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?

Totally unnecessary.

It's been ages since I did my degree and masters but faced with my DS and DD going to Uni in next couple years.
I am a bit shocked as thought it was interest free?... as was in my day.

I would suggest reading up on current student loans, they are not the bargain they were made out to be, discuss this with your children so they can make an informed decision regarding their future education/career path. If the uni course is unlikely to guarantee a very high wage, see if they could find an alternative career

She’s done a masters as well though, so that will have added a chunk to her loan, plus been another year of her original loan going up without her paying any off. And the last few years plan 1 interest rates have been over 5%, and up to 6.25%. And it depends how much loan she took initially. If she was entitled to, and took, the max maintenance loan that would have increased it.

But also you paying it back in 9 yrs isn’t typical.

I honestly don't even remember I have a student 'loan' tbh, never once think about it! It's not really 'debt' in the same way CC debt would be...

Most people never pay it off, I've never made a single payment. Mine will get written off before I pay any of it I'm sure.

I'm an idiot though that did an Early Years Degree followed by gaining Early Years Teacher Status just to get an extra 15p an hour haha so definitely will probably never earn enough to pay it back!

Useful!

https://www.moneysavingexpert.com/students/which-student-loan-plan-am-i-on-/

The thresholds are not increasing as fast as minimum wage in a couple of years you may find that you'll end up paying in the same way as income tax thresholds not increasing has dragged more people into paying tax

The loans today are shocking which is why we are trying to fund my daughter without the living expenses part of the loan. The rules have changed and they can change the interest when they want. I agree with it all being paid back but not with this interest . It just keeps poorer children in their place while rich ones sail through education without a care inthe world .
My advice to anyone with children who may or may not go to university in the future . Save save save as much as you can . Sacrifice the days and nights out to make sure they leave university with as little debt as possible. Go onto the MSE finance calculator and work out how much you need to save monthly before your children start university. Make sure they get a job even in the summer holidays / weekends as soon as they can.

You’d have to start paying it back when / if you earn over a certain amount. The amount or threshold depends on what Plan you’re on.

Thank you Juniper and AbsentMinded, will have a look. Son doing politics but daughter will likely be at drama school so likely to never be able to pay off?

If I had a child now, in 18 years that child could go to uni. I would still be paying my student loans back and be expected to contribute for the parental contribution side for them.

Just pay the repayments from your salary. Depending on the loan scheme(s) you were in it will get written off eventually.

It's just a stupid way of running a graduate tax.

Yes, it’s not worth worrying about. Just consider it as an extra tax.

I borrowed around £40k, have been making repayments now for 9 years (currently paying £240 a month) and I’ve never paid back enough to cover the interest for that year. I am now close to £65k, it’s ridiculous. I just accept that I’ll never pay it off - have calculated I’ll pay back around what I’ve borrowed when it gets wiped and that sits fine with me. I’m a high earner and still won’t pay back in total, but I am also plan 2 (first year of it). My husband has paid off his plan 1 but is also a high earner in the NHS and only had £15k in the first place. Best to forget about it as it comes out of your salary, since you aren’t paying much each month.

ETA: mine gets wiped in 21 years. I think yours gets wiped sooner OP?

I left in 2008 and started paying back in 2015. I owe more last time I looked than I did when I left. I got a bonus last year and 900 went to them. Made me feel sick in all honesty but it is what it is. I’ve said it before, o think student loans are the biggest scam of our times. We were told it was like borrowing money for a bag of shopping at that time and paying for it now. That’s absolutely not what it is and I’m certain I’ve paid more than I borrowed in that time.

I believe that the later loans (plan 2) will never be written off too which just adds a further round of unfairness to it.

it’s exactly right that high earners pay it off. DH paid his off about 5 years ago and graduated a year before me. In the last few years he earned double what I did.

If he goes to uni for 3 years, he would be paying £9535 per year for tuition. That's £28605 tuition loan debt. If he earns over £25000 (barely above minimum wage full time) a year he will be paying 9% or his income above that straight on student loans. His debt wouldn't be written off for 40 years. With high interest he'll unlikely to be paying anything off the tuition cost and will potentially just end up paying in effect an extra tax for 40 years. You may also need to pay a parental contribution if your household earns over a certain amount. Can you afford to subsidise his living costs while he's at uni?
Take some time to understand the impacts now, so you can have open discussions with your children

All the loans currently will be written off. Plan 2 after 30 yrs, and plan 5 after 40.

Exactly what I've done, upped my pension contributions to 10% of salary so the threshold for repayment is lower. I've paid back about 12 quid of a plan 2 loan for a degree i only completed the 1st year of due to ill health

They will find you OP

I’m 41 and only paid mine off last year!!!!

I will never take for granted being in the "right place right time" to be a student.

I did a masters here in scotland 2003-2008. Tution fees paid for by government and walked out with a £6K student loan to pay at the end of it.

Luckily my loan and grafting a weekend job throughout (full time in the holidays) survived me through it. It only took 3 years to pay off.

The debt students have to contend with these days are ridiculous.

My son finished his Masters in 2016 and did a PhD for 4 years during which his loan just increased with the compound interest. He’s now a lecturer and his repayments don’t even cover the interest.

I finished paying mine off much to my surprise last year, I had an undergrad and PGCE loan (pre top up fees) I never really thought about much I’m paying because I’m self employed so it just gets whacked on my tax bill but when I looked I was paying nearly £6k a year on my self assessment.

I am on plan 1. I borrowed only £10k by 2004. I then did a PGCE in 2010 and added a further £10k ish to my balance. I still owe about £5k! I've never stopped working apart from the year training to be a teacher and a few months on mat leaves when only earning mat pay. So been paying for about 20 years and still not cleared the damn thing. Haven't been earning to badly when a teacher either. I assume as my second loan was after 2006 I have 25 years on that. Was about 29 when I took that loan so I'll either clear it or it gets wiped by the time I'm 54. I'm 43 now.

I remember being told it was interest free when in college. Biggest scam ever. I bet it's cheaper taking out a personal loan for it rather than through student finance. If my kids ever want to go to uni, maybe it would work out cheaper for them if we take out loans for them that they repay to us.

I came out with only few grand of loans (in the late 1990s) but when I was earning £17,500 a year the SLC took over £100 a month off my take home pay. It was over 10% of my monthly salary! When I was earning a bit more I chucked money into it and paid it off. I'd rather have it that way round but still, I'm glad they are not taking great chunks of salary off people.