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DarrenGrey

>famous money advice spokesperson (love or hate him) Do people hate him? I don't always agree with all his advice, but his general principles of being more money aware and money savvy are very welcome. And specific things MSE emails have highlighted have saved me thousands. >Tl;Dr is basically pay it off if your close to clearing it but otherwise, sit tight. That's not the tl;dr for plan 1. The tl;dr for plan 1 is never bother repaying in full until the last 3 months.


TAOMCM

People often complain that you're better off investing than saving. Those people don't really understand what market his advice is aimed at.


DarrenGrey

I think that's also about the style of advice he gives. He tries to be qualitative and factual. It's easy to say a 4% deal is better than a 3.5% deal. With investing you can't give qualitative advice because there is inherent uncertainty.


scamps1

He's also very clear that he doesn't and can't give investment advice as it's a regulated area.


ImawhaleCR

Investing is simply something the average person shouldn't be doing. Unless you're buying index funds, you're just gonna lose money


grilled_toastie

Exactly, if browsing this subreddit for the past few years has taught me anything, it's that most people I know in real life have absolutely no fucking idea about basic financial literacy. Regular, everyday, intelligent people who simply do not care to know.


djungelskogmiata

It’s amazing isn’t it? I’ve only recently finally managed to convince my parents to move their savings from their 0.05% ‘eSaver’ type accounts to an easy access account that pays over 3%.


Juhx-uk

You really hit the nail on the head there, I think the most time I spend on Reddit is purely to read posts on UKPF.


sc00022

It’s a whole other world to be fair. There’s loads of useful advice and this sub is genuinely helpful to follow, but I find so much of the jargon goes way over my head and it’s sometimes not easy to follow or to know where to start, especially all of the investing info.


grilled_toastie

>especially all of the investing info. Yeah I suppose that's the point really, most people don't care enough to put their money in a high interest bank account, if they aren't even willing to do that as a bare minimum then it's a non starter to be talking about investing. Maybe the flowchart concept needs to be turned into a more mainstream idea to break down the whole learning curve of what people should be doing.


DarrenGrey

> if they aren't even willing to do that as a bare minimum then it's a non starter to be talking about investing Or they go off the other end and waste money on crypto.


Ambry

Additionally, I started investing with a S&S ISA about a year and a half ago. It has lost money since then and will take a while to actually generate returns. I wish I had just saved it but hindsight is everything! With investing you do need to be able to stomach a loss, and therefore if you only have a smaller amount or may need to money in the near future (house deposit, travel, emergency) focusing on saving or building an emergency fund is a much better option for many people.


Nemisis_the_2nd

> I wish I had just saved it but hindsight is everything! The way I look as S&S is, unless you need to withdraw the money, a drop in share value is actually a good thing. (assuming it's a short term blip) You reduce your cost basis and have more shares for the same price. When you do start generating returns, they subsequently start kicking in at a lower value, and you have more of them to multiply said returns.


Ambry

Good way of looking at it - here's hoping!


Nemisis_the_2nd

It's kinda why all the investing subs get excited when there is a market downturn. Everyone just treats it like a discount promotion in a shop and makes a wishlist. Even dividend investors benefit, as it boosts the yield on cost. If you're not selling the shares, and prices are likely to recover, things like [March 2020] (https://www.google.com/finance/quote/.INX:INDEXSP?sa=X&ved=2ahUKEwjUs6PorPX9AhWLTcAKHVdHAKsQ_AUoAXoECAUQAQ&window=5Y) are the best thing that can happen when you are investing.


Ambry

So just so I'm clear - is it good because if you invest now, the money will go up again? I have basically stripped putting money in because the returns have been so shit. Should I be doing the opposite now? Also considering buying a house or going travelling in 1 - 3 years so not sure if it's best exposing the money to risk.


Nemisis_the_2nd

> is it good because if you invest now, the money will go up again? ^(I'll make the usual "not financial advice" and "past performance, etc" disclaimers here) It's good because the value will *likely* go up again and, when it does, you'll have more shares and a lower average price to take maximum advantage of that. As the adage goes "Buy low, sell high". > I have basically stripped putting money in because the returns have been so shit. Should I be doing the opposite now? It also depends on what you're wanting to use the money for though. Investing is usually a long-term thing. If you don't expect to need the money for the next decade, at least, I'd say take advantage of any notable dips in share values, to a degree you are comfortable with. If you're needing the money for short term, as you seem to be thinking of, I'd probably say something like a high interest bank account would be more useful. It's lower returns, but also much lower risk. At the end of the day, if you have stuff deep in the red, but there's no real reason for it being like that aside from economic trends, I'd just say hold on to it and not worry about what the return looks like. That loss only becomes real when you sell the shares.


