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.

I paid mine off some years ago now, the interest rate - even in Plan 1 - was always the highest 'debt' interest I had at the time and if I still had the student loan today would still be a more than my mortgage rate which is currently 2.15% and which is my only debt.

Personally I never really understood seeing it as a cheap loan because it always seemed expensive, to me. Certainly whenever compared to my own financial situation at the time, it's always been the 'thing' with the highest interest on it.

@Zusammengebrochen there’s also a distinction between avoidance (which you can only really do by avoiding employment) and overpaying. Which I’m sure you’re intelligent enough to understand.

Mine comes out of my pay every month and after art from a cursory check when I receive a statement to see that it’s actually gone in (I recall an issue where the payments weren’t being applied) I don’t pay much attention to it.

I don’t know the outstanding balance, no idea the rate, don’t know if it gets cleared at any stage. It’s just there being paid and probably barely covering the interest.

I can’t afford to overpay so it’s not worth thinking about.

For a low earner, yes it likely makes sense not to repay early.

For a lot of middle and higher earners it does absolutely make sense, as due to the interest on the plan they will pay back many times they borrow.

Much better to pay it off fast. The interest is insane now. It's a tax for life on earnings - the earnings threshold is very low so it will lower take home pay the longer you have the debt. People should also be aiming high to earn more - thats a good thing. Settling for a lifetime debt under values yourself for life. People need to take responsibilty and aim higher. Particularly with benefits finally being cut back.

@CoffeeCakeAndALattePlease i have always been the same. I suppose I’ve given it some thought because I’m in a position to clear it if I want to and at a stage where I’m thinking more seriously about pensions, retirement, mortgages and where is best to direct our savings.

I owe them 41 grand 😔 i am paying it off about £60 per month but it's barely touching the surface

This thread inspired me to log on and look.
Apparently my balance is just over £10k and after interest it’s decreasing by about £800 per year. So I guess it’ll be paid off my the time I retire!

What do you mean "avoid repayment". I repay exactly what the loan terms state. It's not really my fault that my postgrad salary is not sufficient to repay the loan in full within its term time. If you are so outraged by that, then go ahead and campaign for the increase in NHS pay and teacher's pay. We will happily pay off our loans if we earn six figure salaries.

So there should not be any teachers, nurses or AHPs or social workers in you opinion? We should all aim higher? Why not scrap these courses then since these professionals are simply settling for life in debt.

If people know they will pay it off eventually, then they can avoid interest by paying it earlier, that is the main reason. If you're not earning enough or are in and out of work, then a bigger savings buffer may make more sense for you. Instead of looking at what everyone else is up to with necessarily little understanding of where their situation differs from yours, get some independent financial advice based on all your own financials and circumstances.

I just used their calculator and it said it’ll take 23 years to pay it off…. But it will get written off when I’m 65, so that’s actually in 20 years.

The OP is right. In many cases, student earnings are not high enough for them to repay their student loans before they are written off by SFE. Therefore if you make overpayment in this scenario, you are simply paying money over that you don't need to.

I'm on plan 2 and the interest is nearing 9% now. It's also not a choice as soon as I earnt over the threshold they started taking money directly from my wages (via my employer) I currently have about £2k left and plan to get rid as quick as possible. It also affects bonuses as well each year as the more you earn the more you pay so it makes sense to over pay, I worked out I lose one payment a year in interest...

This one is a good case for working out the interest cost to take it into account. 5% interest will double a sum in 14.4 years, so you'll need to work out total interest plus payments to see if you make a bigger loss in interest despite missing the last 3 years of payment.

I didn't earn a six figure salary when I paid instalments or a lump sum. It was my debt so I was responsible for paying it back. I don't understand the attitude of feeling no responsibility to pay money you spent.

And I am responsible for my debt as per the contract, terms of which were agreed by both myself and the lender. The terms are that I pay 9% of my salary over the threshold until the remainder is cancelled after 30 years. Which is exactly what I do. I am fulfilling my contractual obligations and the lender is fulfilling theirs.

You must see how all this unpaid debt doesn't just exist in isolation though, right? You feel no responsibility to even attempt to pay back what you spent? This highlights what's wrong with the mentality in the UK.

A degree might have been wasted on you lol you seem to be lacking in critical thinking

I couldn't stay at home. Parents kept cranking out kids (no room) and it was a tiny town on west coast so no uni in commutable distance really.
Accepted the debt. Got a degree (and shock horror a second with a graduate loan).

Graduated into a fab career and nearly cleared the lot now. Still managing to overpay the mortgage.

The city I went to uni inI met my husband so that massive debt you couldn't bear to carry around got me two degrees, A fab well paying career, gorgeous baby, lovely husband and house I love in a nice area. Worth every penny to me and millions like me 🤷🏻‍♀️

I feel responsibility to fulfill my contractual obligations. The lender did not have to propose the terms but they did so having assessed their risks. I am guessing you went to uni before the tuition fee increase so you have no real concept of how fast a 90k debt grows over the years with 9% interest.

The fact that it's so big should be more incentive to attempt to pay some of it off.

I think that many people paying back the minimum will pay back the original amount, but the interest piling up means they’ll never clear it.

At least that's making an attempt. 👍

Where is the incentive? What am I getting out of paying more? A gold medal? Your personal approval? None of these things matter more to me than a roof over my head and food on the table while doing the job I love.
To put things into perspective for you, I have to pay extra 13k a year just to cover interest without offsetting any of the capital. On the other hand, I can overpay my mortgage by the same amount which does directly benefit me. The choice is pretty obvious here.

It's not longer that cheap a loan !