The interest repayments on the student loans are frightening ...

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VergeofInsanity
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I know the situation with the student loan repayment itself. Above 21k .. 9% of difference between what you earn and 21k. That's not a problem at all logically. A 51k salary would mean paying back 2.7k in the year which is nothing to worry about.

But I recently logged into the student finance repayment website and the interest shocked me. As I have a £5000 bursary which has been taken off my tuition loan, I only owe back £4000 for my first year. Yet logging in just over a month ago I already owed back £4150. So if I was to owe the original £9000 then the interest by now would be near £500 already. That is crazy and scary.

I already owe about £6000 from doing a year of University back in 2009 and I have not even accumulated 1k in interest yet in 6 years.

Now my question is this - how is the interest calculated? What is RPI? Is it variable or fixed? Website said I think it was 5.5% RPI. Has anyone anywhere made calculations as to potential interest repayments years down the line and the totals?

Because the rate it is growing at at the moment ... I can only estimate that you might end up with repaying more interest than the student debt itself! Which would mean hugeeee debt. If that's the case I might be better off paying off my £4150 debt now in one go and alleviate some of the potential future interest accrual.

There must be some calculations somewhere to provide some information?

Thanks.
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BrasenoseAdm
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(Original post by VergeofInsanity)
I know the situation with the student loan repayment itself. Above 21k .. 9% of difference between what you earn and 21k. That's not a problem at all logically. A 51k salary would mean paying back 2.7k in the year which is nothing to worry about.

But I recently logged into the student finance repayment website and the interest shocked me. As I have a £5000 bursary which has been taken off my tuition loan, I only owe back £4000 for my first year. Yet logging in just over a month ago I already owed back £4150. So if I was to owe the original £9000 then the interest by now would be near £500 already. That is crazy and scary.

I already owe about £6000 from doing a year of University back in 2009 and I have not even accumulated 1k in interest yet in 6 years.

Now my question is this - how is the interest calculated? What is RPI? Is it variable or fixed? Website said I think it was 5.5% RPI. Has anyone anywhere made calculations as to potential interest repayments years down the line and the totals?

Because the rate it is growing at at the moment ... I can only estimate that you might end up with repaying more interest than the student debt itself! Which would mean hugeeee debt. If that's the case I might be better off paying off my £4150 debt now in one go and alleviate some of the potential future interest accrual.

There must be some calculations somewhere to provide some information?

Thanks.

We can't, for obvious reasons, provide financial advice. You need to remember though that any unpaid debt is written off after 30 years which makes a big difference. Several independent commentators have run calculations - see for example;

http://www.moneysavingexpert.com/stu...n-fees-changes

This site is regularly cited and should prove helpful.
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ImNotSuperman
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I can't help you much but I feel your pain. I feel like I'm the only person that is slightly concerned about having such a big student loan.
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VergeofInsanity
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(Original post by ImNotSuperman)
I can't help you much but I feel your pain. I feel like I'm the only person that is slightly concerned about having such a big student loan.
I'm just trying to weigh up whether it's better to pay off now or whether the interest would be SO MUCH that there wouldn't be any way to pay it all back unless you were earning 250k per year or something,and therefore it'd be smarter to leave it and actually let your debt multiply endlessly.
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VergeofInsanity
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(Original post by BrasenoseAdm)
We can't, for obvious reasons, provide financial advice. You need to remember though that any unpaid debt is written off after 30 years which makes a big difference. Several independent commentators have run calculations - see for example;

http://www.moneysavingexpert.com/stu...n-fees-changes

This site is regularly cited and should prove helpful.
Is it not 25 years?
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BrasenoseAdm
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(Original post by VergeofInsanity)
Is it not 25 years?
It is 30 years for loans taken out after 1 September 2012.
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VergeofInsanity
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I've just worked out that it's wiser to take as much loan as you can .... I don't suppose one can contact student finance to take a loan out now for this year?
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ImNotSuperman
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(Original post by VergeofInsanity)
I've just worked out that it's wiser to take as much loan as you can .... I don't suppose one can contact student finance to take a loan out now for this year?
Just to make things a bit more complicated, within those 30 years, the government could change the terms and ask you to pay back EVERYTHING.
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VergeofInsanity
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what are you doing?
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Erulia
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(Original post by BrasenoseAdm)
It is 30 years for loans taken out after 1 September 2012.
I swear this is not fixed so the government can ask for the £90000 or so back at any time? The rules can be changed at will.
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citydeer
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on moneysavingexpert website they have a loan repayment calculator which you type in your estimated salary, the amount you owe and it estimates how long it would take to pay your loan off - using this might give you some idea
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BrasenoseAdm
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(Original post by Erulia)
I swear this is not fixed so the government can ask for the £90000 or so back at any time? The rules can be changed at will.
Parliament could in theory abolish private property or wipe out the value of savings by printing money. Rates of income tax and VAT can and do change and at the moment the Chancellor of the Exchequer is looking at revising tax relief on pension contributions. So all things are possible ... but in general governments do not change the terms of loan deals since there are political and economic consequences of doing so. Political parties face general elections (think about the Liberal Democrats' decimation in May of this year) and investors will charge countries higher interest if their governments behave arbitrarily.