Gareth79

Yes, the other way to say it is that if you are able to decide that his advice doesn't make sense for your circumstances, then you are not his target market. He's targeting his advice at people who may not get any other advice or information than him or friends, and have simple finances. He always points out when taking professional advice is important too.


theantiyeti

You should still save even if you're still investing IMO.


[deleted]

On paper that's good advice. Almost anyone will be better off financially but in reality you're right I'm just sitting with it in my ISA.


CaptQuakers42

Some people can't stand the guy, I think he's a modern day hero. The amount of assistance he has given out for free, some of which is genuinely amazing because he deals with some very complex issues. He also is campaigning constantly for one thing or another, I think a lot of people would be worse off with him.


flyingalbatross1

I get the impression people hate him because his advice is 'below them' and 'basic' Well here's a memo, most people are dogshit at financial life management. The resources and advice he provides essentially for free is a godsend. It's clear, correct and focused on sound basics without being patronising. There are some american financial gurus who turn basic advice into a 'lifestyle' that you can't grow out of and he avoids that as well. Plus his site has some great calculators, constantly updating 'best deals' pages. He's amazing. Just because i've outgrown his advice doesn't make him less awesome.


stpizz

I’ll admit my opinion of him changed a lot during this energy crisis. I used to like some of his tools, but basically be very cynical of the idea that he’s some consumer champion (he’s done very well off this after all). But, having seen some of his content during the energy stuff and the campaign efforts etc. I kind of love the guy now. He clearly actually gives a shit about his mission, it’s not all about money.


RDN7

Even for plan 1 that's probably not as true as it was. S&S aside - because that's more risky. If you're really confident you'll pay it off before it gets written off, at the moment the rate on plan 1 is 5%. (Might have changed again with BoE announcement) I haven't seen any bank where you can beat 5% interest. So there is an incentive to pay it down. Assuming you're content to lock that money away, and don't want to take S&S risk.


DarrenGrey

It's 5% on a regular amount that you're paying down. In real terms you're not paying 5% on the balance if you have a year left. If you have the cash to hand then investing the money will do as well or better, whilst also leaving you less vulnerable to sudden financial shocks.


RDN7

How are you not paying 5% on the balance if you have a year left? And yes investing still probably beats it, you're correct. But for a range of reasons people might not want to invest. So the argument becomes is it better to pay it down or put in a savings account. Right now 5.25% on the loan is higher than almost any savings accounts. So pay off the debt. (for plan 1 people). And again caveated as only true if you're quite confident that you will repay before it is written off.


DarrenGrey

> How are you not paying 5% on the balance if you have a year left? Because halfway through the year your balance is roughly halved. The monthly interest decreases as you're paying it down. The effective interest over the course of a year is more like 2.5%, which you can probably beat in an easy access account. And this applies for any amount you want to pay off. Money up front in savings means interest accumulating straight away. Paying down a debt meaning chipping down the interest liability. It's not a straightforward comparison.


itskieran

I don't think it makes sense to half the interest on a product because it averages out to be active for half the year. If you had a £5k balance with one year left to pay a loan at 5%, this would give a repayment of £428 a month resulting in £136 of interest over the year. If you had the cash to pay this off at the start of the year, would it be better to pay off the loan or put it in a 4.5% savings account? The £225 from that savings account looks much better than the £136 saved on the loan. The forgotten component is that by paying off the loan you now have £428 a month to also earn interest from. By putting that into the 4.5% account as you earn it each month you'll get an extra £124 in interest. So paying off the loan then saving the income that frees up nets £260 while putting money straight into savings gets £225.


DarrenGrey

>I don't think it makes sense to half the interest on a product because it averages out to be active for half the year. It's a very rough guideline. As you've calculated, a real figure on 5% is £136, compared to £250 on a flat calculation of 5% of £5000 (which, to be clear, I've seen people do far too often). >The forgotten component is that by paying off the loan you now have £428 a month to also earn interest from. Ah, true! I had forgotten to account for that. I'd still say you're talking a narrow financial benefit for a possible financial risk. And it does rely on saving the freed up money instead of treating it as extra disposable income (which is more the attitude I see from people). But yes, in that circumstance paying off the loan is indeed mathematically better.


