Student loans - loads must get written off??
Discussion
The other half has student loans of 30k.
My gut reaction was that paying these off ASAP would be an obvious objective.... But she wasn't so sure so i looked at the figures.
I ran various spreadsheet assumptions - firstly assuming the 1.5% interest rates stayed in place (obviously fairly optimistic)
She is 25 so has about 23 years until they write off anything outstanding.
By my calcs if you start with a modest income (23k) and get a 5% pay rise each year and the student loan cap (when you start paying) increases at 5% too (it is currently just under 17 K).....you are very likely to still have money outstanding at the end (age about 47)
So unless you think you'll get pretty good money....or the cap will not escalate very much..... There seems little point in overpaying to get rid of early - even more so if you are a woman and plan a career break for kids.
So is that pretty much the case..... People on modest incomes or planning to raise families - don't pay any more than you have to and wait for a chunk to get written off?
My gut reaction was that paying these off ASAP would be an obvious objective.... But she wasn't so sure so i looked at the figures.
I ran various spreadsheet assumptions - firstly assuming the 1.5% interest rates stayed in place (obviously fairly optimistic)
She is 25 so has about 23 years until they write off anything outstanding.
By my calcs if you start with a modest income (23k) and get a 5% pay rise each year and the student loan cap (when you start paying) increases at 5% too (it is currently just under 17 K).....you are very likely to still have money outstanding at the end (age about 47)
So unless you think you'll get pretty good money....or the cap will not escalate very much..... There seems little point in overpaying to get rid of early - even more so if you are a woman and plan a career break for kids.
So is that pretty much the case..... People on modest incomes or planning to raise families - don't pay any more than you have to and wait for a chunk to get written off?
The mess is slightly more complex depending on if you have plan 1 (course began pre 2012 but post 1998) or plan 2 (post 2012).
Plan 1 is even more complex depending on if the course started before or after 2006, basically under 28 or over 28. The over 28's have the loan until age 65 or full payment whichever is sooner. The under 28's keep it for only 25 years after reaching the threshold. The under 23's (post 2012) keep it for 30 years.
Ultimately a whole load of the post '06 loans will end up being written off with having made full re-payment the government picking up the tab. So yes you can spent 3-4yrs getting pissed then get the loan written off 25 years later.
Plan 1 is even more complex depending on if the course started before or after 2006, basically under 28 or over 28. The over 28's have the loan until age 65 or full payment whichever is sooner. The under 28's keep it for only 25 years after reaching the threshold. The under 23's (post 2012) keep it for 30 years.
Ultimately a whole load of the post '06 loans will end up being written off with having made full re-payment the government picking up the tab. So yes you can spent 3-4yrs getting pissed then get the loan written off 25 years later.
The whole situation is actually worse with regard to how many are actually paying anything off.
If you had a job pre uni & received your p45(s) promptly from job to job to hand to your new employer you could forever avoid starting paying back despite the fact hrmc who collect the paye payments knowing you are earning more than the threshold as they have your tax code, NI details etc, all because they put the onus on the employers asking if new starts have a student loan to repay & the persons owing to do something about actioning repayment if they are not and should. & SLC don't appear to care about doing anything to fix this obvious flaw.
If you had a job pre uni & received your p45(s) promptly from job to job to hand to your new employer you could forever avoid starting paying back despite the fact hrmc who collect the paye payments knowing you are earning more than the threshold as they have your tax code, NI details etc, all because they put the onus on the employers asking if new starts have a student loan to repay & the persons owing to do something about actioning repayment if they are not and should. & SLC don't appear to care about doing anything to fix this obvious flaw.
Sheepshanks said:
Cemesis said:
You'd like to think if you amassed £30k of dept at Uni that you'd end up earning more and therefore pay it off quicker.
There will be a lot of people working in the NHS with degrees only earning mid-20's of £K.Type R Tom said:
Might be worth keeping in mind that some banks will count it against you when going for a mortgage. Nationwide, for example, treat it like credit card debt!
On the flip side if you save the money towards a deposit instead of overpaying then you'll have a larger deposit. Also when you have a mortgage then if you're on a type 1 loan the interest rate on the mortgage will be higher than that on the student loan so you're better off overpaying the mortgage. That's the approach I've taken.Another benefit to this approach is that if you end up being unemployed for whatever reason then you don't have to pay your student loan whereas your mortgage payments will still be due.
SunsetZed said:
Type R Tom said:
Might be worth keeping in mind that some banks will count it against you when going for a mortgage. Nationwide, for example, treat it like credit card debt!
On the flip side if you save the money towards a deposit instead of overpaying then you'll have a larger deposit. Also when you have a mortgage then if you're on a type 1 loan the interest rate on the mortgage will be higher than that on the student loan so you're better off overpaying the mortgage. That's the approach I've taken.Another benefit to this approach is that if you end up being unemployed for whatever reason then you don't have to pay your student loan whereas your mortgage payments will still be due.
Sheepshanks said:
mph1977 said:
many of whom won;t have the same student debt as other students because of DH contribution to fees .
