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.

Many people do earn enough to repay. Keeping earning low to not have to repay is somewhat cutting off your nose to spite your face. In that case it makes sense to repay as quickly as possible given the interest rate is higher than saving rates. It used to be lower so it made sense to leave cash in savings.

Are you paying it or not?
Your replies are very contradictory.
Actually I don't care, I've given you more than enough of the attention you seem to crave.

Because when the interest rates went up it was cheaper for me to stick it on an interest-free card than pay the high interest rates. I'll be paying off the rest before the interest-free term ends.

Also the pay back rates can be entirely different. My DH started uni 2 years after me and his loan gets cancelled when he reaches 45, whereas mine doesn't until I'm 65. So there's no point paying his off (his is actually higher than the initial amount because of how little he's paid off) but there is mine (which is nearly done).

Depends how you do it! It's possible to earn well over the repayment threshold and pay nothing, as long as no one job/self employment goes above it. Wouldn't suit everyone, I know, but there are some of us who do prefer the type of working pattern that facilitates this.

Three Cheers for anyone minimising what they pay back.

1. Interest rates on student loans are usurious - there is no real reason they should be much above base rate - only the student loans company profit - Not the treasury. These interest rates are the reason why student 'debt' is such a huge figure on government books.
2. There was already a 'graduate tax' applied to higher earning grads, it's the 40% tax rate.
3. Individuals who've given up 3/4 years of earnings to gain higher education are, in the main, providing necessary contributions to the UK/World. (I'm not saying 'better', just 'necessary' - some jobs need higher education)
4. my generation were actually paid to go to university (i went on full grant) it is inequitable that later generations are being saddled with debts for education.
5. Even worse the government in the past have retrospectively changed loan terms, varying interest and loan term - what other credit product can make arbitrary changes to loan Ts&Cs?
6. Martin Lewis may be correct in calculating this as 'cheap' loans for some people, but when you can't trust that the loan terms would stay the same, why take the risk.

You seem pretty invested replying with a laughing emoji to each of my posts 🤔

Thanks - I can’t speak for others but my earning isn’t decided by my repayments. I haven’t really given it too much thought until now - they just get deducted and that’s that. But now I am giving it some thought hence trying to understand it better.

She is obviously an angry individual determined to deliberately misinterpret what is being said to try and be provocative.

@FrankieStein403

1. my generation were actually paid to go to university (i went on full grant) it is inequitable that later generations are being saddled with debts for education.

My parents were the same. I shudder to think what higher education will cost for my children. I was annoyed as my fees were the year they increased from around £3k, so my brother had a significantly smaller loan but I hadn’t appreciated just how expensive it is now until this thread. Some of the figures are insane. More than my first mortgage and I’m only mid 30’s!

You make it sound as though people are deliberately keeping their earnings low. My salary is set by the government and if I want to continue using my degree, that's the salary that I am going to get. I am not deliberately keeping it low, it's what it is for the job that I do.

@catza I think some posters don’t appreciate the mechanism of repayment.

Yeah I think you're right. I've toyed with the thought of paying mine off because I like to keep my monthly outgoings low but everything I've read does not recommend paying it off unless you have high income and no other debts.
I wish SLC would offer discounted final payment settlements but they won't because they make more money charging interest

I hadn’t really considered the profit element of the interest because when I took the loan (and historically) it was so low. But reading what other people are paying on Plan 2, which is something I hadn’t engaged with before I can see that it is now a tax of sorts, rather than a the loan that was sold to us for the benefit of our education.

Hey. There was someone up the thread who said they were determined not to pay the loan off and gave tips on how to avoid it. They suggested getting 2 jobs as apparently that means a different threshold for repayments. Maybe that is what is poster is getting at.

So the real picture is you don't truly understand how finance works. Mortgage providers don't ask about the OS balance - they see that the loan is being taken from your pay via your payslip and include in their affordability calculations. You have not been prevented from borrowing because the repayments fall within the affordability AFTER your loan is paid.

As others have pointed out, you shut down anyone with a different experience. If you are right and everyone else is wrong, why have a discussion? You only want to hear those that agree with the way you do things anyway.

To summarise: Financially savvy individuals model their projected salary and the likely amount they will payback over the upcoming 25 years. If likely to payback less than the amount borrowed or the loan equivalent and not make a dent on the interest, it makes sense not to overpay and just stick to the minimum (this is the majority for the newest plan). If you are a high earner and likely to end up making full repayment, better to clear sooner if you can afford to as interest rates are high (especially for the newer plan). One would factor in other loans and investments to this calculation and make predictions on salary rises/career breaks. It is a calculated risk, not everything goes to plan but each person makes the best decision at the time and adjust as necessary.
That it all there is to it but you seem to want to keep going round and round in circles whilst shutting down anyone who you don't like the sound of🙄

The faux reaction towards your 'friends' being wrong and the Martin Lewis way being universally fit for all never fooled me and you just don't like that I pulled you up on it. The reaction I have received to my posts shows quite clearly that many others agree

I'm in same position not in a position to even pay into a pension fund because of it. I don't get how it's oegal
to put this much interest on and keep hoping one day someone will do something until then I pay £250 each month and they keep piling on the interest

@Toomanyusernamestochoose
the “real picture” is that the amount of my repayments has never been significant enough that I haven’t been able to borrow what I wanted - that is entirely subjective. My student loan has not been a barrier to me acquiring a property, or borrowing what I needed - which is entirely dependent on the LTV - which I was obviously able to satisfy. Yes I have a mortgage - but have never needed to borrow the maximum amount a lender would lend.

I understand the responses given and have acknowledged them.

Bravo for being so smart.

Corr I’m sorry it’s having such an impact. That’s terrible.

There's so many different replies - it's good you are paying some back, but a few posters definitely don't plan to.
Addled brains today, sorry.

But a tax that you don't have to worry about if you had the prudence to go to university before a certain date, or to have parents who'll pay it upfront for you. Only for the profligates who don't tick those boxes!

Absolutely - it’s criminal. Education was always a right of betterment that should be available to all. I honestly never gave much thought to taking a student loan, it was just what you did if you went to uni and that was free choice to make based on whether you want to. The expense must be so much more prohibitive now.

@Zusammengebrochen your commitment to my posts, as a stranger to you on mumsnet, is commendable. Although we’ve not agreed on this post your trolling with laughing emojis has given me a chuckle this afternoon.

I saw a post on another thread where Zusammengebrochen put a laugh react where someone said they were autistic.
They were pulled up on it, and they said they found it funny.

I think my initial comment has been taken more seriously than intended and as I stated subsequently - I pay exactly what I am required to pay. Despite doing that for the past 21 years, my student loan balance is the same as it was when I left university.

Another flippant comment for people to froth over: Hate the game, not the player!

I don't think plan 1 is written off till over 60 and you have to repay once earning over 24k (or something similar), so if you are always going to earn over that amount you might as well overpay to reduce the interest. That's only specific to the plan I am on. I've been paying off since 2007 ish and not only have £4 left. I did more than one degree