Student loans- feel sick

[Lazy56789]

I did a degree around 15 years ago, and a Masters around 10 years ago.
A repayment is taken out of my salary each month based on my earnings, but when I received a letter from student finance today I saw my balance was 41k! And over 2k in interest was added in the last tax year.

It's terrifying, I'm not in a position to pay off huge amounts, how does anyone do it? The figures are eye-watering, I feel like i must've done something wrong for it to be so high?

Wow - the income threshold is now only £25,000pa.

Yep you can basically be working full time barely over minimum wage and you'll need to start contributing. I think there's still a myth you'll be earning a very good wage before needing to pay back student loans. On a median wage you'll be paying student loans until it is written off in 25-30 years time and people will complain they're paying off your student loans because you haven't paid it back in full when it's written off. Not taking into account the crazy amount of interest which means you'll have actually paid back the cost of the loan multiple times before it's written off. Unless you're a super high earner you won't pay them off anymore in reality

And plan 5 isn’t written off for 40 yrs.

My graduate salary was 19,000 per year, in the dark ages. The under grad loan didn’t need to be paid back til 25,000. And it was only 9k. I thought all of that was awful at the time. Everything was cheaper so the wages went a lot further, housing cheaper, food cheaper. It’s really a bad situation at the moment. I don’t know what the answer is, tax the Uber rich? The billionaires. Stop promoting university degrees where they’re not needed. Promote the trades and jobs that will always be needed.

This is me. Except I won't ever be able to repay and will have been paying my loan back for over 40 years before it finally does get cleared. My family were poor enough that tuition fees were waived (positive) but in order to live I needed to take the maximum studen loan each year. I will have paid back more than three times what I borrowed originally, but I had no choice and have to just suck it up and not let it bother me.

It must vary drastically depending on the plan then. I earn well over the minimum and never paid back more than £60 pm.

Dd is lucky to be on plan4. She is starting her first career job as a teacher in September. Plan 5 would require payments at the start, plan 4 will probably be from next year,

£32K seemed a much more reasonable threshold than £25k if it is for "the added earning advantage of having a degree". (with minimum wage being £23.8k for a standard 37hr week)

I've saved some cash so DC can get no maintenance loan one year, in order to reduce the amount they borrow. Reading this, I'm not sure there's any point to it. I'm thinking it might be better for them to take the loan and then I'll give it to them to cover their monthly repayments when they start paying it back instead.

It doesn’t. Plans 1, 2, 4 & 5 are all paid back at 9% of your earnings over the threshold.

Makes sense. Although weigh it up because I think interest is charged from the day the loan is taken out.

Don’t lose any more sleep over it and DO NOT make overpayments! It will be written off. Consider it a ‘university tax’.

Yeah, I’m dubious of it as a system too! Yes, HE is an industry.

Where are you getting 9% from?

Oh ignore me, I’m getting that confused with the interest rate.

Gov uk https://www.gov.uk/repaying-your-student-loan/what-you-pay

..

Student loans aren’t loans. They’re essentially a tax, that’s the way to think about them. Anyone who went to university after the fees being 3k has very little chance of paying them off unless they’re very high earners. I think I’m up to about 60k now. I pay £80 a month.

It’s a tax in a different outfit. Not commenting on my personal opinion of it or the politics of it.

But it doesn’t impact your credit score, ability to get a mortgage or any kind of finance - and anyone who says it does is wrong. So ignore it and treat it like a tax.

But a tax that only applies to some people who went to uni. You can opt out of it if you went early enough, or your family covered the costs for you.

Given when you did your degree fees were not that high I can’t understand how it’s £41k ! I finished my degree in 2011 and had it paid off by 2020. I paid extra whenever I could do avoid interest. £2k interest a year seems so high and I don’t remember mine being that high - maybe it has changed.

My loan wouldn't have been written off until 65 and I was definitely earning enough to pay it off well before then.

But regardless, like OP, I still freaked out about how much it was going up and wanted rid. It likely would have been better to pay into my pension, however, I probably would have done that as I was financially clueless.

Omg, you have done one of the worst financial decisions of your life. Paying off a debt who has not any impact on your credit score and gets wiped off after a period and not invest in your pension that grows with comping interests… honestly they really should give people some financial education in this country as mistakes like that can cost you loads of ££££

Mine very much was taken into account for my mortgage.

Again another lie we were spun

‘But it doesn’t impact your credit score, ability to get a mortgage or any kind of finance - and anyone who says it does is wrong. ‘

It influences the mortgage you can get - your ability to get the best mortgage for your needs. Affordability matters. 🙈🙈🙈🙈

Clearly they should give others grammatical and language lessons, however, we are where we are.

I have acknowledged that. But thank you for hammering it home.