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?

It's not indefinitely though.

For OP it will be written off around about age 47 (25 years from the April after they graduated).

So will have another 20 years to work without it before pension age, even if they still owe tens of thousands.
For slightly younger people they'll be 52 but pension age will probably have gone up too by then.

What's the alternative? Do you think people shouldn't pay it back at all?
If Ops carries on only paying back £55 p/m, she'll never repay what she actually used, let alone any interest so it's a pretty good deal really.

Particularly if that includes maintenance loans and not just tuition fees - do you thing your average plumbing apprentice or McDonald's staff member got their housing, food and beer money paid for by the government for 3 years?

£100 per month is tiny. Good luck paying a mortgage if you’re worried about £100.

But if you're on a low wage and above the threshold, the repayments are tiny so no big deal at all.

Student loans. Mostly Paid for by the tax payer. Yet another drain on the country’s finances. Yet they encourage everyone to go to uni and get into huge debt. It’s not going to end well.

I don't know why people think it's a scam? Borrowing large amounts of money at 18 with the knowledge it will be written off 25 years later for younger people? I consider that good value. I couldn't have gone to university and gained qualifications without it.

I’m 36 and have probably paid off a grand total of about £500 from my loans. I’ll never pay it off and don’t earn enough at the moment to pay anything back - I don’t even think about it 🤷‍♀️

They are definitely factored in as they are a loan repayment that reduces your disposable income and therefore your affordability

I'm the same. To be honest, what difference does it make to your life (other than the monthly amount being taken)?

When I finished my masters, I called banks etc and asked if it would impact my credit rating/mortgage/other financial issues and they said no. So the way I see it, I can merrily live my life, get a TERRIFYING (yes, agreed, it's terrifying) invoice every year and continue on.

This is what I understand, but someone please go ahead and correct me if I'm wrong - this was 15 years ago.

It won't affect your credit rating ability to get a mortgage etc, but it may affect the amount you are able to borrow.

If you have a salary of £40k without a student loan, you have more money available to you than someone on £40k - 9% of all income over the threshold. (roughly £110 less useable income a month)

But why do you need to pay it back? Just chip away at it surely and it goes away one day

It could affect your mortgage offers, obviously. You’ll have higher outgoings so less available cash per month.

I have another 13 (out of 25) years to go 😴

If you believe that you've been hoodwinked. Whole system is a scam. And the worst bit about it is that it's children being signed up to this as vast majority of people applying to university are under 18 at the time. It should be a misselling scandal, but because it's state perpetuated that'll never happen.

Also, lower to middle earners will probably end up paying off even more over their lifetime because they'll keep paying for much longer than a higher earner who'll pay it off quicker. Although I think they're now trying to penalise high earners with an even higher interest rate which seems unfair as well.

Only go to university if you've have decided on a career that requires a degree and it's going to pay very well. Most 17 year olds don't know for sure what career they want, and those that do, often end up doing something else.

It is disgusting! No wonder young peoples mental health is so bad.

I consider it to be like an extra tax. I'll never pay it off, so I just have to wait until it's written off. I don't get stressed about it.

I am paying a mortgage in fact the interest charged on my mortgage is actually slightly lower than the interest charged on my student loan. Despite the fact my mortgage is about 4x the size of my student loan will be paid off in 9 years time and my loan will still be going for the next 20 years.
7-8% interest rates on a student loan are disgusting. I will need to work out whether I'd be better off remortgaging to include my student loans.
£100 a month for 30 years is £36000, I only borrowed just over £11k. That is pay day loan level of crazy. When we were applying for uni we were told, interest rates are tiny, payments back won't be very much (threshold hasn't increased at the same % as minimum wage) you'd need a really well paying job before you pay anything back.
£100 a month is a significant amount to be deducted from your wage every month for 30 years, when the balance owed never actually reduces because the interest is so high

I've just finished a degree at age 38 and am about to start a masters. The amount I am earning now and my trajectory of earning means it's worth paying for the qualifications. As well as the sense of personal achievement. I don't even over think it, it's just another tax.

What about healthcare roles that require university degrees? I am in this camp. We have been shafted.

Agreed

YABU to let it affect you. Just ignore it and carry on with life as normal. Don’t know why they even bother sending those stupid bills, it’s like scaremongering.

My loan said it would be wiped at 65. Fortunately it's all paid off now.

Realistically, it's a graduate tax. If you don't earn above the threshold as a graduate, you don't pay if back. If you've benefited from and used the degree to achieve higher pay, you make a contribution to paying if back slowly, at an affordable rate.

If you're ever in a position where you earn less than you're used to, you pay proportionally less.

Yes, you can't spend the sum they take each month, but you can't spend what's destined to be taken as tax or national insurance either, which is part and parcel of being employed.

I absolutely agree - but it's appalling that there is a literal industry focused on loading up teenagers with debt that they will never pay off in the full knowledge that their degree is likely to be utterly useless in the real world. I don't think that many eighteen year olds are sufficiently informed about themselves or finance to make that decision.

@Emilysmum90 you are angry at the wrong people. 20 years ago it was still a very sensible suggestion that students went to university. Many careers needed it and you could still expect to get a better paid job. Graduate apprenticeships for example were very rare indeed.
Also the terms and conditions of the student loans were much more favourable in those days, such as no internet was charged until after graduation, interest rates were lower, uni fees substantially lower etc etc.
I totally agree the situation is outrageous, and very very unfair, but it is various governments who should bear the brunt of your anger

This makes no sense. I’m a Plan 1 graduate who paid my loan off after ten years. As did most of the other Plan 1 graduates I know.

I came from a working class family, and was clever enough to realise that going to uni was an economic decision and did it to further my earning potential. I went into a career that required a degree and had good progression opportunities.

My SLC degree was my route to doing better than my parents, and I am happy to pay for that opportunity now it is bearing fruit.

I might have liked to do a masters, but it made no economic sense so I went into a route with a professional qualification instead. I might still do a masters at my own cost in future just because I want to.

Anyone who is capable of getting a degree (and definitely who is capable of getting a masters) is able look at their future earning potential and decide whether thousands of pounds of debt is worth it in that context.

The student loan only keeps you ‘down’ if you don’t then use the qualification to boost your earning potential. If you do a job that pays as well as a job you could’ve got without a degree, then yes it will hamper your finances going forward (if you earn over the repayment threshold), but that should’ve been a decision you made when you took on the loan.

Since the intro of Plans 2 onwards, the government has massively beefed up funding of and availability of apprenticeships which can see people get degree level qualifications with no debt, and getting paid while they get their qualification. How does this fit with the government keeping us down theory?