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?

They don't count as a capital debt but the amount you repay each month is indeed factored into affordability calculations for mortgages.

This tends to be glossed over rather by MSE as ML does not want to dissuade young people accessing higher education as in many (but not all) cases this is still a better option for people to access careers or higher paying jobs.

I'm in the same boat OP except I've got plans 1 and 2 as I did a postgrad too. Its very hard to not think of it as a lump sum or look at those smallish monthly repayments and think God what I could do with those over the course of 45 years.

I have always worked and always made repayments, my salary now is very good and I get 2 generous bonuses per year. Student loan repayments go up to take more from said bonuses when they come in. In spite of all this, my loan has not significantly budged since I graduated 15 years ago. The SLC are allowed to raise the interest rates to whatever they like after you've taken out the loan, which is ludicrous.

I am very angry at all the teachers and careers advisers 20 years ago who told us all it was not a big deal and not to worry. It is a huge deal and yet another kick in the shins for young people. I won't be encouraging my DC to pursue a degree unless it's a very worthwhile subject and I'm in a position to help significantly with costs.

I've got a plan 1 and 2
I owe 25000 on the plan 1. When I graduated over a decade ago I owed 21000.
I have worked full time since graduating. I currently pay about £300 a month.
My nursery fees are over 2000 a month, so that 300 is a pinch, and I didn't understand that properly age 18.

I think of it as a tax, as i never see the before.

Laat time i checked the interest i was appalled. 6.25% (plah 1) - thrice my mortgage!

I remember vividly 20 years ago being emphatically promised it was by far and away the lowest interest loan i'd ever have access to, so to take what I could get.

That aged well.

The way we were missold these loans is a national scandal.

I graduated 11 years ago and it only seems to be going down now that I'm paying £300 per month. I still have £13k left and am expecting it to take another 4 years to pay off.

Exactly this. It should be know as a Contributary Grant. You make contributions to it as a percentage of your salary and after 30 years it’s wiped.

Relax, it's not classed as normal debt, won't affect credit rating or mortgage applications or anything as it's different. Just pay the minimum (the amount they automatically take) and it will get wiped off after a certain amount of years.

Once again it does affect mortgage applications. Any monthly student loan repayment amount IS factored into the affordability calculations for mortgage applications. The capital debt outstanding however is not treated as capital debt.

Will a student loan affect your ability to get a mortgage? https://share.google/0baESMTipjkVTBLJL

I think the people saying it doesn't matter need to look at the T&c's of the current loans.
Crazily high interest rates, 40 years before it's wiped (so you'll be paying pretty much your entire working life), high repayments that kick in at a low salary threshold and repayments do affect affordability checks when applying for a mortgage.
Much much tougher than it used to be.

"The way we were missold these loans is a national scandal."

Agree. It's a scam. A way of squeezing even more out of only the poorer kids from a generation that already have things far harder than their parents and grandparents generations when it comes to pensions, healthcare, housing and cost of living.
I'm not encouraging my kids to go to university unless it's vital for their chosen career path AND they fully understand the financial implications for their entire lives.

The plan 1 one that OP is on isn't too bad, DS is on it, it gets wiped after 25 years. The newer ones seem much worse and of course much more.

The link in my last post is the link to MSE explaining how it CAN affect mortgage affordability.

I've not paid any in the last 7 years due to my earnings. I've another 10 years then it's wiped off anyway.

Current interest rates on plan 5 are 4.3% following RPI.

My DC is getting a medical degree for 70k in loans and likely 40k to 50k in top ups from us.

It is ridiculous but compared to America (a medical degree costs over 200k for the students) it’s a bargain 😂

I think 99% of students take out student loans so it’s only a few that get it paid for in full by other means.

We will give our DC a lump sum when they graduate they can either pay off their student loans or invest the money. They’re an adult now. They have to make adult choices.

It’s frustrating. I just had a one off payment and this month my student finance was 5 times its normal amount.

Roll on 15 years when it’ll be wiped!

I only took out a relatively small amount so I was shocked how large mine was when I looked recently. What I've been paying each year seems to be barely covering the interest as well. I've decided to pay £200 off a month to hopefully clear it in the next 4-5 years rather than just keep paying the interest until I'm 65 and it gets written off. I had so much trouble getting logged in etc for years that I hadn't realised just how much it was going up.

To be blunt. No one made you go to uni, no one made you continue with a masters. You knew it was being funded by a tax based on your future earnings (I refuse to call it a lone, it is a tax).

I finished a levels in 1987, out of the 241 kids I started secondary school with in 1980, only one went to university at 18. So you need to look at the privileged position you have obtained and realise that if you had paid the full wack for the education you received it would have been much more expensive, the country subsided you.

You don't have to pay anything if you aren't earning above the threshold. After a set period it gets wiped off.

Wow. What career path did this degree and masters set you on? Whatever it is that’s an absolutely shocking monthly payment. This country is a mess…

I’m on plan 1 and I’ll never pay it off
it gets wiped when I’m 65 which is not long hence.

'They' would be the government.

Do you know student loans only save the country a fraction, compared to what grants cost?

The reason isn't money. I would posit it is to dissuade the working classes / poor from bothering with university (while simultaneously massively reducing the number of apprenticeships). We're minimum wage factory fodder. Manual workers who die before getting our pensions.

Just think of it as a graduate tax

Lots of us voted for the LD in 2010 trying to prevent people a few years younger than us paying extortionate amounts for the education that had been heavily subsidised for their parents and grandparents.

Nick Clegg sold us out on a gamble for a different electoral system. The huge wealth gap between people in their 20s now and boomers/gen x is astounding.

It's bad, isn't it? My son pays hundreds a month and says the loan will keep increasing for more than a decade despite him paying so much off every month. No other loan would be set up in this way.

I don't understand people who say it doesn't matter?? It's a significant chunk of people's income! And it does affect eg how much you can borrow on a mortgage. I cannot believe that teenagers are signed up to a complex financial instrument that often impacts the rest of their life! It's fucking outrageous.

When discussions about uni pop up on active threads I always want to add this issue. In fact I will next time I see one.
I would 100% recommend an apprenticeship rather than uni to young people.