There are no absolute guarantees - the future hasn't happened yet - but taking a loan from the government looks as safe as any financial transaction can ever be.
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Doones
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(Original post by Erulia)
I swear this is not fixed so the government can ask for the £90000 or so back at any time? The rules can be changed at will.
If that happens you will have much bigger things to worry about. i.e. the world is ending, zombie attack, or something.

It won't happen.
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Doones
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(Original post by BrasenoseAdm)
(think about the Liberal Democrats' decimation in May of this year)
(Almost literally.)
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Klix88
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(Original post by VergeofInsanity)
I've just worked out that it's wiser to take as much loan as you can .... I don't suppose one can contact student finance to take a loan out now for this year?
Yes, you can apply for Student Finance up to nine months after the start of the academic year. If you already have the Tuition Fee Loan, you can contact SF and ask to be assessed for the Maintenance Loan/Grant as well.
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username1862217
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(Original post by VergeofInsanity)
I know the situation with the student loan repayment itself. Above 21k .. 9% of difference between what you earn and 21k. That's not a problem at all logically. A 51k salary would mean paying back 2.7k in the year which is nothing to worry about.

But I recently logged into the student finance repayment website and the interest shocked me. As I have a £5000 bursary which has been taken off my tuition loan, I only owe back £4000 for my first year. Yet logging in just over a month ago I already owed back £4150. So if I was to owe the original £9000 then the interest by now would be near £500 already. That is crazy and scary.

I already owe about £6000 from doing a year of University back in 2009 and I have not even accumulated 1k in interest yet in 6 years.

Now my question is this - how is the interest calculated? What is RPI? Is it variable or fixed? Website said I think it was 5.5% RPI. Has anyone anywhere made calculations as to potential interest repayments years down the line and the totals?

Because the rate it is growing at at the moment ... I can only estimate that you might end up with repaying more interest than the student debt itself! Which would mean hugeeee debt. If that's the case I might be better off paying off my £4150 debt now in one go and alleviate some of the potential future interest accrual.

There must be some calculations somewhere to provide some information?

Thanks.
Hi OP,

This article sums up the three different types of loans (from different time periods) nicely and allows you to compare them.
http://www.moneysavingexpert.com/stu...nt-loans-repay

As you can see, your 2009 loan is only gaining interest with inflation (RPI). The more modern of your loans is gaining inflation + 3%, or 5.5% currently. This is set to drop to 3.9% from this month though.

At the bottom of the article is a calculator to know how long it will take you to pay it all back. I do not think these new loans are expected to be paid back in 99.9% of cases though.

Your old loan expires after 25 years, and your new one after 30 years.

Hope that helps Image
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Duncan2012
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(Original post by VergeofInsanity)
I only owe back £4000 for my first year. Yet logging in just over a month ago I already owed back £4150. So if I was to owe the original £9000 then the interest by now would be near £500 already. That is crazy and scary.
When did you take out the loan? Assuming you're a new student you won't have accrued £150 in interest on a £4000 loan in a couple of months. I suspect there's something wrong with your figures.
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chickenonsteroids
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(Original post by ImNotSuperman)
I can't help you much but I feel your pain. I feel like I'm the only person that is slightly concerned about having such a big student loan.
It's because we're sold it in such a weird way. Yes, it's significantly softer than commercial loans and federal loans in the US but saying that most people won't pay it off after 30 years as if that's a good thing is a bit silly. It essentially compares the length of a student loan to that of a mortgage :lol:

But what can you do. Student debt is fine to governments. It's not even helpful.
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Doones
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(Original post by chickenonsteroids)
It essentially compares the length of a student loan to that of a mortgage :lol:
Which it is. Most mortgages are 25 years.

Except it's better than a mortgage... mortgages don't get written off unless you become bankrupt, and student loans don't get factored into future loan requests (e.g. asking for a mortgage, except for the repayment affordability point of view).
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domonict
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you will never be able to borrow money at such favourable terms again, in your entire lifetime.
( family/friend zero interest excepted)
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