Student Loan Question

[greggy50]

Hello

Just a quick question really

I start a graduate job in September on £25k a year when I finish my course

I am led to believe will have to start paying back my loan straight away

However between September - April of that tax year don't think I will be over the threshold of £16,000 ish to start paying it back...

So will the tax man already be aware of this? Or will I need to somehow give them a prior warning to ensure I don't pay it back too soon

Also later down the line is they any real benefit to paying it off sooner? As I get a rise again in year 2 and should be on decent money by the end so could probably pay a decent chunk off it of is soonish (circa £20k)

Thanks

[Ynox]

When I started paying mine off (finished last summer fortunately!) back in 2006, I didn't have to make any payments until the start of the next tax year. Worth doing your own research on that though.

[BoRED S2upid]

With the new Mortgage checks I imagine they take into account all debt so this will be factored into the equation. May therefore be worth paying it off quicker if your thinking of buying a house.

[smashing]

I think you would probably be better using the lump sum to increase your deposit rather than paying off the student loan....but then again I may be completely wrong.

[Jakg]

You get until the next tax year before you need to start paying it off.

You don't need to tell them you don't earn enough - they'll work it out.

I can't see a reason why you'd want to pay it off any sooner - theres still the possibility it'll be wiped out after 25 years without you having cleared it all.

[greggy50]

Jakg said:

You get until the next tax year before you need to start paying it off.

You don't need to tell them you don't earn enough - they'll work it out.

I can't see a reason why you'd want to pay it off any sooner - theres still the possibility it'll be wiped out after 25 years without you having cleared it all.

Okay cool thanks for that

[plus5dB]

Why would you drop £20k when you could put that towards a nice car and a house deposit?

I got very lucky with mine in that they didn't start taking my student loan for an extra year. i.e. I started work in Sept 12 and I just paid my first installment in April 14. And yes, I was earning enough last year.

[greggy50]

plus5dB said:

Why would you drop £20k when you could put that towards a nice car and a house deposit?

I got very lucky with mine in that they didn't start taking my student loan for an extra year. i.e. I started work in Sept 12 and I just paid my first installment in April 14. And yes, I was earning enough last year.

I just thought may be better in the long run as thought having the loan may make it harder for me to get a decent mortgage and fact think you have to pay interest on it now but it appears its best just to leave it.

I just questioned because I will be based at my parents for the first 18 months or so and may get a car from work as well from work so will probably have a fair wedge of money saved in a couple of years and wanted to ensure sticking towards a house was still the best idea that was all!

[Shatner'sBassoon]

greggy50 said:

Also later down the line is they any real benefit to paying it off sooner? As I get a rise again in year 2 and should be on decent money by the end so could probably pay a decent chunk off it of is soonish (circa £20k)

Thanks

Depends what interest rate you will be paying on the SL. I'm assuming it's still 1.5%, which is a very low rate compared to other borrowing.

Do you have any other borrowing, credit cards etc on a higher interest rate? If so, concentrate on paying those down first.

Helpful guidance here http://www.money.co.uk/article/1004371-should-I-pa...
and here http://www.moneysavingexpert.com/students/student-...
, although the latter seems to be down at the moment.

[greggy50]

That first article is very useful thankyou

I have no debt at all have a little bit saved and a couple of cars as saved up from my part-time job and placement year I have never had a credit card in my life.

However going to take one out soon to try and build up some credit rating as have been told that would be beneficial...

It appears I will be paying 1.5% interest so from what I can gather if I cannot get an account with 1.5% interest or more it would make more sense to pay a bit more of my student loan off. Not going to do in one big lump of course but may try and clear it a big quicker if I can

[Jakg]

You should be able to get 3% interest from a current account very easily, 5% with a bit of work.

You may also wish to run the numbers on repayments vs interest - at £24k with a £25k debt you'd still have around £25k left owing by the write-off date, assuming your wage rises with inflation every year and interest rates stay the same. If you'd put in £20k overpayment you'd be a bit pissed!