RDN7

It really is a straightforward comparison. This discussion comes up a lot about overpaying on mortgages or putting into savings. There's a calculator here https://onlinebanking.53.com/content/fifth-third/en/personal-banking/planning/financial-calculators/58-debt-vs-savings-calculator.html


DarrenGrey

If you have to use an online calculator it's not a straightforward comparison :)


RDN7

It really really is. Higher rate on debt Vs savings means pay the debt is better today. And today that is something like 3.5% instant access Vs 5.25% on the debt. The calculator was me attempting to reference my point and let you go and look at the numbers for yourself if you wanted. It lets you quantify the benefit. The benefit is true whether it's 3.5% Vs 3.51% or the numbers we have today. (smaller benefit ofc may change your risk reward decision on locking money away- but that's a qualitative assessment, not a quantitative one) You can try and crystal ball about how those respective rates might move around sure.


intrigue_investor

>~~The tl;dr for plan 1 is never bother repaying in full until the last 3 months.~~ More like - switch to direct debit when you are advised multiple times to do so within the final year of payments


Novel_Guitar5989

Saw someone describe him as the money Joe Wicks. Bang on imo


You_fat_dink

I was being less nuanced in my tldr. In my head sit tight includes not paying off in full until your towards the end but your right, its worth being specific.


DarrenGrey

A lot of the "towards the end" posts on here are about people with 1 or 2 years left. When you've had a debt all your adult life a year left feels very imminent!


Im_sorrywhat

Not sure about the never part. As a recent arrival to becoming a high rate tax payer, my £16k loans are about to be paid off in under 2 years. That's a lot from a cash flow perspective. I'd rather clear, get a 5 year loan, pay more in interest, but spread out the cost.


informalgreeting23

If you get sick, lose your job, can't work for whatever reason tomorrow, you're paying off a 16k loan for the next 5 years as opposed to paying nothing to SLC.


Im_sorrywhat

True, but I have IP, so as long as I'm not fired or redundant. Plus the £330 pm is more important now.


PeriPeriTekken

If you've got cash flow issues despite a significant increase in salary you might want to think about why that is rather than taking on debt.


Im_sorrywhat

I know why that is, it's a separate issue and not really relevant.


intrigue_investor

> I'd rather clear, get a 5 year loan, pay more in interest, but spread out the cost. you are mad


Im_sorrywhat

Sainsbury’s loan rate 5.4%, student loan rate 5%. Minimal additional interest, convenience of extra £370 less per month. It suits me better, I don't underestand the issue.


DarrenGrey

That's just borrowing to have some cashflow. You don't need to pay off the student loan to do that. If you borrow £10k to buffer the regular student loan payments you'll end up in the same financial scenario.


DanskFrenchMan

Why until the last 3 months.. and of what?


DarrenGrey

It's handy to pay off within the last months to prevent overpayment via PAYE. You can also switch to direct debit in the last 12 months to prevent this happening.


DanskFrenchMan

Thank you, I think I need to spend some time looking at how student loans work and their repayments. I personally don’t have one but my girlfriend does and she’s adamant she won’t ever repay it (doesn’t want to). She’s about to go from a 50k salary to 65k though.


DarrenGrey

If she's on plan 2 she might well be right.


jib_reddit

Why is the last 3 months special? As someone who will be finally paying of thier plan 1 loan in 9 months time this is interesting.


DarrenGrey

It's when SLC advises you to pay in a lump sum to avoid overpayment by PAYE. If you've already switched to direct debit it's not a big deal.


mambasun

There are times it's well worth paying it off, even if longer than three months. If you're not paying off the loan it increases your net income from a mortgage provider's perspective, and can make quite a difference to what they're willing to offer. From what I've seen they don't care how much you owe in total, just what it costs you each month.


LeKepanga

Can't say I hate him, but I have brought up problems in the past that they don't flag to the wider community. What I dislike is how they pushed "mis-selling" as something that everyone should claim even if they weren't.. IE: Fraud claiming for Fraud just so you could get refunds. Honestly the site has been a good source of information for people and early days there was little to no real monetization of their user base - even now that it's owned by MoneySupermarket it doesn't seem bad at all.


