Student loan repayment

[GuinnessMug]

Morning all

I have been trying to find some info on this, and MoneySavingExpert and the wider internet has not thrown up anything useful, so I am throwing this out to see if anyone has any ideas!

I am a mature student and took student finance of £12,000 for tuition fees on plan 2, which I started to re-pay in April 2020, after graduating the year before. Due to my earnings I was paying £60pm but now due to salary increases, this is now £100pm. I have never not paid repayments.

I do not anticipate any significant pay increases in the near to mid future, unless I move jobs, which may or may not happen.

We are moving home soon and will have some money left over. I am wondering whether to clear the student finance or not. My outstanding balance of student loan is £12,694 after 4 years of repayments. Online calculators put my repayment period at anywhere between 9-15 years, and they all assume pay rises that may not happen.

I know the general advice is not to repay it, as it not like "normal" debt, but that £100 a month I am paying could go into my pension, or savings (we currently have one at 4.6%) or just extra money to enjoy ourselves with. Apart from a mortgage (we are not repaying it yet as we are locked in to a low interest rate, and the money left over from the house sale will be used for needed renovations and saving to repay some mortgage after the lock in ends) we have no other debt.

I know I won't need to repay it if I lose my job, or drop salary, but it seems such a shame paying £100 or so a month for years that I could use now. As it stands, either by paying off now or whenever it happens from my monthly payments, I will have repaid more than the loan, which I am of course happy to do.

Thank you

Does your employer offer salary sacrifice for pension contributions?

No advice but that seems shocking! 4 years of paying in and the balance has only gone up?
sorry, not helpful I know.

12 years of paying mine off and still no closer to it being paid. I know people will say it’s a graduate tax, but it’s not is it? Those with wealthy parents aren’t paying this “tax”.

It’s an interesting one and I’ve been looking into it. DH has just paid his off but he earns more than I do and has for a number of years. My repayment is similar to yours but if you do get a pay rise you go to quite repayments. DH was paying £350 a month before clearing it.

If you really don’t think there is career progression and pay rises in your future, I would probably just keep repaying it. Put the money from the move in high interest accounts or invest it, you should make than you will pay over the repayment term. It’s also good to have a bit of accessible money after a house move as there’s always unexpected things that come up.

But it also just gets to the point where repaying it is annoying.

I appreciate you may not want to tell us more, but I feel this answer depends on your age, security of jobs, assets, amount of savings and pension up to now. Basically, if you’re in a comfortable position, then yes pay off the loans. But if not, one day you may kick yourself for not having that £13K to hand for whatever life throws at you.

Yes they do

Exactly. Hence thinking of just getting rid.

I paid £800 off mine last year, it went up £2400 - current total of £38k for Plan 1 and 2.

I wouldn't pay it back if you need house renovations just use that £12000 for that instead.

Thanks for the replies.

Some additional info:

I am mid 40s, relatively stable career. Not much progression in my current role, however I am applying for jobs elsewhere and hopefully a move will come with a pay rise.

Mortgage left is £120k, we are porting this to the new property and as the new property is worth about £100k less than the one we are selling, the £100k is coming back to us.

Our mortgage has 2 years left lock in, at 1.2% so not worth paying off, as we will also have ERC.

The plan was to put 50-60K in a high interest savings account, locked in for 2 years and use what ever is in there to pay a lump sum off the mortgage when the lock in is up. We also have an emergency savings account with 4.6% interest, which is instant access with about 5k in it.

The remaining 40-50k would go on stuff needed doing in the house. It's liveable so not urgent, but needs a bathroom and kitchen, plus decorating. The bathroom is the priority and the kitchen could wait if we wanted to.

We were discussing using some of the remaining 40-50k to pay off the student loan, which would then free up £100pm which I could put back into savings or whatever we needed.

If I do move and my salary increases, then I will be paying back more each month for the student loan, when I would rather should have it in my bank......I think!

https://petition.parliament.uk/petitions/756832

I know this is an.old post but this is still relevant.
Worth a sign and share

I know this is an old thread but just to lyk there's a petion re the huge interest rate on these loans on the mn petitions site.
I don't particularly like the wording on the petition but at least whoever set it up had the ooomph to do so. It's the signatures that count. Expats can sign too, worth a sign and share widely