Student Loan Repayment Percentage
I haven't been able to find a simple, straight-forward response to this.
If you take out a student loan (including both tuition and maintenance), does the amount of loan impact the percentage you pay back on a monthly or annually basis?
For example, if I were to take out £30,000 collectively vs. £60,000 collectively - would I pay the same percent of either figure back? And as a side, what is the percent?
Another a side question: are tuition loans and maintenance loans treated in the same way when it comes to repayment?
Essentially, I'm really just trying to figure out whether it's more worthwhile in the long run to take out more or less loan - with the option of taking more loan opening up the opportunity of saving some of the money for post-university life, making things a little bit easier.
But will that come up at a significantly worser cost? Or are these debts slightly dubious anyway... meaning it would be wiser to take whatever you can when you can?
If you take out a student loan (including both tuition and maintenance), does the amount of loan impact the percentage you pay back on a monthly or annually basis?
For example, if I were to take out £30,000 collectively vs. £60,000 collectively - would I pay the same percent of either figure back? And as a side, what is the percent?
Another a side question: are tuition loans and maintenance loans treated in the same way when it comes to repayment?
Essentially, I'm really just trying to figure out whether it's more worthwhile in the long run to take out more or less loan - with the option of taking more loan opening up the opportunity of saving some of the money for post-university life, making things a little bit easier.
But will that come up at a significantly worser cost? Or are these debts slightly dubious anyway... meaning it would be wiser to take whatever you can when you can?
The percentage is based on your salary & not the amount you borrow. Once you earn over £25000 you start to repay at 9% of your salary over that figure. ie if you earn £30k you will repay 9% x £5k = £37.50 per month - it is not affected by how much you have borrowed. You repay either until the whole of your loan (plus interest) is repaid or for 30 years & then the balance remaining at that time is wiped out. This means that some/most people will never repay all their loan , the government (and therefore the taxpayer) foots the bill. But if you became a high earner then you would probably repay the whole amount within the 30 year limit.
you can read a better explanation at https://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/
you can read a better explanation at https://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/
It's 9% payback rate but you only have to start paying once your salary is above a certain amount. So if you take out more, the amount you'll have to pay back each time would be more £s. I think so anyway, i'm not entirely sure, I'd speak to a careers adviser or the university themselves. Hope this kinda helped
Original post by EddyEagal
I haven't been able to find a simple, straight-forward response to this.
If you take out a student loan (including both tuition and maintenance), does the amount of loan impact the percentage you pay back on a monthly or annually basis?
For example, if I were to take out £30,000 collectively vs. £60,000 collectively - would I pay the same percent of either figure back? And as a side, what is the percent?
Another a side question: are tuition loans and maintenance loans treated in the same way when it comes to repayment?
Essentially, I'm really just trying to figure out whether it's more worthwhile in the long run to take out more or less loan - with the option of taking more loan opening up the opportunity of saving some of the money for post-university life, making things a little bit easier.
But will that come up at a significantly worser cost? Or are these debts slightly dubious anyway... meaning it would be wiser to take whatever you can when you can?
If you take out a student loan (including both tuition and maintenance), does the amount of loan impact the percentage you pay back on a monthly or annually basis?
For example, if I were to take out £30,000 collectively vs. £60,000 collectively - would I pay the same percent of either figure back? And as a side, what is the percent?
Another a side question: are tuition loans and maintenance loans treated in the same way when it comes to repayment?
Essentially, I'm really just trying to figure out whether it's more worthwhile in the long run to take out more or less loan - with the option of taking more loan opening up the opportunity of saving some of the money for post-university life, making things a little bit easier.
But will that come up at a significantly worser cost? Or are these debts slightly dubious anyway... meaning it would be wiser to take whatever you can when you can?
You pay back 9% of what you earn over £25,000 per year (this threshold will probably increase over time). How much you owe does not affect your payments.
Effectively think of it as a graduate tax since only really high earners will actually pay it all off before it gets written off.
You only pay back loans once you earn over 25000 annually. Then you pay 9% of your paycheque, not 9% of the loan, monthly. It is taken directly from your paycheque without you having to do anything so it’s not the same as a normal loan. This debt also won’t affect your credit score or ability to get credit like normal debt would, so you wouldn’t have to worry about it when it came to something like applying for a mortgage.
Take out as much loan as possible in my opinion. You get a gratuity period for 6 months after you graduate (if I’m recalling correctly), may never have to pay it back and if you’re not finished paying it back after 30 years it’s wiped from the record. Take the loans and make your life easier!
