Student loan repayments are completely unfair

[Sammy900]

I've thought for ages that student loan repayments are a complete rip off. I'm so glad they are now all going under review.

They were mis-sold at the time as a minor "graduate tax" that you'll barely notice and there weren't any other options available to enable low income households fair access to higher education.

I didn't realise then that this would turn into a lifelong debt, with snowballing interest that makes it impossible to clear.

I'm on the original plan 1 which just goes on and on until I'm 65.

The next plan 1 deal after 2006 then decided that 25 years was a fair term (not 47 years!!). Such a huge difference in what will be paid back.

Any other standard loans have much shorter terms.

It was based on the assumption that you would continue to be a low earner for the rest of your life and not move up the career ladder.

I really think that the government / treasury should look into the fairness of the terms of the original plan 1 loans too not just Plan 2.

I think you can submit your case to your local MP and with the treasury committee if you feel that you are paying back a student loan on unfair terms and now is the time to do so.

I really hope this gains momentum and something can be done about it finally.

What are your thoughts?

It most certainly is a lifelong debt for many!
My daughter went to uni in London in 2017 for a three year degree course and she got the maximum loan for fees and maintenance as I was a single parent on a low income. Upon graduating she got a further student loan for one year to study for a PGCE and then became a secondary school teacher.
She recently had reason to check the balance of her student loan. I was flabbergasted to see that she now owes about £107,000!
It's just going to increasingly snowball in the coming years. She has no chance of ever paying it back on a teacher's salary, if she wanted to clear her debt.
It just seems so wrong that she will be massively penalised financially for the majority of her future working life- all for the rather dubious privilege of becoming a qualified teacher in the state system.

@WutheringTights @MadinMarch I assume that poster is referring to plan 1.

It’s a discriminatory policy. It negatively affects women who may take an extended period of absence from the workforce to have children, sometimes multiple leaves of absence and may reduce their hours after. The repayments work for those in finance or law who can quickly be on a higher wage and move through the salary brackets quickly but not really for anyone else. It’s also only taken out by those from working class backgrounds.

I'm plan 1. I graduated with a law degree in 2003. My first job was a sales assistant in a department store for £10kpa which i think was the repayment threshold then. By 2015 i was a 5 year pqe solicitor earning £35k in the south east - not all lawyers are on mega salaries. I agree it indirectly impacts women, i've had two maternity leaves in the past 10 years and worked part time as DP (despite leaving school with 3 gsce and bumming his way around the world until his late 20s) earned twice my salary. We couldn't afford a nanny which is what we would need to work full time. My part time salary has been below the threshold so I still owe £5k (my loan was £13k so not too horrendous compared to todays loans).

I'm ok now. I earn £55k so the loan will be cleared in around 3 years time. Tbh WFH/hybrid is the reason i've been able to go back FT and earn a decent salary - i'm very lucky my employer is down with flex working (and was before lockdown ). I'd still be PT otherwise.

USA loans are essentially a lifetime committment. I now have a S&S ISA as a 'college fund' for dcs but if they want to go to uni they'll have to live at home and this fund will pay travel costs.

I'm on Plan 1. Graduated in 2012. I had a full tuition loan and a maintenance loan of around £3k p.a., so the total debt was around £25k.

We didn't complain when interest rates were low in 2013, did we?

I think the plan I have is fair. I get its frustrating that the interest is higher now but just checked now its 3.2%.
I have 5k left to pay, which means within 2 years my loan will be cleared

Plan 2 is shocking i agree but plan 1 isnt that bad!

Everyones circumstances are different.

In an ideal world I would've graduated after 3 years and walked straight into a professional role with a decent salary and paid the loan off within a reasonable amount of time.

I absolutely don't mind paying back the money borrowed and with a small amount of interest (as it was sold). I understood that it was a loan.

Unfortunately for me and many others I didn't realise that the crippling interest gathered over the years that I didn't earn enough, went off for maternity leave, went back part time, etc means that the original amount borrowed snowballed to a ridiculous amount that has now turned into a lifelong debt as the term doesn't finish until I'm 65 years old (not after 25 / 30 or 40 years like all the other loan terms).

This to me seems unfair or circumstances like mine were an oversight when the original plan was made. If they realised this was unfair then it should've been changed when different plans were made.

Even if the non-qualifying years were frozen so interest wasn't continuously added on - that would be fair

I have wrote to my MP, and will join any campaign going regarding this whilst it has gained attention again and will be under review. If I don't get anywhere with that is there anything else I could do? Any chance of an appeal regarding my own individual circumstances?

Anyone who feels their terms were unfair should do the same and good luck to you!

I was at an offer day yesterday and the course leader was dismayed about how many students now need to take a job alongside their studies in addition to the amount of money to pay back.

But maternity leave is paid for by tax payers and children can be considered a choice. Then there’s child benefit, the free childcare given (which we didn’t get years ago). If we support parents like this we should support those in education too

I borrowed 11k in 2003-2007 and now owe 12k. I'm another who repaid for a while then had a baby 8 years ago - they raised the threshold above what I earn part time at the moment.