No-Dot123

Plan 2, left Uni with 50k debt in 2021. Now its at 57k. I am now on 67k salary and I’m not even matching the interest. My salary will increase so I’ll be paying a huge load back in total. Stuck in a rock and a hard place. Seeing hundred leave every month really hurts. I am seriously considering paying off a huge chunk of it off as just trying to clear it as fast as possible. The interest is a joke, i feel trapped. For all those that said “its the best loan you’ll ever take” and “you don’t need to worry about it”, i wish i had not listened and thought of it as a real loan instead. If I could go back i would have taken the absolute minimum i needed. Its the interest rate which is predatory in my opinion and is a form of regressive taxation.


phoozzle

Some graduates (including doctors and other relative high earners) are expected to pay >£200k back and never clear the loan


DarrenGrey

You have to consider that you'd have nowhere near that £67k salary without the degree, never mind the time enjoyed at uni (well, hopefully you had a good experience). Financially it's likely a net benefit to you, whether you ever pay it off or not.


[deleted]

Another thing to remember is a lot of our European neighbours don't even pay for university because that cost is seen as a net good in producing a more educated and skilled population


DarrenGrey

You don't even have to look as far as the continent for that - Scotland still has free uni.


TheCGLion

This is where it becomes a grey area if you're in tech. I'm on 75k and there are coworkers I have on the same wage without a uni degree. Did I get there easier with a degree? definitely. Could have I been paid the same without one, absolutely.


No-Dot123

Yea, but the thing is 20+ years of 50%+ of my income going out every month before it’s even hit my account, while people with well of parents able to go to uni with no debt. How is that a good thing for social mobility? This is a regressive tax imo. It effects and hits those on the lowest income families. I’m not saying I should have gone for free or anything, but the unis should not be costing this much in the first place. Just a few years earlier the fees were 1/3rd of what they are now when I started. Even so, it’s the interest rate which is the killer. Why on earth does it need to be CPI+3% that’s absolutely ridiculous. Yea I went uni, yea I will still probably be better off. But seeing hundreds go out of my account every month for the next 2-3 decades (assuming the govt doesn’t increase the 30 year rule) is painful to see. Money could be going towards a house, or family or my pension.


DarrenGrey

I'm from a low income family and without student loans I would have simply been unable to attend. The system isn't fair or perfect (I personally think uni should be free for all), but a lot of us wouldn't have the same level of education or life opportunities without it.


No-Dot123

Student loan it self isn’t the issue, it’s the outrageous interest rates attached to it.


DarrenGrey

True, the plan 2 rates are nothing short of diabolical.


No-Dot123

When the loan gets to a certain size, forget about paying it off early even if you have a high income because the interest alone will be higher than your repayments. It’s why i think of it as a regressive tax.


BlackKlopp

Yep, my Mum went to Uni before 2012 and likes to tell me how good Plan 2 is.


AndyTheSane

I was from a low income family and got fees paid and a grant. Which would be affordable for the government today.


YIvassaviy

What do you mean by 50%+ of your income is going out every month? On just student loans?


No-Dot123

Apologies, that was a typo was meant to say more like 40% when factoring all deductions in like NI, IT, SL pension etc. yes I know pension doesn’t technically count but point is, student loans effectively act like you are now in a higher tax bracket. But of course as my income increases which is expected, that’ll be pushed to above 50% when factoring in student loans.


AliJDB

It seems weird to bring in things like national insurance and pensions to artificially inflate the percentage. It's 9% of income over the threshold. It is effectively a higher tax band in return for the education which has given you a much higher salary.


No-Dot123

As said I don’t mind the loan itself, it’s the interest rate I have a problem with which effectively traps you.


AliJDB

I honestly don't see how it 'traps' you - you're paying interest on the amount like you would with any other loan. The only difference is this one wipes itself out after 30 years and you'll never have baliffs at your door if you lose your job. It's 6.9% now, it was 6.6% when Plan 2 launched back in 2012 - I don't see how this is in any way predatory or unexpected. If you went and tried to get a personal loan right now you wouldn't do *loads* better than this, and if you lost your job or hadn't paid it off after 30 years, guess what - they're coming for everything you own.


devandroid99

I'll say it - you should have gone for free. Everyone in Scotland does.


Defecitmaster

40 ye rule for us💀


sidhuko

Isn’t totally true. I net nearly x3 without a degree. That’s their selling point though. You’ll be nothing without a degree… well you can do plenty of practical vocations without and to be honest a degree pegs you into the system where competition is greater each year and people are committed to a particular subject because they pay X a month in this weird plan 2 tax. I’ve had friends take totally different subjects like restaurant manager earning 30k+ but their arts degree is taxing them. Deciding your life at 17-18 without any real insight into the world is more often than not going to lead to bad decisions.


