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Original poster

Student loan advice

34 replies

BlueMediterranean · 23/05/2021 15:41

Hi all,

I got a student loan for my PGCE in Sept 2016, £9000 total
I just got a look to all my P60 from April 2017 until April 2020
I payed a total of £2,338 for stduent loan
However, my student loan is £8,687.59

How can this be possible???
Should I call them? or directly hire a finance advisor?

OP posts:
thereinmadnesslies · 23/05/2021 15:50

There will be interest added to your student loan.

pippapoo62 · 23/05/2021 15:51

It's a loan , therefore interest has been added.

nannynick · 23/05/2021 15:56

What interest you pay varies, you can find details at: www.gov.uk/repaying-your-student-loan/what-you-pay

worrybutterfly · 23/05/2021 16:28

I'm also on the new 'plan 2' loan and the interest rate on student loans is insanely high. I think it's currently 5.6% and would have also been added while you were still studying.

I'm in a similar situation, making repayments of around £2000 a year, and they are adding on around £3000 a year in interest. So my overall amount is going up rather than down 🙄

If I'd started uni a year earlier I'd be paying back around £2750 a year, but they'd only be adding on £400 a year interest. So at least I'd be paying it off!

Original poster
BlueMediterranean · 23/05/2021 16:29

Thanks for answering.
I know it's a loan and I have to pay interests but this is way too much!

Is this normal? because I think there is some kind of mistake here

OP posts:
nannynick · 23/05/2021 16:41

Try using this calculator: www.student-loan-calculator.co.uk/
Select the advanced options, so you can enter in the year in which you graduated.

nannynick · 23/05/2021 16:51

I check your online account to see if there is anything in there that helps identify if there is an issue, such as incorrect salary details. www.gov.uk/sign-in-to-manage-your-student-loan-balance
If nothing obvious then call them and see if they can assist.

Tippexy · 23/05/2021 16:54

The thing is that it’s fake money in a way. You’ll never pay it off so it doesn’t really matter what the balance is. Just treat what comes out of your pay as a graduate tax and ignore the numbers.

Original poster
BlueMediterranean · 23/05/2021 16:59

Thanks, I can see in the calculator that my loan should be lower. Can't be only £300 less after 5 years! I payed more than £2300

I will try to contact them

OP posts:
YellowScallion · 23/05/2021 17:13

Depending on the plan you are on, it's not impossible that you've only been covering the interest plus a small amount extra.

Sunflowergirl1 · 23/05/2021 17:25

I think they charge 6% a year...that's why it is near impossible to pay it off unless you have a very high salary. A friend is in her early 30s, been laying her loan off for 8 years, is earning £40k and still owes more than the original loan!,

Overthebow · 24/05/2021 06:00

@Tippexy

The thing is that it’s fake money in a way. You’ll never pay it off so it doesn’t really matter what the balance is. Just treat what comes out of your pay as a graduate tax and ignore the numbers.
Op only has £9000 so on a teachers salary will pay it off quite a lot before the cut off.

Loads of people pay larger student loans off too, both me and my DH are on track to pay ours off around 10 years before the cut off. I had £30k loans by the end of uni.

worrybutterfly · 24/05/2021 06:31

@Overthebow

If you came away with only £30k of loan then I'd assume you're on plan 1 (started pre 2012).

Those plans only have 1% interest on loans that are about a third of the size (£3k instead of £9k tuition a year) which means they will go down.

It's the post 2012 loans that have 6% interest on tuition fees of £9k a year, making them almost impossible to pay off.

Tippexy · 24/05/2021 11:39

Are you and your DH on Plan 1 or Plan 2 @Overthebow?

Overthebow · 24/05/2021 11:42

Yes plan 1. Well that's stupid isn't it. What's the point of a loan you can't pay off? Why is the interest rate so high?