I have the money to pay it off but we have a mortgage which is 11 years from ending and it would knock a good chunk off the term, so I don't know what the best use of the money is. I was thinking I would pay off when I go full time again but obviously it's growing in the meantime.

I know it gets written off but like OP if I don't pay it off I'll be making monthly payments out of my (eventually) higher salary until I retire!

When I took out my first loan in 1998 I had no clue (rightly or wrongly) that it wasn't a similar sort of repayment scheme to my sister's which was tied to only having to make repayments once earning above average salary.

I had a higher than average loan due to some additional hardship loans and then was ill and unable to work immediately after graduation. So my debt snowballed, whilst they changed the rules about interest rates. We were sold the ridiculous lie that because interest rates were tied to inflation it wouldn't matter because salaries would be increasing too! Public sector pay freeze anyone?

I paid mine off in my early 30s - itself a painful experience as I was doing temporary roles and it wasn't easily possible to claim back student loan overpayments that had been collected via PAYE. So whilst I paid it off quickly, it was because I was overpaying not through choice.

It was definitely mis-sold. I didn’t know the interest would start straight after the first payment, whilst I was 18, in my first term of university. They always went on about how we wouldn’t start paying it back until the April after we graduated if we were earning enough. By that point, interest had been added for 3+ years depending on the length of your course.

The only students that would have been able to pay some back whilst still studying are the ones with wealthy parents.
They also use RPI to calculate the interest, knowing it would come out higher, whereas the government uses CPI for most things, which is lower.

Due to going part time after having children, I haven’t been earning enough to pay it back but 1K a year has been added in interest so it’s now back to square one, 15 years after graduating.

It was still mid-sold before then though.

50% of population should not have been the target.

Not everyone is academic.

There's a teacher recruitment idea for the government. Pay off loans for those who qualify and serve 5 years (or whatever) in the state school system. Could be applied to nurses and engineers too; anyone we need more of.

I don't think the concept of taking a loan and repayment as you earn more is so bad, but it's the interest payments they need to sort out and reduce. 2 percent interest is enough.

I have an original plan 1 so paying it off until I'm 65 and a plan 2 because I retrained.

Obviously it was my choice to do another degree and I knew that would increase my loans.

But it's such a trap isn't it. Plus you don't get to decide where your payments go off you have more than one loan. So at the moment my payments are all getting directed to my plan 2 so my plan 1 keeps getting bigger. But my plan 2 would be written off before my plan 1. So basically the whole system is designed to keep getting money from you for as long as possible.

As women we tend to be disproportionately affected too. Mat leave and bring more likely to work part time when our kids are young leader is with spiraling debt where men who become fathers are more likely to increase their earnings and therefore pay off their loans.

I'm happy for university to cost something and for there to be a loan agreement but our current set up is ridiculous.

@Sammy900 what’s your ‘crippling interest’ been on plan 1? The interest was very low for the first 10 years, it went up a bit post Truss, but is only 3% ish now.

The whole thing is ridiculous and how it’s measured against parental income. So someone with parents who are low paid are saddled with far more debt than those who have parents earning more through no fault of their own.
the poorest to start with then end up with the most debt to pay back

How many moaning about student debt on here voted for Tory governments I wonder?

I don't think Plan 1 was crippling at all. I paid my off on a teacher's salary many years ago.

Indeed because it wasn’t, I borrowed £20,000 I barely touched it in my 20s due to low earnings, maternity leave etc, but very little was added onto it. I think the worst year I had £300 added to it. That’s not crippling interest, loans borrowed from public funds still need some kind of interest to keep up with inflation (with the current model at least) or it’s not a loan if you’re paying back less than you borrowed.

We always knew student loans were a gamble in that if you didn’t utilise your degree, you were still liable to pay it. You have to be very low earning to be in a situation where interest is outstripping payments on plan 1. Hence the later cut off age for viability.

I think I will do the same plan 1 also.

The last statement I had showing interest for my plan 1 loan was in 2017. Around £2500 had been added to my loan in interest since I graduated in 2001. I’d paid off nowhere near that amount.

I haven’t had a statement since then so I dread to think what it is now.

I’ve taken time out of work to look after my DC. I was very academic but I realised I’m not a career person - I worked to live.

I've recently done this, having also been penalised for early career low earnings, mat leave and working part time for several years when DC were pre school. I also believe it's indirect discrimination against women.

I've put a complaint in to the SLC and written to my MP, we shall see what comes of it.

I forgot to add that I was also a bit annoyed because my husband had to write a letter to them confirming that he was supporting me and paying our bills, and they also wanted to see a bank statement showing this!

My loan is supposed to be repaid through PAYE if I earn a certain amount in a month. They had sent letters saying that they been informed that I wasn’t working, so I’m not sure why they needed my husband to get involved!

A downside could be that you have people working as teachers just for this benefit and doing a terrible job because they don't really care about being a teacher.