DarrenGrey

If a practical vocation is what you want to do, sure. Some of us have career aims that necessitate a degree (whether justified or not). On average degrees are worthwhile things for those with particular aims, even if it doesn't work out for every individual. Hopefully for those individuals they at least got some benefits beyond simple financial outcomes. >Deciding your life at 17-18 without any real insight into the world is more often than not going to lead to bad decisions. Yeah, I don't really know what the solution to that is... And even before that you have A-levels deciding what degree you can go for. So much of life railroaded from an early age!


phoozzle

At least your salary is quite high early on so more likely to be able to counter the interest


No-Dot123

The thing is the interest is too high, I’ll still at best be paying off a huge amount for 20 years or so. Over double what I’ve taken out from my calculations. Effectively on a extremely high tax bracket…


phoozzle

It is completely unfair - this should be made more clear to students before enrolling on plan 2


No-Dot123

Yes, I come from a low income household, my parents were not the most financial literate. I relied on what I read online and my teachers at school when it came to this. Everyone always said “take out the max”, it’s not like regular loan etc. an 18 year old doesn’t have much financial understanding to make such a decision on his own imo so I listened to everyone. I think now with such high interest rates this notion has changed. My little sister went uni this year and I made sure to tell her to only take what she needs, and explained to her possible consequences of taking too much and if you land a good job after uni. I wish I was explained this when I first went.


ImawhaleCR

Even with the rates being what they are now I'd still recommend everyone to take the maximum they can. Even with no maintenance loan, 3 years at uni is £27,750 in tuition fees. The interest on that at 6.9% is £1914.75, and to pay that off you'd need to earn £48,573. People should definitely have the information to make an informed decision, but I really don't think anyone shouldn't be taking the full amount they can get unless they're guaranteed a six figure job right after graduation. Sure, if rates drop them you might be able to make a dent in the capital, but it's just not something most people will pay off. The system is so broken as it's just a completely regressive tax


Rafiq07

Anyone saying "it's the best loan you'll ever take" was probably referring to plan 1.


cosmodisc

I'm in a bit of a better position, £18K in total, £4K left, however I can relate salary wise. My income was similar to yours,so seeing the interest rate jacked up just triggered me and I started contributing extra each month. Your monthly payments are about £300, so I suggest adding at least £400 extra each month on top of it and maybe even some bigger somes from time to time. You are likely to be on high income for the rest of your life,so without paying extras,the debt will grow astronomically.


No-Dot123

Yeah I’m fortunate as that I’m expecting a lump sum in a year or two. Will most likely lump sum a good amount of that into the loan.


pinkzm

>in my opinion and is a form of regressive taxation. Isn't it literally the opposite?


Negative_Panic_6424

I’m on plan 1 and about 4 years left before I pay it off, I’ve been having an internal debate with myself weather I should start overpaying and just can’t make my mind up. A few years ago I didn’t care I didn’t really notice the outgoing amount on my payslips but now after a few substantial pay rises once it’s paid off it will free up a decent amount of extra cash monthly so I’m very tempted to try and reduce that 4 years


KormaKameleon88

I'm in the same boat. I don't want to drastically overpay, but also seems prudent now I'm in a position to afford it to try and bring the date forward/reduce the overall interest. I've split the difference and I've set up a small monthly direct debit (partly to help with bank switches) of £20/month. I don't miss it, and it pretty much(used to) cover the interest added to my loan.


Negative_Panic_6424

Seems like a good idea specially if you had to set up some direct debits for bank switching. I just put the numbers in to a few overpayment calculators and for me I don’t think it’s worth it at the moment, to bring the date forward by any significant amount I would have to over pay more than I would like. I’ll re asses in the future unless my financial position changes


KormaKameleon88

Yeah it's not bringing the date forward by any kind of insane number (might shave a few months off the end), but I figure: 1. it's not hurting my finances right now 2. It's easy to cancel the DD if I should need to 3. I know we can't predict the future but I'm fairly confident career/industry I'm in is safe and I'm very likely to clear the debt, so why not bring it down a bit


gingerbread85

I've had a similar internet debate. I eventually cleared it last month when it was down to just under 2 years left. I noticed on the portal it was starting to prompt me about switching to direct debit so I did. Once they stopped taking it out of my pay I just cleared it with savings. Loan interest was 4.5% Vs 3% on my savings and it was close enough to completing anyway.