Tippexy · 24/05/2021 11:47

Ah I thought so Smile Yes it’s practically impossible to be able to pay Plan 2 loans off. I agree with you, it’s stupid!

titchy · 24/05/2021 11:51

Well if interest is 6% and you've had the loan five years, that's 30% of the loan total that's been added in interest alone - around £3k, and that's without compounding. So yes I'd say it sounds about right.

LemonSwan · 24/05/2021 11:53

I have always said if Gina Miller put the same amount of energy into Student Loans as Brexit then they would have all be written off.

A proportion of students (late birthdays in 6th form) sign up to these loans before they are 18 and I wonder about the legality.

I have no idea why Martin Money Saving Expert said this was the best loan you could take. Its not, its by far the worst loan terms I have ever seen in my short life of low interest rates. Imagine what they would be if interest rates rose to normal levels.

Complete Insanity and very short sighted of the government. They have bred a population paying 10% more tax than everyone else so theres no movement for increasing income taxes in future years.

worrybutterfly · 24/05/2021 12:11

@Overthebow

Yes plan 1. Well that's stupid isn't it. What's the point of a loan you can't pay off? Why is the interest rate so high?
They don't want people to pay them off. It's more of an extra tax than a loan.

I'll pay back more that I borrowed, but I will never actually pay it off. It will just keep going up, by more and more each year.

The interest rate is insane, I could get a 95% mortgage for a better rate! But I shouldn't really moan because I wouldn't have the career I have now without the degree. But I just wish I'd been in plan 1.

worrybutterfly · 24/05/2021 12:22

@LemonSwan

Imagine what they would be if interest rates rose to normal levels.

If RPI went up to 2011 levels of 5% I'd see interest of over £4K being added each month. Worst case if they went up to 90s levels of 8-9% I'd find myself having £6k in interest added to my loan each month.

It's a scary thought, and one I wasn't made aware of by anyone when I was 17 and looking at universities.

WaterBottle123 · 24/05/2021 12:24

I had no idea rates were so high! They were 1 percent when I was paying back in the 2000's!!

Shocking. I will try even harder to save for DC's...

titchy · 24/05/2021 12:28

Imagine what they would be if interest rates rose to normal levels.

The repayments would be EXACTLY the same as they are now. The interest rate could be 150%. You'd still only pay a fixed percentage of your salary above £25k back for a fixed number of years.

That's why they're not like normal loans where you're expected to pay off the capital and interest regardless.

worrybutterfly · 24/05/2021 12:37

@titchy

Imagine what they would be if interest rates rose to normal levels.

The repayments would be EXACTLY the same as they are now. The interest rate could be 150%. You'd still only pay a fixed percentage of your salary above £25k back for a fixed number of years.

That's why they're not like normal loans where you're expected to pay off the capital and interest regardless.

But in the long run it does matter.

Someone who graduates with £55k in student debt and goes into a £40k a year job will pay back £110k in total. But they will still not clear the loan.

If over £55k in interest hadn't been added to that loan they would have paid it back and a much lower overall cost.

So, yes monthly payments remain the same. But the number of months you have to pay it for significantly increase.

Student133 · 24/05/2021 12:44

These are not technically 'loans'. What the student loan system effectively is, is a graduate tax for those who get the benefits of a much higher salary, without having write complicated legislation. In all other countries where uni is free, tax rates are often higher, so even if we got rid of this tomorrow, its likely taxes would have to go up anyway. As a current student it is a lot more fair that I pay for the benefits of my education, not the taxpayer, who on average won't earn as much. Im going in to a grad scheme and will pay about £50 a month, which fir the career path a degree has allowed me, is an absolute bargain.

CloudPop · 24/05/2021 12:56

I have no idea why Martin Money Saving Expert said this was the best loan you could take. Its not, its by far the worst loan terms I have ever seen in my short life of low interest rates.

I agree completely. I think I the idea is that if you don't earn much, you pay little to nothing back. If you commit the cardinal sin of having a well paid job before you are 30, you are then expected to pay over the odds to subsidise what is a completely ridiculous system. How it can be a good idea to incentivise people to keep their earnings low is beyond me