[greggy50]

Jakg said:

You should be able to get 3% interest from a current account very easily, 5% with a bit of work.

You may also wish to run the numbers on repayments vs interest - at £24k with a £25k debt you'd still have around £25k left owing by the write-off date, assuming your wage rises with inflation every year and interest rates stay the same. If you'd put in £20k overpayment you'd be a bit pissed!

Really think my Natwest account if giving me like 1.5% at best currently as still a student...

Certainly something I will need to took at changing

And ah okay... I believe my total debt is around £21k and from what I can gather so far does not seem to be any real major benefit to paying it off early!

At a very rough guesstimate figured in two years time all going well I should have around £22.5k saved in total all going well but think may put this towards a deposit on a st house to renovate instead or something

[RMCA]

Hi Greg,

I graduated last summer starting a £25k graduate job in September and I'm still yet to hear anything from Student Finance. I have saved enough to have the option to pay my student loans off but considering the payments will be £60/month (once they start) I am putting my savings towards a house deposit.

I have had a meeting with a mortgage advisor who has specified that my student loan debt shouldn't have an impact on my mortgage application. It will only affect my affordability for the monthly repayments as it will reduce my net take home. My credit rating is very good without having had a credit card (5x+ salary offered for mortgage) and was advised by the bank that getting one wouldn't necessarily help and wasn't worth the risk.

Good luck with your final exams and enjoy your LAST summer!

HTH

[greggy50]

RMCA said:

Hi Greg,

I graduated last summer starting a £25k graduate job in September and I'm still yet to hear anything from Student Finance. I have saved enough to have the option to pay my student loans off but considering the payments will be £60/month (once they start) I am putting my savings towards a house deposit.

I have had a meeting with a mortgage advisor who has specified that my student loan debt shouldn't have an impact on my mortgage application. It will only affect my affordability for the monthly repayments as it will reduce my net take home. My credit rating is very good without having had a credit card (5x+ salary offered for mortgage) and was advised by the bank that getting one wouldn't necessarily help and wasn't worth the risk.

Good luck with your final exams and enjoy your LAST summer!

HTH

Well I could not hope for a much more useful response so thanks a lot for that

I only have one exam left to go so the end of uni is very close now...

I agree about the last summer comment have a few things booked as will never get 3 months off again!

[Jakg]

[quote=RMCA]
I graduated last summer starting a £25k graduate job in September and I'm still yet to hear anything from Student Finance./quote]AFAIK it's your responsibility to ensure student loan deductions are taken and there is a fine of up to £1k for not doing so.

I graduate last year and my first deduction wasn't taken in April - but once I raised this with my employer it was.

[RMCA]

Jakg said:

I graduate last year and my first deduction wasn't taken in April - but once I raised this with my employer it was.

Interesting, thanks for the the heads up! Not trying to dodge paying but do find it strange that I haven't had a single letter since graduating..

[Jakg]

RMCA said:

Interesting, thanks for the the heads up! Not trying to dodge paying but do find it strange that I haven't had a single letter since graduating..

I received a letter saying "were due to take some money from you soon" but nothing more.

You should be able to login at www.studentloanrepayment.co.uk with your UCAS details to get the scary headline figures on the total amount you owe etc.

[greggy50]

Jakg said:

I received a letter saying "were due to take some money from you soon" but nothing more.

You should be able to login at www.studentloanrepayment.co.uk with your UCAS details to get the scary headline figures on the total amount you owe etc.

Just logged in to that site pretty useful

It appears I owe £24,200.44

And it says the interest rate is 1.50%

So think I will just stick to paying it off normally

Was slightly more than I expected... but I did a 4 year course which is probably why!

[cold thursday]

Nick Clegg lest we forget. He ranks alongside that tt Gordon Brown in my consciousness.

[PugwasHDJ80]

cold thursday said:

Nick Clegg lest we forget. He ranks alongside that tt Gordon Brown in my consciousness.

I'm 34 and still owe £10k of a student loan.

It really really pisses me off.

But i'm not sure why the rest of society should have to pay for my further education?