Student loans

[TwittleBee]

Can someone explain to me why my student loan repayments jumped up so high? I haven’t changed my income.

I am also so shocked at how my debt has risen £10k since uni? It’s never going to be paid back is it.

The interest rate on Plan 2 student loans (i.e. yours) is linked to RPI. The rate is set at RPI + 3%, and I think it’s set at about 8% now. Back in 2016 the RPI was less than 1% so your interest rate was less 4%. Unfortunately the interest rate is now twice as much, and the total loan amount is also more. If you had any maternity leave etc then the interest accumulated while not paying off any of the loan will have also added significantly.

I am sorry. I think the way that plan 2 student loans were introduced to school leavers should really amount to mis-selling a financial product.

Are you expecting any pay rises? It seems at the moment that without any significant pay rises or CG changes to your financial planning that this will effectively be an additional tax for the next 20 years, at which time the loan will be written off (assuming you started paying in 2016).

there’s been a lot in the media about plan 2 recently. I know Martin Lewis always advises parents to let their kids take the loan when offering to pay fees but if you have a decent job you’re going to be paying this off your whole life as the interest just keeps piling up. I know people say to consider it a tax, but essentially it is a loan that’s going up all the time and I know this would stress me out.

I shall have a google and look at the news, I cannot believe it. I do feel like I was mis-sold, it’s also not like we had any choice if we wanted to go to uni. We didn’t have various loan providers to consider like we do with mortgages.

it’s jumped from £100 a month to £400 a month

The Times are running a campaign about it at the moment.

Graduates would vote for party that ends student debt crisis

https://www.thetimes.com/article/a6f32547-18ce-41e3-8c16-d57573e75c94?shareToken=268b23a63621673105f4122765539fc9

Listen to The News Agents recent podcast about student loans, it’s totally changed my view.

Yes just seen this article too which has helped me understand. https://channel4news.substack.com/p/explained-why-your-student-loan-debt

When was the jump, you posted 2 statements 8 years apart. Did you really earn the same in 2016 as you do now? Did you work the whole year in 2016-17 or just part? Otherwise unsure why the repayments have gone up so much.

Your repayments are a set rate on your salary. To pay £400 a month your salary must have gone up a lot.

Apologies the jump happened this year, and no it has not gone up, been paid the same for past 2 years.

How much do you earn?

£65k , the payments I am making each month now equate to the amount of interest on my loan added every month

When does it get written off on Plan 2?

I am on Plan 1 and my student loan debt is standing at £21k. I’ve been paying it off for the last 13 years, but think it gets written off after 25 years.

30 years after first April that payment was due.

It depends when you took it out. Pre-2006 it gets written off at 65. Post-2006 it's 25 years. I'll never pay mine off and I'll still be paying it when I'm 65 (36 years after graduating).

https://www.moneysavingexpert.com/students/student-loans-repay/

Came here to recommend this, such a good listen

Plan 2 students got a really shit deal. What surprises me though, is that they only seem to be realising this now!

I remember when it was all over the news that tuition fees were rising to 9k a year. I was a recent plan 1 grad and thought, there’s no way that people are going to keep going to uni and get themselves into this much debt. I thought that the lower tier universities in particular would really struggle to get students. I was astonished when they were all still managing to fill there courses!

That’s crazy that you have to pay up until 65… it’s basically an additional tax. I was at uni 2010-13. Year I graduated was the last year before they increased the tuition fees to £9k! Madness. I’m glad mine will be wiped after 25 years, I’ll never pay it back but they’ve made a lot from me in interest

There's a petition on the mn petitions site regarding the huge interest rate, it's worth a sign and share as widely as posdible. Expats can sign too. I don't particularly like the wording on the petition but at least whoever set it up had the ooomph to do so