The BBC tries to explain Plan 2 loans, but they state this:
> Student debt does not affect a graduate’s credit score
While technically correct, credit score in the UK is just an indicator of credit worthiness, it’s more of a marketing opportunity for credit reference agencies. Importantly, a student loan **does** affect your likelihood to access credit in many situations like a mortgage, and we need to stop pretending like student loans don’t affect your finances significantly.
SultryPulse0 on
The current student loan system is broken. Graduates are struggling under mounting debt with no end in sight. It’s time for serious changes.
Critical-Engineer81 on
It’s a graduate tax. You will never pay it off.
I think if we changed to a graduate tax system then the private companies won’t make as much money, and people will argue better jobs at the end of the process.
hobbityone on
Either introduce a graduate tax or fully fund education. This middle of the road stuff is just beyond a joke.
As much as people like Martin Lewis and various governments insist it shouldn’t be seen as debt, it absolutely is and impacts so much of your life.
clydewoodforest on
Student loan repayment is the worst of all worlds. If you earn too little you never pay it back, the exchequer has to eat the loss. If you earn a mint you can pay it all back quickly meaning you pay less overall. But if you’re in the middle you end up caught in a debt-interest trap that punishes middle-income earners. Add that de-facto 9% tax burden to the 40% tax bracket and the nonsense with the child benefit cliff, and it gets truly ridiculous.
Drag0n_Fruit on
lol I borrowed 60k in 2015 (graduated 2019)
After working for every year since I graduated, saving up £10k to throw at it since interest rates have been so high, I now owe….. £70k …
Amazing. Interest rates are around 7.1% btw
Budget_Expression291 on
When I had my student loan, I was working minimum wage.
Once I managed to save like £500 to pay it, and then after paying. the remaining balance was the same starting balance. So it made no difference at all.
Later on I managed to pay, but it was ridiculous
HaykoKoryun on
The “best” part of the student loan system is that despite it being “interest free”, only going up with inflation, it doesn’t go down with deflation. Go figure!
paraCFC on
Borrowed 18k in 2012 was overpaying by a bit last month I’ve finished paying it off. So not everyone like stated here is having it written off after 30 years.
orangecloud_0 on
I’ll never pay it off, and I did 4 years with that one “gift” year. I’m just waiting 30 years to “pay it off” until it gets forgiven
NagelRawls on
Ah yes, the great student loans myths strike again.
Hot_Price_2808 on
This is kind of leading to brain drain because I know a lot of people have gone abroad to avoid paying back student loans.
Martyn470 on
Borrowed £12k, I finished university in 2013, have been paying in to it since 2015 ish, I checked last week and it’s up to £15k, nearly 16.
Least it gets paid off after 25 years, so at 48 or so I’ll be happy and student debt free.
Top_Opposites on
Guessing you didn’t go to uni for any financial course, this is how loans work.
5T3thousand on
This is probably one of many. I wonder just how much real world maths were taught in school during their time there. Understanding the cost of a loan is crucial. That said, perhaps the law needs to be changed so that the full price is spelled out for those who may not fully understand.
IhateALLmushrooms on
The government should grow up and reduce the loans. It’s the only logical and just solution.
Stundets having debt they will never pay off is an ever growing disaster to our economy.
We increased the loans by an unrealistic amount and forced the taxpayers to cover it. The only winners are the student loans companies that eventually will get the state money…
Meanwhile the universities are that rich they no longer know what to even do with all the money.
storm_borm on
Mine is in excess of £50,000. I am now just earning enough to start making repayments. They are asking for £26 a month, the interest is over £3,000 a year 🤡. It’s a pathetic system
UKActuary1 on
I was in the first year to attend university on a plan 2 student loan (2012) and this article motivated me to look into my numbers, so I thought I would share them.
For a bit of background:
* I studied for 3 years to get a BSc in maths.
* I received the maximum maintenance loans available to me.
* I graduated in 2015 and have made constant repayments since (no time off work since graduating).
* I borrowed a total university fee and maintenance loan of £42,633.
* I have accrued interest of £25,028.86 since starting university (of which £4,071.74 was accrued while I was still at university).
* I have made total repayments since leaving university of £25,848.
* I have repaid £899 of the amount I borrowed.
From the numbers in the table above it’s possible to calculate my gross salary (net of salary sacrifice i.e. pension contributions), so I’ll do it for you.
Obviously I’m in one of the best positions to repay my loan having only studied for 3 years (no masters degree), going straight into work and quickly gaining a very good salary. Projecting my repayments forwards I’ll repay my loan by age 40 (another 10 years), over which I’ll make another £65k of repayments for an approximate total of £90k, over twice the loan I borrowed.
My take away from all of this is that for the vast majority of people it is best to view it as a tax. At my relatively low plan 2 loan the current breakeven salary (where repayments perfectly offset the interest) is £62,277. It’s a tax which can be avoided if your parents are wealthy enough to pay for your student loans up front, which mine were not.
