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?

The total amount although disturbing is largely irrelevant to what you pay. If it were half that amount you would still be paying the same out of your salary. Don’t even consider paying any of it back in a lump sum. Think of it more like an additional tax than loan repayments. There will come a time when the balance is written off, though I’m not sure when that is.

Well exactly!

Well, it now looks like the hourly rate needed to activate a loan being paid back is just under £15 an hour. Minimum wage just hit £12.21 so that shouldn’t be beyond many more people.

i just believe you make choices. You know the terms and conditions of doing a degree. You take out a loan and you pay it back when you hit a certain threshold.

Certain jobs shouldn’t need degrees. They should need specific training on that thing. Blair had this idea that half of students should go to uni devaluing it for everyone.

I did a degree that was totally irrelevant to what I do now. I would never encourage my DC to do that now as it’s just so much more risky.

what would shutting down the Student Loans Company achieve @Adrienne23 ?

all they do is administer loans in line with the higher education policies set by government in England, and the devolved administrations elsewhere. Do you genuinely not understand that?

https://www.gov.uk/government/organisations/student-loans-company

the what we do bit is about a clear as it can get

• government owned
• non profit making

I got a mortgage with hsbc in 2022, it was very much taken into account on affordability, because i remember challenging it when the MA asked me what the monthly amount was

Yes if the mortgage company see dedications from PAYE on payslips it will be taken into account but if you earn under the repayment threshold the mortgage company doesn’t take student loans into their affordability checks. Mumsnet appears to have a lot of high earners but large amounts of graduates are not at at the threshold of repayment.

I was very confused when I moved to UK 12 years and heard a co worker talking about student loan. I was like ?? Ehh? What's that.
I feel so lucky I didn't pay one dime for my university education as it was free. 5 year degree in one of the best uni of my country. Free. My country works different. If you have a great private primary & secondary education & get amazing grades you get a spot at uni.
I will have to live this nightmare with my kid , dreading it.

You really don’t need to be a high earner to be earning over the threshold. Plan 1 threshold is £26,065, and for current students who are on plan 5, it’s only £25k.

Yeh. It is definitely considered even if it is reduce the amount you can borrow.

People keep saying this is like an ‘education tax’ but it’s not. If it were an education tax then rich people would have to pay it too but they don’t as they don’t need to take out loans in the first place. Let’s make it an education tax instead of a loan and make it equitable so everyone pays it.

It’s annoying that people actually think of it as a tax. It really isn’t!

What an absolute con it has all been. I feel so sorry for younger people these days. I think the previous government changed the company administering the loans to another company and they put the interest rates up. It is a disgrace.

When everyone is broke and struggling they have no bargaining power, so it leaves it wide open for large corporations to underpay and overwork staff, especially with the threat of AI to the job market now being openly discussed.

I realise that under or non payment of the student loan does not carry the same dangerous penalties as with other loans. However, for many people it will have a psychological impact. The OP has been paying off her student loan but can see the significant amount that is being taken in interest. It must be very disheartening.

I agree with Donatella that it almost enshrines the inequality passed down through the generations. Disgusting.

Yeah its like hey if I tell myself its 'just a tax' I can deny that I'm being forced to pay £200 a month or whatever for 25 years cos I got scammed by my own government.
It's a total con.

How is it a con? It's a product - like any loan - that we signed up for. You get nothing in life for free, and as explained many times on this thread, the amount you may pay every month varies.

I had a small loan in the 1990s, around 6k and inflation linked so the value wasn't increasing over time relatively.

The government paid for the tuition this was just for living expenses.

Felt about right in terms of making a contribution to my education but also getting some support from the state.

But the real con isn't the cost of a degree, its the requirement to have a degree for jobs which 40 years ago only required a levels.

And if you 'get nothing in life for free' why are we all paying taxes??

You haven't done anything wrong @Lazy56789 . It's ok. The balance of your "debt" is irrelevant and does not relate in any way to the amount you have to repay unless you win the lottery/inherit a large amount/get a super-high-paying job and choose to pay it off.

For most ordinary people, student loan repayments are effectively just an extra tax that you pay until you reach the write-off deadline (25 or 30 years or whatever was in the rules when you had your agreement). For people whose incomes are decidedly average or low, the interest will exceed their repayments and their balance goes up not down. This is normal, expected and not a problem. They make their modest repayments and then the rest is written off. For people with a bit more income their repayments may exceed the interest by a bit, so the balance goes down but very very slowly with no hope or expectation of it reaching zero. This is also normal, expected and not a problem. Once they have paid for as many years as required to reach the write-off time, they no longer owe anything.

This means that the amount you pay for your degree is proportionate to how much you benefitted from it. If you never become a high earner, the cost is low. Only those who earn high have any expectation of paying it off.

Exactly this. It is a money making scheme!

If it were a tax, people would be able to evade it much more easily. It isn't a tax but it works like a tax for the vast majority of ordinary people. No system is perfect but changing it to make sure the wealthiest are properly rinsed would cause more problems than it solves. A lot of wealthy families who choose to pay up front actually end up paying a lot more than they would have with the loan, which is fine as they can afford it.

Dont panic ! Student loans are not like normal bank loans. They do not show up on credit checks or affect mortgages. Martin Lewis explains them well. Treat your repayments as an education tax. Do not attempt to pay it off - just pay the minimum required - as if it were an additional tax. Change your thinking on it. It does not matter what it accumulates to as the loan is not intended to be paid off unless you are a high earner - the loan and interest will be wiped off after i think 30 years. Martin Lewis explains it well. The other thing to check is whether your interest and repayment structure are correct - again Martin Lewis explains this. A call to the student loans company can help you check this out - many folk have had a reimbursement due to this SLC error. Anyway main message is dont stress.

Idon'thaterainbows I absolutely agree with you. Young people were given the impression that it was necessary to get a degree if they wanted to get a job and progress in it (and there was a lot of hype about the university "experience" too, so lots of youngsters felt they would be missing out on a lot of fun). As it has turned out, because so many young people now have degrees (and some have felt it necessary to get a Masters), those that do not have them don't get a look in, and those that do still face stiff competition.

Important trades and skills have been overlooked. A recent report said that the drive for more housing is being held up because there are too few skilled building workers. Meanwhile, lots of young people have degrees which have not proved to be of much use to them, and a huge debt around their necks.

But your loan capital would have been increasing because of the compounded interest.

For many of those jobs that you say now require a degree the monthly repayments are going to be low and the loans will never be paid off.

Also, not everything funded or part-funded by the tax payer is 'free' when using.

I don't think it would... I essentially paid what the loan would have been worth in 1995 adjusted for inflation, by the time it was repaid. I worked it out.

Also a lot of 1990s uni was 'the experience ', £1 a shot student nights out etc. Now many students are either working around their studies, too skint or both
More likely to be behind the bar than in front of it.

Many will say, what do they expect, to party for 3 years at no or very little cost? But that's literally what it was like in my day. Not saying we should go back to that, the country plainly can't afford it. But going to uni now is nothing like what it was then and I feel sad my kids won't get to experience what I did both socially and financially.

I think there are still a lot of people like that given how popular the choice of going to university is for young people (I posted the link the other day to UCAS figures for 2025 entry). They won’t all be going because they’re expecting a high flying job at the end, despite what many people on MN decide to believe. From my own perspective I’m doing my third degree as a hobby.