I paid mine off and kid of regret it. This is because I didn’t realise then that I would become a single parent working part time and claiming UC. When I left uni I got a full time job. I bought a house and then a year or so later sold it to buy another with my partner. I decided to use some of the equity gained from the first house to pay off my loan. I didn’t put it towards the next house as we needed to go in equal. However fast forward many years and we divorced after 2 children, I was made redundant and then offered a part time role so I then claimed UC to top me up. I’m still in that role 10 years later and earning no where near the repayment threshold. However I’ve since done a masters and taken a masters loan and have just left the repaying to when o ever earn enough.

Many people treat it as like another ‘tax’ deduction from salary though and the monthly amount can be rather small depending on earnings.

I used to get annual statements for my student loan and no matter how much I paid off each year the internet was almost exactly double what I paid (just a few pence different). So each year it just went up and up.
I paid it from 2004 until 2011 when I stopped working when I had my son.
I then started paying it again in 2021 when I returned to full time work.
I haven't received a statement from the student loan company since 2010 so I dread to think how high it is now.
I don't think I want to know how high it is.
Only another 21 years until I am 65 and it gets written off.

student loans aren’t cheap if you’re on plan 2 it’s currently 7.3%. Whilst mortgage lenders won’t specifically ask about your loan, when they see your payslip it will count towards affordability!

I am 🤣 on exactly the terms I agreed too. I just have options with those terms I’m exploring in this post.

@celticprincess I’m sorry to hear that. That’s part of my reluctance to repay it. I have only just starting earning over the threshold and me and DH are always chopping and changing financial plans. I think I’ll leave it for now and reassess in a year or so.

@Horserider5678 yes - others have said the same. I hadn’t appreciated how expensive it is for plan 2.

@LetMeStopWhatImDoingToFixTheProblemYouMade i agree it’s a national scandal. Mine has stayed the same since graduating and then grew over mat leave. That seems unfair in itself - maternity should surely be a time exempt of interest. Yet another way women miss out!

I posted near enough the same pages back. Got told I'm financially illiterate and that I don't know what I'm talking about. According to a poster there are no deductions made, the loan is cheap and you're financially illiterate if you think it's not. Oh and never use a bank for a mortgage, use a broker because brokers lend you the money yourselves without any questions, just need to know your net pay!

Who is this mysterious "taxpayer" who gives out student loans and pays for public services? People throw it around as though it's a separate entity from the rest of us - public sector workers and people with student loans. I pay taxes so evidently I am the very same taxpayer who gives out loans and pays my own salary...
I didn't agree to "pay back" the loan. I agreed to make regular repayments on any income above the threshold. The difference is subtle but it's there.

@Jmaho what’s been said about mortgages has been misconstrued over and over. I never disputed and in fact acknowledged and agreed, that the student loan repayments would be taken into account by any lender. My assertion, which still stands, was that I’ve never been asked what the BALANCE of the total loan was AND that it’s never been a prohibitive factor in me borrowing what I need. I don’t dispute it might have brought down the overall sum the lender was prepared to lend, but I’ve always been able to borrow what I wanted/needed and so it’s not been a barrier for me. My point was that I’ve not found it a hinderance when managing my finances.

@catza exactly.

I think you're being too generous there, it's not even a very subtle difference.

That is if their salary remains stagnant at 35k which I doubt

Maybe because people have aspirations to earn more and more over their lifetime and they don’t want to settle.

Maybe because they have some morals and don’t have a scrounger mentality.

You borrow money, you pay it back. Why should the state pay your education and give you opportunities for you to then game the system and benefit from the education then shirk the responsibilities. Honestly.

It’s not your money though is it? Do you just not pay back money you borrow generally? Wouldn’t want to be your friend or family member.

I suppose the main reason is some people treat their debt seriously and wish to pay back what they borrowed? Just because it gets written off eventually doesn't mean you shouldn't try to pay it back. All debt gets written off in the end, if you die and your assets don't cover your debt it doesn't get passed on to someone else.

Nobody forces someone to take out a student loan. I know lots of people who don't have one. University is a choice.

@ChoppedChorizo I agree. My comments weren't aimed at you it was a different poster.
The balance of your student loan won't make a difference on a mortgage application but most will deduct the amount you pay each month and class as an outgoing in the same way they would a personal loan
I look at lots of cases from brokers where it isn't on the application but is on the payslip and I just add it in. 9 times out of 10 it doesn't make any difference but sometimes the payments are huge and it does really affect how much you can borrow.
I think this thread has confirmed that it really depends on your own personal circumstances as to whether it is best to repay it quicker or not. Some more recent graduates on high salaries are paying huge amounts each month and because of the now much higher interest rates the balance keeps growing. Some people are fine with this, others find it stressful and will want to pay it down as quickly as they can