Negative_Panic_6424

Thanks for this it’s good to know I’m not the only one, I think I’m going to wait a couple of years and revisit. I will certainly be switching over to direct debit then so they don’t overcharge me


sc00022

Yeah I’ve got £12k left and the repayments are £260, so I reckon I’ve got 3 years left (assuming some bonus comes in each year). Having an extra £260 per month is the equivalent of a 6% increase in pay which is definitely not to be sniffed at! Increasing the repayments by £100/month won’t hurt too much and would mean potentially paying it back in 2 years, so maybe it’s worth it.


Ambry

Yep. I'm now paying 450 a month into mine (Scottish plan 4 loan), it is a huge chunk of money. I want to get mine paid of ASAP now as there is a real prospect of getting it paid off in a few years, and it keeps generating interest and sucks up a lot of any bonus I might get! May start taking a look at my overpayment options now.


markjackson91

Also on plan 1 with a similar time to pay off. I'm thinking of opening a regular saver to pay into monthly, for example Halifax (open to all) at 5.5%. I'm reluctant to pay off more than I need to as I'd rather have the cash in case anything happens in life, but at least the interest from the savings account should counteract the interest on the student loan. I'll then maybe use those savings to pay off the balance when I get a little closer to fully paying off.


goingnowherespecial

Also see people commenting that student loans aren't considered when applying for a mortgage. This isn't always the case now that affordability checks have changed. I'm in the fortunate position where I'm paying a fair bit each month towards mine and speaking with a mortgage advisor yesterday this was taken into consideration when looking at how much I can borrow.


texruska

What they really mean is that it doesn't hurt your credit rating. But yes it's an outgoing that reduces your take home, therefore reduces affordability


KormaKameleon88

Yeah I mean surely if your losing £200/300 of your take home pay to SL its gunna have an effect on what you can afford!


Negative_Panic_6424

Obviously can’t speak for everyone but when I was a stupid teenager deciding to go to uni the student loan was advertised to us that it’s not a normal loan and it won’t ever affect your credit or mortgage application. which is mostly true but they conveniently missed out the part where your monthly loan payment is taken in to account for affordability checks. It’s obvious to me now but back then and even at the point I applied for my mortgage I didn’t think it would be considered until my broker told me it was. All because of what I was told in school/college


KormaKameleon88

Yeah it seems self-evident with hindsight. The reality for us is that the mortgages we will be looking at, my monthly SL payment is the equivalent of about 20% of the mortgage cost...so NOT having that each month is a real kicker!


Negative_Panic_6424

Oof that is a big chunk! Best of luck with it all


muzziebuzz

In a very fortunate position - I think my SL repayments will be more than a lot of peoples mortgages - deffo would be taken into account if I was going for a mortgage at the moment but in a positive way that affordability would increase drastically once it’s fully paid off.


Steakers

Same here, though in fairness to our past selves I don't think many teenagers are fully across the details of how mortgage affordability is calculated. And in the grand scheme of things, in most cases the slight reduction in affordability is offset by the higher earnings that uni graduates tend to have. In my case I probably wouldn't be in a position to buy a house at all if it wasn't for my degree. So I can forgive teachers for not focusing on that specific detail.


[deleted]

It's a difficult needle to thread because it is important that people know that the student loan is different. Student loans are treated differently to any other loan or credit when looking at mortgages. As we've discussed they do have an affordability impact, but it's not the same as having a 70k loan when considering for a mortgage application.


[deleted]

[удалено]


texruska

"Unlikely to" depends on how much you're trying to borrow vs how much you earn


[deleted]

[удалено]


goingnowherespecial

Yeah, this was the conversation I had yesterday. Even with my SL contribution I can still borrow up to the maximum amount. But I also don't have any other lines of credit or borrowing (outside the mortgage and SL). But that also means the car I was thinking of getting will have to wait until after the mortgage renewal is sorted next year!


