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 just struggle to understand why people don't feel any personal responsibility to even repay some of it. Why is it ok to spend money that isn't yours?

The student loan isn't really intended to be paid back in full. The government know that most people won't be able to pay it back in full.

The loan levels are set and the repayment levels are set. There is no requirement to overpay until it is paid off.

So the only people it would benefit from doing so are very high earners who would eventualy pay it back over the repayment term but who would save a load of interest by paying it off early.

Even people who don't pay it back in full are paying it off monthly for (in my case) 30 years.

I am repaying "some of it". I am repaying what I am required every month. I don't know how you managed to establish that I pay nothing since I stated many times that I pay 9% over the threshold as per my contractual agreement.
I would have thought reading comprehension was high on a list of requirements for a degree....

In my case, because it was sold off without my consent. I had been repaying, then had some low income years due to ML and a couple of other issues. But I always knew I'd earn a lot more quite soon. And I'd have told them as much, if they'd asked my permission to sell the loan off.

Soon after, by coincidence, I found out that you can go over the threshold if it's not all in the same job, iyswim. And my career was going that way anyway. So no, I don't feel any personal responsibility to make any repayments to whatever hedge fund bought it. And the state sold off 1.2 million loans, so there'll be a lot of us.

The current threshold is pretty low, by the time current students graduate if they work full time in any job they'll probably start having to pay it back straight away. And it's for 40 years

I don't think I do earn 'so little' though, I earn a smidge over £30k, which isn't too bad at all considering I'm part time. Ok it's not mega bucks, but I'm not a low earner. My point was there's no incentive to pay it off as the interest is much more than the repayments.

You're sort of right
It's not recommended to pay it off because it's a safe plan not because it's a cheap loan
If you lost your job/became too ill to work/die then you don't pay the loan back as it's based on what you earn. Therefore it can be risky to pay it off in full in case something happens. Therefore if you had a lump sum to pay it off it makes more sense to pay that lump sum against other debt such as mortgage
Martin Lewis is trying to rebrand it as "graduate tax" based on the fact with the new plans very few people will ever pay it off
Im in NI so I am on plan 1. I started on 27k and 11 years later have 10k left. I pay around 180 a month and would love to have that extra 180 a month in my pocket lol but I feel lucky in a way because I am doing a job that my degree requires. A lot of people are paying for degrees they have never really used.
People saying it doesn't affect mortgages - it 100% affects your affordability of what you can borrow as it's a payment coming out of your salary each month.
Also a lot of people I know in NI end up going down south to ROI to work and never have to pay their loans back. SLC don't/can't automatically take it from their salary because they aren't in the UK anymore.

MSE has an article on this, OP:

https://www.moneysavingexpert.com/students/student-loans-repay/

I paid mine off because the interest rate was the highest of all my financial products. It was slowly going down but I'd have paid a lot of interest before paying it off. In the years of low interest rates it was a cheap loan but that's no longer the case. The money I paid off is no longer being charged at 7% or so per year so that's a net financial gain as no savings account pays that

They were expressing their point of view. It really is not that difficult to understand everyone has a different approach to debt and how to tackle it and I would assume someone who is well educated to be aware and not feel the need to start a whole post implying how others in their social circle don’t manage their money correctly because they chose to do it differently when you don’t know their entire financial background - that to me is snide.

Some of your posts are misinformed too - for example the one about having no impact on your mortgage which posters have corrected you on. As they said - it’s on your payslip for them to see. Just because you were unaware does not mean the bank did not consider it.

I agree with other poster comments about majority of students now being given loans without realising they are actually signing themselves upto 25 years of additional tax rather than a loan repayment - the government have deliberately done this to ensure they get the maximum back. Had you started a thread discussing this, my answer would be entirely different

I overpaid mine for the simple reason that making payments from overseas every month was a real ball ache, and I wanted the headspace.

I was one of the first years to have loans and graduated with about £15k of debt.

I loathe debt and didn't have or want a house or car or baby in my 20s. I had plenty of money to save so I paid the student loan off. I don't think I'd be comfortable with a huge debt hanging over me and psychologically it was the best thing to do.

I later had savings and could have paid off my low interest mortgage but decided to do the "right" thing by investing it at higher interest instead. Of course the shares tanked and I lost thousands. Really regretted it. I always pay off the debt first now.

So in your case it makes sense to prioritise other debts, as you are doing. As you can see from the replies though, for others it absolutely makes sense to prioritise a high interest student loan.

Does that answer your question as to why people do it?

And that’s not a value judgment? It’s not a fact is it? It’s entirely subjective.

Where’s the calculator please? I followed a link on this thread but couldn’t find it.

Yes - it’s been a helpful discussion, I always find it odd when people come to a discussion board and with a view to shutting down conversation - why not stand in a phone box and speak to yourself?

It’s not misinformed to say that my repayments haven’t prevented me from borrowing what I’ve wanted to. Nor that I haven’t been asked about the OS balance.

I’ve joined a discussion on this thread - it was an opening post, which has since evolved. If you don’t enjoy the thread move along.

How is it not factual though?
You are contributing to a pile of unpaid debt.

You are attempting to shut down anyone with a different opinion or experience.

Not if I’m repaying more in interest than the capital balance.

Thanks @Flosset I was musing that this morning, £23k in the bank is a sizeable safety net if had a period of unemployment (and my work is of a nature where I can schedule in a month off here and there - which is nice with the children eg school hols). It seems “safer” either in the bank or in my control. But I get the logic of interest vs capital.

Haven't read the full thread, but I paid off the last £4.5k of my student loan yesterday. It's taken 13 years (plan 1).

I'd already been moved to a DD to pay it directly as I was in the last year, so I was definitely going to pay it off. That's ~£350 no longer taken from my net salary and I'm so chuffed. I worked out that any interest earned on the lump sum was less than the interest that would be charged on the loan after savings tax was applied. No other debts apart from mortgage.

It was very anticlimactic on the phone to SLC though 😅

Plan 4 debts don't get wiped off 30 years after graduation, they get written off 30 years after the date that you first triggered a repayment which, if you were earning a low salary, might not be for some years after you started working.

DC started university in 2023. In the first year took minimum maintenance loan and tuition so total was about £15k. By the final day of term in the first year that loan had accumulated over £800 in interest.

I started paying it back as soon as I graduated. I have gaps where I didn't make payments though - 2 mat leaves for instance.
But even if it was later that I started paying back, I'll still never even pay the interest at £7 a month repayments, there's absolutely no point (in my situation) of making any extra repayments.

I don't really view it as debt at all but an extra deduction on my way, which I will pay for pretty much the rest of my working life, until it is written off.

To aim to not pay any of it off is a very strange approach imho - sure, you might not pay it all, but at least make an attempt.