..and many won't have had a contribution. Most start on salaries that don't even meet the repayment threshold anyway.the repayment threshold is 16910
the starting salary for a Health Professional in the NHS is 21478 ( first increment of band 5)
http://www.rcn.org.uk/support/pay_and_conditions/p...
http://www.nhscareers.nhs.uk/explore-by-career/all...
Certain allied health profession students on university courses leading to registration with the Health and Care Professions Council may be eligible for financial help from the NHS.
Eligible students who are accepted onto approved courses will usually have their tuition fees paid in full and may receive financial support in the form of a bursary.
They will receive a £1,000 grant each year and can apply for an additional means-tested bursary of up to £4,395 per year. Students in London will qualify for more (up to £5,460)
NHS Student Bursaries provides financial support to eligible students taking approved (NHS funded) courses in the following subjects.
dietetics
occupational therapy
operating department practice
orthoptics
orthotics & prosthetics
physiotherapy
podiatry/chiropody
radiography (diagnostic and therapeutic)
speech and language therapy
Note: the above arrangements relate to students commencing courses on or after September 2012.
http://www.nhscareers.nhs.uk/explore-by-career/nur...
Financial support for pre-registration nursing students
Financial support
All students on university courses in nursing leading to registration with the Nursing and Midwifery Council are eligible for financial help from the NHS while studying.
All eligible students will usually:
have their tution fees paid in full
receive a £1,000 grant each year
be eligible to apply for an additional means-tested bursary of up to £4,395 per year. Students in London will qualify for more (up to £5,460)
Note: the above arrangements relate to students who started their course since September 2012.
Further information
Find out if the course you are applying to is an approved and attracts NHS financial support. All universities offering approved courses can be found on our course finder.
The NHS Student Bursaries also has information and support:
eligibility requirements
the financial support available
an online bursary calculator
how the process of applying for financial support works
frequently asked questions
the latest rates
details of the adoption award
details of the maternity support award
http://www.nhsbsa.nhs.uk/816.aspx
care to revise your statement ?
trixical said:
The whole situation is actually worse with regard to how many are actually paying anything off.
If you had a job pre uni & received your p45(s) promptly from job to job to hand to your new employer you could forever avoid starting paying back despite the fact hrmc who collect the paye payments knowing you are earning more than the threshold as they have your tax code, NI details etc, all because they put the onus on the employers asking if new starts have a student loan to repay & the persons owing to do something about actioning repayment if they are not and should. & SLC don't appear to care about doing anything to fix this obvious flaw.
I only started paying my student loan off 10 years after I graduated, just by neglecting to tick the appropriate box. First job saw me byond the threshold. If you had a job pre uni & received your p45(s) promptly from job to job to hand to your new employer you could forever avoid starting paying back despite the fact hrmc who collect the paye payments knowing you are earning more than the threshold as they have your tax code, NI details etc, all because they put the onus on the employers asking if new starts have a student loan to repay & the persons owing to do something about actioning repayment if they are not and should. & SLC don't appear to care about doing anything to fix this obvious flaw.
Only another 3 years to go...
CountZero23 said:
trixical said:
The whole situation is actually worse with regard to how many are actually paying anything off.
If you had a job pre uni & received your p45(s) promptly from job to job to hand to your new employer you could forever avoid starting paying back despite the fact hrmc who collect the paye payments knowing you are earning more than the threshold as they have your tax code, NI details etc, all because they put the onus on the employers asking if new starts have a student loan to repay & the persons owing to do something about actioning repayment if they are not and should. & SLC don't appear to care about doing anything to fix this obvious flaw.
I only started paying my student loan off 10 years after I graduated, just by neglecting to tick the appropriate box. First job saw me byond the threshold. If you had a job pre uni & received your p45(s) promptly from job to job to hand to your new employer you could forever avoid starting paying back despite the fact hrmc who collect the paye payments knowing you are earning more than the threshold as they have your tax code, NI details etc, all because they put the onus on the employers asking if new starts have a student loan to repay & the persons owing to do something about actioning repayment if they are not and should. & SLC don't appear to care about doing anything to fix this obvious flaw.
Only another 3 years to go...
~10 years later I owe around £7k and paying back around £1.5k/year - looking forward to it being gone
The flipside is my OH went to uni later and owes £26k and currently pays £12/month or something off it, with the interest I can see her paying it for most of her working life
Swings and roundabouts.
I went to uni, began in '05 and graduated in '08 with a desmond. 7 years later the loan is almost fully repaid based on monthly PAYE deductions alone.
Once you reach a certain earnings threshold the monthly payments shoot up quite quickly.
someone earning c.£20k today is likely to be earning much more than that in 10-15 years time. Is it therefore likely that they'll just pay the majority of their loan back at the later stages?
I went to uni, began in '05 and graduated in '08 with a desmond. 7 years later the loan is almost fully repaid based on monthly PAYE deductions alone.
Once you reach a certain earnings threshold the monthly payments shoot up quite quickly.
someone earning c.£20k today is likely to be earning much more than that in 10-15 years time. Is it therefore likely that they'll just pay the majority of their loan back at the later stages?
Gassing Station | Finance | Top of Page | What's New | My Stuff