Take out as much loan as possible in my opinion. You get a gratuity period for 6 months after you graduate (if I’m recalling correctly), may never have to pay it back and if you’re not finished paying it back after 30 years it’s wiped from the record. Take the loans and make your life easier!
(edited 5 years ago)
https://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/
Had to delete previous post due to a graphic.
Had to delete previous post due to a graphic.
Thanks very much all of you for your above responses. Very helpful.
So, a student that borrows £30k and earns £25,000 a year would be repaying the same amount annually (9% of said loan) as someone who borrowed £80k and earns £25,000? They'd both be giving the student loan company £2,250?
With this system, why on earth would someone borrow less than what is available? What's more, why would anyone not request the basic rate loan?
It really is a taxation - not a debt. With a debt, your salary would certainly affect the payback rate. 9% payback for someone earning 25k and for someone earning 100k? Very strange... but of course, largely, very beneficial to students who go onto earn a modest wage.
Oddly, for those students who go onto earn a very large wage (100k+) - irrespective of how much loan they received - are, in a sense, being punished for earning so much more.
Is my interpretation of all this still correct? Sorry, I somehow can't believe it!
So, a student that borrows £30k and earns £25,000 a year would be repaying the same amount annually (9% of said loan) as someone who borrowed £80k and earns £25,000? They'd both be giving the student loan company £2,250?
With this system, why on earth would someone borrow less than what is available? What's more, why would anyone not request the basic rate loan?
It really is a taxation - not a debt. With a debt, your salary would certainly affect the payback rate. 9% payback for someone earning 25k and for someone earning 100k? Very strange... but of course, largely, very beneficial to students who go onto earn a modest wage.
Oddly, for those students who go onto earn a very large wage (100k+) - irrespective of how much loan they received - are, in a sense, being punished for earning so much more.
Is my interpretation of all this still correct? Sorry, I somehow can't believe it!
Original post by EddyEagal
Thanks very much all of you for your above responses. Very helpful.
So, a student that borrows £30k and earns £25,000 a year would be repaying the same amount annually (9% of said loan) as someone who borrowed £80k and earns £25,000? They'd both be giving the student loan company £2,250?
With this system, why on earth would someone borrow less than what is available? What's more, why would anyone not request the basic rate loan?
It really is a taxation - not a debt. With a debt, your salary would certainly affect the payback rate. 9% payback for someone earning 25k and for someone earning 100k? Very strange... but of course, largely, very beneficial to students who go onto earn a modest wage.
Oddly, for those students who go onto earn a very large wage (100k+) - irrespective of how much loan they received - are, in a sense, being punished for earning so much more.
Is my interpretation of all this still correct? Sorry, I somehow can't believe it!
So, a student that borrows £30k and earns £25,000 a year would be repaying the same amount annually (9% of said loan) as someone who borrowed £80k and earns £25,000? They'd both be giving the student loan company £2,250?
With this system, why on earth would someone borrow less than what is available? What's more, why would anyone not request the basic rate loan?
It really is a taxation - not a debt. With a debt, your salary would certainly affect the payback rate. 9% payback for someone earning 25k and for someone earning 100k? Very strange... but of course, largely, very beneficial to students who go onto earn a modest wage.
Oddly, for those students who go onto earn a very large wage (100k+) - irrespective of how much loan they received - are, in a sense, being punished for earning so much more.
Is my interpretation of all this still correct? Sorry, I somehow can't believe it!
Firstly, if you are earning £25k , no matter how much you borrowed, you would repay nothing. The 9% starts once you start earning over £25k & is only payable on the salary over that. So earnings of £26k gives a payback of £1000x9%/12 = £7.50 per month - hardly onerous.
Also the high earner is not being punished - it is assumed that the whole reason they are earning that much is because of their degree ie lawyers, doctors etc
Original post by rosered98
Firstly, if you are earning £25k , no matter how much you borrowed, you would repay nothing. The 9% starts once you start earning over £25k & is only payable on the salary over that. So earnings of £26k gives a payback of £1000x9%/12 = £7.50 per month - hardly onerous.
Also the high earner is not being punished - it is assumed that the whole reason they are earning that much is because of their degree ie lawyers, doctors etc
Also the high earner is not being punished - it is assumed that the whole reason they are earning that much is because of their degree ie lawyers, doctors etc
How is such a thing even sustainable for the UK then? £7.50 per month is NOTHING and nobody will be able to repay their loan completely.
For me it feels like its basically free money which pays for my university, I would never be able to even repay a fourth of my loan this way.
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