Student loan advice

[BlueMediterranean]

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?

It's not though is it, what do facto the system does is act as a progressive tax whereby the more you gain out of your degree, the more ypu pay back to the government, who are underwriting all this stuff. This is exactly the same way as how taxation works, so though it may not be as good if you make lots of money, it is better for the country, given the choice to send half the people to university, which I don't agree with btw.

Gulp. DD will have in excess of 80k before any interest is added.

I really don’t think I’d bother going if I was a student today. That’s huge sums of money they’ll be paying off for so many years.

@WaterBottle123

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...

By all means save for your DCs but do not then spend these savings on their tuition fees! Give it to them for a house deposit. It’s madness to do the former.

It's actually the people in the middle that end up paying the most back, really high earners pay it back more quickly so end up paying less overall, low earners do not pay it back.

I remember once working out that at the rate I was paying mine off, I'd have finally paid it off age 63 (this was one of the early schemes where loans weren't cancelled until retirement) having paid something like ten times the original loan amount. And that was assuming a 1% pay rise each year when my pay had actually been frozen for a number of years.

Also you need to account for the fact that after a few years inflation means you're paying back much less too, I think the point martin Lewis makes is that even with how much it 'costs' its still worthwhile doing it.

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.

No it doesn't. It might matter to the Gov who won't get all of their loan back. But the graduate on £40k will pay the same back whether their total 'debt' is £70k, £170k or £1700k.

It only matter to very high earners who would be likely to pay the full amount back. The majority don't fall into that category.

And someone (often women) who works part time throughout their life may not have to pay anything ever.

Try not to think about it too hard OP, it gets a bit overwhelming otherwise. I just treat it like an extra tax, where I get £X less in my pay pocket each month. It doesn’t hang over my head like other loans as I know if I lost my job I wouldn’t have to scramble to find the repayments.

For you, only having £9K, it might be worth it for you in the long run to try and overpay where you can. There are a few calculators out there where you can find the “sweet spot” of when it’s worth overpaying vs not.

I get for those on PAYE this is an extra tax. But for those self employed it is a horrendous loan and I cant just forget about it.

I have to pay a lump sum based on my end of year P60. Interest is retrospectively added depending on the earning amount and the lump sum due. If I wanted to make contributions monthly to stop compound interest like how those on PAYE do - I cant. These will be considered voluntary and not count towards reducing my end of year payment due.

You might think these loans are kind because if you dont earn you dont pay back. But they are very aggressive. The Student Loans Company is not the government, they are a private company. If you are not earning they will demand access to your bank account to check you are not receiving an income or you have to get someone to write a letter to say they are supporting you. Its very intrusive, very aggressive and anyone who says otherwise has obviously never dealt with them.