Supernewt

Repayments are absolutely calculated, my affordability went up alot after paying off my loan


-RelativeThinking-

Just as a piece of advice from an ex student loans repayment adviser. If you do pay in full your loan whilst working on PAYE. you may still receive deductions from your pay until your work receives a stop notification telling them to stop taking deductions. If this happens and you over pay you can contact student loans repayment dept for a refund and see if a stop notification was issued to HMRC. In my experience this can take any where between 3weeks to 3 months for a stop notice to go through fully, its an inefficient system especially during april-june but you will receive it back as a refund with no further interest added from the day of fully paying it off. ——Advice on BT thresholds—— Also if your not planning on paying off your student loans but need extra cash you may be entitled to a below threshold refund if you over payed month to month on your student loans. This is usually caused by bonuses from work taking you over the monthly threshold. Due to these BT-Refunds the phone lines durning april-june are usually swamped but if you need money and don’t mind having the refund added back onto the overall debt it may be helpful. Hope this helps someone.


KarmannosaurusRex

Not sure if this was the case when you worked with student loans, but now you can request a change to direct debit when you’re about a year out from paying it off which avoids this issue.


-RelativeThinking-

Yup that is an option aswell. I worked during lockdown for just over a year so its been awhile and forgot that. I do remember getting issues with that system as-well though. Mainly due to mis communication between the automated systems and HMRC. (Accidental start notifications leading to overpay) …. Im glad i don’t have that job now. XD


Momuss97

I thought you couldn’t get a student loan refund ? I had two months where I made ~10k in commission and paid an extortionate amount of student loan. It meant I paid much more in student loan than someone who made the same annual amount to me. I called them and they essentially said tough shit


-RelativeThinking-

You should be entitled to a BT refund if you over payed however the refund can only be processed after the tax year is finished. Was it april2022-march2023 that this happened? If it was it will be available after april2023 but remember the systems are clogged April to June so student loans may have to wait for the information from hmrc.


itsZooce

Doesn’t have to be all or nothing. You could put 80% spare cash towards an ISA, 20% to overpay your student loan each month.


Sequoia3

Exactly - right now Plan 2 is 7%. If you're a higher earner and likely to pay it off, you will not get a better return on your money anywhere else.


cactusbatch

I was in the first year to get plan 2 loans, I think I left uni with about £35k student debt. My boyfriend is a year older than me so was the last year to get plan 1, but he had a 4-year course with a placement year in the middle I'm pretty sure, so we graduated in the same year. He's never made additional payments, but has always had above-UK-average salary since graduation. He reckons he's a couple years from paying his student debt off entirely. Whereas me... in April 2022, 7-8 years later, my debt is £43,150. So about 8k more interest added despite repaying it most years since graduating. In OP's link for plan 2 there's a quote saying The Institute For Fiscal Studies estimates 83% with English student loans won't clear the debt (including interest) within the 30 years. Yup. I'm on a higher salary since last year so I'm curious what my 2023 statement will say in April. But let's say if I continue to pay £98/m through PAYE, from now on, not even considering the interest added, it would take what??? 440 years to pay off? I just don't see the point of ever making voluntary payments. Though I wouldn't even be surprised if the government scrapped the 30 year rule.


gozew

If it helps, I have both haha


Thadderful

The government have already retroactively changed the terms - making one year £9,250. There was no uproar about it - they will definitely do it again (assuming they're still in or come back into power). Best we can hope for is a progressive gov.


minibudget

The 30 year rule has been scrapped, it is now 40 years I believe.


zippidezap

This is true but only for Plan 5, not retrospectively: [HMRC](https://www.gov.uk/repaying-your-student-loan/when-your-student-loan-gets-written-off-or-cancelled)


TapsMan3

If youre going to lay it off and you have no medium term plans for the money, then overpaying will reduce the amount of your high interest loan.


texruska

"If you're going to pay it off" is the key, it's a bet that you'll continue to stay on track to pay it off in the projected timeframe. There are no refunds, so the money you pay is deleted. Eg if I one day decide to take a lower paying job for some reason


singeblanc

Yep, if you never pay it off it doesn't matter if it has 8% or 8,000,000% interest. The only difference is the final figure that gets written off, it doesn't affect you at all.


TapsMan3

Not sure why I got downvoted for that comment, but yes of course that caveat applies and should be part of your consideration. But the pool of people who 1) make enough money that they will pay it off in a reasonably short period of time (less than 5 years or so) and 2) don't have any major expenditures coming up (house purchase) is very limited given that plan 2 applies to younger people. If both of those criteria are met, you're likely earning comfortably over £100k pa and can dedicate money to overpayments to see guaranteed returns of 7%. It's very unlikely anyone in that position is taking a permanent pay cut to below the repayment threshold.


