Student Loan Re-Payments for both pre and post 2012 loans

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Dirks
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Hi, this does not seem to have come up, apologies if it has. I struggle with decent search terms for it.

Is there any information on how repayments will be handled if a student ends up oweing one loan on the current system, and another following the 2012 changes?

I imagine this would happen if a student dropped out, and then started an entirely new degree under the new fee scheme.

However I am specifically thinking of a student graduating in 2012, and immediately commencing a PGCE. Assuming, as seems likely, PGCE funding is kept in line with undergraduate funding, the student will owe one loan, which has inflation level interest and starts repayment on earnings of 15,000+, and another which has market rate interest and stars repayment at 21,000+

Paying both back at the same time would be savage- c20% of earnings above 21k, with no option for early repayment, on top of taxes. Paying one or the other loan off first would each have very different effects, as well as being a bit clunky (changing interest rates, and shifting repayment boundaries amounting to quite large sums of diffence).

Has anyone heard anything on how this will be worked out? Its obviously a bit early for this type of detail, but it seems like a major issue.

I'm also a bit sad, and actually kinda intrigued about how they'll do this...
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rmhumphries
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Assuming that your funding came under the same agreement as the original loan, you would pay the original rate on the whole loan, at the original place (so pre-2012 rates / payback times).

I would imagine this would cover people who take original agreed funding plus one year (so year one drop-outs, year two drop-outs who fund a year themselves, people who add a year to their course).

However, that is only my guess.
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hypocriticaljap
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(Original post by Dirks)
Hi, this does not seem to have come up, apologies if it has. I struggle with decent search terms for it.

Is there any information on how repayments will be handled if a student ends up oweing one loan on the current system, and another following the 2012 changes?

I imagine this would happen if a student dropped out, and then started an entirely new degree under the new fee scheme.

However I am specifically thinking of a student graduating in 2012, and immediately commencing a PGCE. Assuming, as seems likely, PGCE funding is kept in line with undergraduate funding, the student will owe one loan, which has inflation level interest and starts repayment on earnings of 15,000+, and another which has market rate interest and stars repayment at 21,000+

Paying both back at the same time would be savage- c20% of earnings above 21k, with no option for early repayment, on top of taxes. Paying one or the other loan off first would each have very different effects, as well as being a bit clunky (changing interest rates, and shifting repayment boundaries amounting to quite large sums of diffence).

Has anyone heard anything on how this will be worked out? Its obviously a bit early for this type of detail, but it seems like a major issue.

I'm also a bit sad, and actually kinda intrigued about how they'll do this...
Paying both back at the same time would be savage- c20% of earnings above 21k, with no option for early repayment

I don't understand this sentence

9% 0f debt A
and
9% of debt B
is still 9% not 20%

And you can repay any amount of a pre 2012 loan at any time with no penalty.
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Dirks
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(Original post by hypocriticaljap)
Paying both back at the same time would be savage- c20% of earnings above 21k, with no option for early repayment

I don't understand this sentence

9% 0f debt A
and
9% of debt B
is still 9% not 20%

And you can repay any amount of a pre 2012 loan at any time with no penalty.
Well, 9%+9% is 18%: if both loans are being re payed simultaneously then it would add up to that.
Say I earn £32,000.
If I have an old system loan of 20,000, then I repay 9% of everything above 15k: £1530 per year.

If I ALSO have a new system loan (say for a PGCE) then to repay that loan I am required to pay 9% of my earnings above 21k : 990 per year. Which is a good extra 20 pounds a week.

Now, I don't necessarily think that will happen. What I was wondering is if anyone has heard of the solution.

Because the interest rate for these loans is completely different they can't just be considered as one big lump of money- its not like just taking another year of student loan is right now. They are entirely different loans, with different repayment levels and interest rates. Just because if I am repaying one loan from 15k+ does not mean I don't also owe back the loan that starts repayment of 21k+

If they do only take 9%, then which loan would repay? And where would repayment start?

Old style loan first? In which case the payer is being denied the opportunity to start paying the second loan, and is thus having to incur considerable additional interest on the new style loan. They would get hit by the worst of both worlds: having to start repaying early, yet paying back for a very long time.

New style loan first? If so does that mean that their repayments would start at 21k until the new loan was paid off, then drop to 15k? This would be fantastic, but I doubt it would be feasible. Old loan from 15k to 21k, then new loan above that? Seems a bit clunky.
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Niamh84
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Dirks, I was wondering about this too. I have a hefty pre-2012 student loan which I have not yet begun to pay off and would like to consider a PGCE beginning September 2012....But I've been unable to find any information regarding how both a pre-2012 plus a post-2012 loan would be paid off. Any information/advice most welcome!
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modgepodge
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I'm actually in this situation cos I did my degree in the pre 2006 system, and have now just done a PGCE under the new system. Slightly easier as it all starts getting paid back at £15k and interest rules are the same, but WHEN the debt gets written off is different - on my first loan it will be with me til I'm 65, on my second it will be with me for 25 years. I'm assuming I will pay back my first loan first, but I don't know. No one I've spoken to knows, and I cba calling SFE as the people on the phones are fecking useless and it will make no difference to me as I can't do anything if I don't like the answer!!

Also I'm fairly sure that when I get a job they are not going to take 9% of my income over £15k for my first student loan AND 9% of my income for second one - just 9% in total, which will contribute to the total debt being paid off.
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Niamh84
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Thanks, Modgepodge. I guess we'll just have to wait and see what happens later in the year. If I hear anything more concrete I'll be in touch!
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oscar1
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Any news on this type of scenario? 9% or 18%?
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sii217
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Good question, I left uni after a year back when it was the old tuition fees in 2008. Now I'm going to be starting again this year. So what happens with paying back the loans? Do I pay one before the other, or one after I earn 15k+ and the other when I earn 21k+
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Bob Kelso
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I would like some clarification on this too as I will be going back to uni this year to study Graduate Entry Medicine and had studied for my previous degree under the old loan system. If both repayments were concurrent and we had to pay 18% that would be brutal (on top of NI, PAYE and Pension Contributions)!!
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messynessie
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I would also love to know if anyone could shed any light on this, I'm in the pre- and post- 2012 situation as I graduated last year and will be starting a PGCE this year, and would really like to know what my repayments are going to look like!
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gcyko
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Don't know if anyone is still interested, but I just called up Student Finance and they said you have to make repayments to both loans if you earn above both thresholds. So in effect, 18% it is! :eek:
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feeny84
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The information is here (and it's not 18%!):

http://www.studentloanrepayment.co.u..._schema=PORTAL

Basically you pay 9% on earnings between £15000 (actually the threshold has been to £16910 and will continue to rise each year) to £21000 - this goes towards payment of your plan 1 loan.

Then you pay 9% on earnings above £21000 (I assume this threshold will rise with inflation also).

In summary, if you're in this situation you pay 9% on everything over the plan 1 threshold.

I am in a slightly different situation where I have a undergrad loan from 2003-07 and a PGCE loan from 2010-11. In my SLC statements, the SLC has lumped both amounts together. As one is pre 2006 and the other is post 2006 I don't know if I pay until I am 65 or it will be written off after 25 years. If anyone has any info I'd really appreciate it.
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