This loan is a scam pretty much. The threshold in my country is unrealistically low, my monthly payments are insane by local standarys and I still owe more money at the end of the year than I did at the beginning.
@@letdownbaloon thankfully mine has gone down to 4.5% or thereabouts… i dont think I will be paying it off in the next 5 years… its looking closer to 10.. (I’m 27)
Martin Lewis's answer was slightly misleading. Almost all graduates will be wasting their money if they overpay because the income you need to cover the interest and the balance is way beyond the expectations of most graduates. He should state, unless you are going to be in the top 5% of earners for the 30 years of the loan term, it won't be worth overpaying anything. Only if you have the balance sat in your account with nothing to spend it on because you have bought a house and repaid your mortgage, it might be worth it - but even then, there's probably wiser things to do with the money.
Will the government please raise the tax relief from 40% to 49% on pension contributions? I spent 2 years abroad after graduating and will pay 49% but only get 40% until my mid 50's. Why don't they call it UK 20% basic tax 40% high tax 45% additional 49% student
The five different student loan plans are far more complex than that because they all have different repayment thresholds. The government would never move the student loans repayment threshold to align with higher rate as your percentages imply - because wll the people earning between the basic and higher thresholds wouldn't be paying anything towards their loans. Some people are paying 20% on some income, 9% on another different band and then 40% on any income above the higher rate threshold. And your 'additional' band would be 54% for graduates on income above that threshold and more again for anyone with a PG loan - which would lead to a 60% rate (45 + 9 + 6%) and they would never admit to or publish that.
Basically, an average earner will NEVER pay off the student loan and it'll be wiped after 30 years. So the 'interest' on it doesn't really matter, it could go up 100x every single year, and it wouldn't matter to an average earner. A high earner, say someone earning 100k+ a year, is going to earn enough to pay off their student loan, so the interest for them does actually matter, as it'll add up and the longer/more interest they get, the more total they'll end up paying.
@@doghat1619 yeah but if ur earning 100k+ ur gonna pay off the loan within a few years anyway since ur paying like 7k a year minimum, Whats an average earner? Like 40k/yr?
To give you an idea, I’m earning about £33k and pay around £42 a month on my student loan. I graduated in 2016 and the interest is high so I have not scratched the surface of my student loan
@@doghat1619where are you getting 100k salary from? Even 50k is enough to pay off the original loan in full well before the 30 years. £9250 x 3 = £27,750 Let’s just round it up to £40,000 debt to account for any maintenance loan. On a 50k salary with a plan 2 loan, you’d be paying 9% on anything over £27,295. This comes out to £2043 per year. £2043 x 20 = £40,860. It would take you just under 20 years to fully repay the original loan on a 50k salary with MINIMUM payments. This drops down to 14 years if you didn’t take out maintenance loan. 100k salary is an exaggeration
Before the interest rates went up, you needed to earn £67,000 every year from graduation in order to pay off a full tuition fee and maintenance loan for a 3-year degree. This would have taken the full 30 years. It is much more now - around £96,000 for every year for the 30 years (assuming a post-2012 loan). If your starting salary is lower, as most will be, the balance will run away with itself before there is any chance of repaying it long before you achieve a higher income.
This loan is a scam pretty much. The threshold in my country is unrealistically low, my monthly payments are insane by local standarys and I still owe more money at the end of the year than I did at the beginning.
I left uni with 48k worth of debt, been paying it monthly for 7 years and I've knocked it down to £52k... no that's not a typo :)
It gets cancelled after a certain amount of time.. so don’t stress
@ yeah when I’m like 60 😂
I started with £20,000 its now £24,000 doing really well.
My interest rate is now 7% on my loan. This is mental
7.8%
8% now
It’s 8% now! It’s a trap. I did a finance degree and can’t even get a decent paying job
@@letdownbaloon thankfully mine has gone down to 4.5% or thereabouts… i dont think I will be paying it off in the next 5 years… its looking closer to 10.. (I’m 27)
Fed up with the whole… low income talk with student loans. Setting up for a defeatist mindset
Martin Lewis's answer was slightly misleading. Almost all graduates will be wasting their money if they overpay because the income you need to cover the interest and the balance is way beyond the expectations of most graduates.
He should state, unless you are going to be in the top 5% of earners for the 30 years of the loan term, it won't be worth overpaying anything.
Only if you have the balance sat in your account with nothing to spend it on because you have bought a house and repaid your mortgage, it might be worth it - but even then, there's probably wiser things to do with the money.
Will the government please raise the tax relief from 40% to 49% on pension contributions?
I spent 2 years abroad after graduating and will pay 49% but only get 40% until my mid 50's.
Why don't they call it UK
20% basic tax
40% high tax
45% additional
49% student
The five different student loan plans are far more complex than that because they all have different repayment thresholds. The government would never move the student loans repayment threshold to align with higher rate as your percentages imply - because wll the people earning between the basic and higher thresholds wouldn't be paying anything towards their loans.
Some people are paying 20% on some income, 9% on another different band and then 40% on any income above the higher rate threshold. And your 'additional' band would be 54% for graduates on income above that threshold and more again for anyone with a PG loan - which would lead to a 60% rate (45 + 9 + 6%) and they would never admit to or publish that.
What counts as a high/middle earner (in regards to paying off student loans) ?
Basically, an average earner will NEVER pay off the student loan and it'll be wiped after 30 years. So the 'interest' on it doesn't really matter, it could go up 100x every single year, and it wouldn't matter to an average earner.
A high earner, say someone earning 100k+ a year, is going to earn enough to pay off their student loan, so the interest for them does actually matter, as it'll add up and the longer/more interest they get, the more total they'll end up paying.
@@doghat1619 yeah but if ur earning 100k+ ur gonna pay off the loan within a few years anyway since ur paying like 7k a year minimum,
Whats an average earner? Like 40k/yr?
To give you an idea, I’m earning about £33k and pay around £42 a month on my student loan. I graduated in 2016 and the interest is high so I have not scratched the surface of my student loan
@@doghat1619where are you getting 100k salary from? Even 50k is enough to pay off the original loan in full well before the 30 years.
£9250 x 3 = £27,750
Let’s just round it up to £40,000 debt to account for any maintenance loan.
On a 50k salary with a plan 2 loan, you’d be paying 9% on anything over £27,295. This comes out to £2043 per year.
£2043 x 20 = £40,860.
It would take you just under 20 years to fully repay the original loan on a 50k salary with MINIMUM payments. This drops down to 14 years if you didn’t take out maintenance loan.
100k salary is an exaggeration
Before the interest rates went up, you needed to earn £67,000 every year from graduation in order to pay off a full tuition fee and maintenance loan for a 3-year degree. This would have taken the full 30 years. It is much more now - around £96,000 for every year for the 30 years (assuming a post-2012 loan). If your starting salary is lower, as most will be, the balance will run away with itself before there is any chance of repaying it long before you achieve a higher income.
4.5% currently, was 6%. Make overpayments over month or it'll never go away.
My interest is over 500 a month at the moment...