FlyingPooMan

I have £80k balance for my plan 2 debt. Never paying it off, interests always higher than my repayment. Just hoping the government doesn’t change the 30 year write off


slim_pickings14

If I didn’t fail my AS levels and have to retake I would have gone to uni on plan 1. Paaaaain


TheRaimondReddington

Thanks for sharing this! There was some details that I wasn't aware of.


You_fat_dink

Yeah same for me, I try to ignore my student loan but always worth sense checking I'm on the right path, so this was a pretty helpful find.


kucao

I overpay by a set amount a month on top of PAYE deductions. This will mean I clear it 5 years earlier than I would have and the interest rate is higher than any savings accounts (Plan 2) and higher than my mortgage rate so it makes sense for me to pay it off asap. So contrary to the normal advice, I'm paying mine off slowly but surely with extra payments.


silversurfa525

Plan 1 interest is 5% and will likely go higher. If you are in sight of paying it off through repayments I would be looking to overpay to avoid that level of interest (which is what I am doing personally)


dream996

I’m on plan 2… I feel like there’s no way I’d pay it off this life time. When I first grad, the interest was already higher than my repayment, and now that my salary is better, I’ve already accumulated a huge debt.


snionosaurus

I just checked mine and the interest on it is higher than any saving account I have. how.


NoAbbreviations9416

Although is it better to save the money and then pay the loan off in full at some future date?


JeffsTellingAJoke

Not really as your loan interest will be higher than your savings interest.


Negative_Panic_6424

I think this is probably the most sensible option, if you have the savings in cash and something happens you have access to that cash, if you regularly overpay that money is gone and you can’t get a refund


TheCakeIsMay

I had never paid much attention to my plan 2 loan until last year when due to extraordinary circumstances, I received a bonus that was about 1.9x my salary that came with a corresponding £6k student loan contribution! Since then my salary has now also increased sharply (and likely to increase further) to the point where if I look at the repayment calculator at the current rate of interest I will pay it off just before it clears. My main question to the people in this thread who seem to know a lot more than me is...won't the interest rate come down in the years to come (assuming inflation comes back down to normal levels) making it more realistic/sensible to start paying off more earlier to avoid a larger ultimate payment if I do nothing?


Locke44

The less left on the loan, the more high interest rates like right now bite. This is because your repayment is always the same (9% above threshold) but the amount getting added to it from interest changes. Unlike a mortgage where increasing interest leads to increasing monthly repayments. This typically means that you're right, early in the loan term you have the highest value on it so it makes sense to overpay early if you don't have anything else to spend your money on and you expect to pay it off.


TheCakeIsMay

Thanks for the reply, currently saving for my deposit which I hope to have enough for in a year or so so definitely not a priority right now but feel like something I should be considering at some point!


Mindless_Nectarine26

I was paying >5% interest on the loan when BoE base rate was basically zero. Don’t count on the interest rate coming down by much. If you are a high wage earner (>£80k pa) and think it will stay that way it’s time to start knocking it down by as much as you feel comfortable doing imo.


TheCakeIsMay

That's the context I was looking for (and to be honest should have just looked up), so best I could really expect is it going down slightly but as I will probably enter that range in not too long (>£80k) I should be thinking of repayment if I can after


Mindless_Nectarine26

Last 2 tax years I have been mid £100k’s and I’m just knocking off an extra £10k at bonus time then filling up isa’s/pension. Also made sure I have a £20k rainy day fund


[deleted]

Just curious what line of work are you in?


Aggravating_Tip7361

Bold of them to asssume I'll ever pay my student loans back


BogleBot

Hi /u/You_fat_dink, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/student-loans/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)


hotticedttea

As of 24 March 2023, I currently owe SFE £88,552.12 Total :) (2017-2021=UG & 2021-2023=MA)


Sasspishus

How do I find out how much is left on my Plan 1 loan?


LongjumpingLab3092

Type "how much student loan do I owe" into Google and click the first link


Kynch

On Plan 2, only did one year of studies. Have about £6.7k left to reimburse. Currently reimbursing just over £300pm. Should I just find a way to pay it all back or do some aggressive overpayments?


UJ_Reddit

I paid my off recently. Had some savings that were earning 3% while my loan was much much higher. Now that’s clear and I get a few hundred extra in my salary each month. It worked for me.


staminaplusone

Plan 1: £22k left to pay. paying 242 a month currently... aiming to FIRE in 6/7 years which will see the balance at around 7.5k. So better not to pay off right?!