The system is clearly broken looking at what it takes to repay the “loan”. I have no regrets taking out my loan and no problem repaying it, I couldn’t earn my salary without the degree it funded. The bit that annoys me is that if my parents had a bit more money when I attended university then by age 40 I would be around £90k better off – just another way the wealth divide continues growing.
butterjamtoast on
I would love it if everyone just collectively decided to stop paying or overnight.
I’m aware it is automatically deducted but a mass strike would quickly resolve that.
It’s not advisable but I don’t pay mine back, I’m either schedule D or a LTD company and I’ve just never paid anything. I get a letter like once every year saying if you’re working let us know. And I just don’t.
Mistakenjelly on
Yes thats how interest works.
You went to University, you are supposed to be the best and brightest of all.
20 Comments
The BBC tries to explain Plan 2 loans, but they state this:
> Student debt does not affect a graduate’s credit score
While technically correct, credit score in the UK is just an indicator of credit worthiness, it’s more of a marketing opportunity for credit reference agencies. Importantly, a student loan **does** affect your likelihood to access credit in many situations like a mortgage, and we need to stop pretending like student loans don’t affect your finances significantly.
The current student loan system is broken. Graduates are struggling under mounting debt with no end in sight. It’s time for serious changes.
It’s a graduate tax. You will never pay it off.
I think if we changed to a graduate tax system then the private companies won’t make as much money, and people will argue better jobs at the end of the process.
Either introduce a graduate tax or fully fund education. This middle of the road stuff is just beyond a joke.
As much as people like Martin Lewis and various governments insist it shouldn’t be seen as debt, it absolutely is and impacts so much of your life.
Student loan repayment is the worst of all worlds. If you earn too little you never pay it back, the exchequer has to eat the loss. If you earn a mint you can pay it all back quickly meaning you pay less overall. But if you’re in the middle you end up caught in a debt-interest trap that punishes middle-income earners. Add that de-facto 9% tax burden to the 40% tax bracket and the nonsense with the child benefit cliff, and it gets truly ridiculous.
lol I borrowed 60k in 2015 (graduated 2019)
After working for every year since I graduated, saving up £10k to throw at it since interest rates have been so high, I now owe….. £70k …
Amazing. Interest rates are around 7.1% btw
When I had my student loan, I was working minimum wage.
Once I managed to save like £500 to pay it, and then after paying. the remaining balance was the same starting balance. So it made no difference at all.
Later on I managed to pay, but it was ridiculous
The “best” part of the student loan system is that despite it being “interest free”, only going up with inflation, it doesn’t go down with deflation. Go figure!
Borrowed 18k in 2012 was overpaying by a bit last month I’ve finished paying it off. So not everyone like stated here is having it written off after 30 years.
I’ll never pay it off, and I did 4 years with that one “gift” year. I’m just waiting 30 years to “pay it off” until it gets forgiven
Ah yes, the great student loans myths strike again.
This is kind of leading to brain drain because I know a lot of people have gone abroad to avoid paying back student loans.
Borrowed £12k, I finished university in 2013, have been paying in to it since 2015 ish, I checked last week and it’s up to £15k, nearly 16.
Least it gets paid off after 25 years, so at 48 or so I’ll be happy and student debt free.
Guessing you didn’t go to uni for any financial course, this is how loans work.
This is probably one of many. I wonder just how much real world maths were taught in school during their time there. Understanding the cost of a loan is crucial. That said, perhaps the law needs to be changed so that the full price is spelled out for those who may not fully understand.
The government should grow up and reduce the loans. It’s the only logical and just solution.
Stundets having debt they will never pay off is an ever growing disaster to our economy.
We increased the loans by an unrealistic amount and forced the taxpayers to cover it. The only winners are the student loans companies that eventually will get the state money…
Meanwhile the universities are that rich they no longer know what to even do with all the money.
Mine is in excess of £50,000. I am now just earning enough to start making repayments. They are asking for £26 a month, the interest is over £3,000 a year 🤡. It’s a pathetic system
I was in the first year to attend university on a plan 2 student loan (2012) and this article motivated me to look into my numbers, so I thought I would share them.
For a bit of background:
* I studied for 3 years to get a BSc in maths.
* I received the maximum maintenance loans available to me.
* I graduated in 2015 and have made constant repayments since (no time off work since graduating).
The table in the link shows my loan amounts, interest accrued and repayments made since I started university in September 2012:[ https://imgur.com/a/ScRVYET](https://imgur.com/a/ScRVYET).
A few summary points:
* I borrowed a total university fee and maintenance loan of £42,633.
* I have accrued interest of £25,028.86 since starting university (of which £4,071.74 was accrued while I was still at university).
* I have made total repayments since leaving university of £25,848.
* I have repaid £899 of the amount I borrowed.
From the numbers in the table above it’s possible to calculate my gross salary (net of salary sacrifice i.e. pension contributions), so I’ll do it for you.
* 2016 / 2017: £33,422.22
* 2017 / 2018: £50,155.56
* 2018 / 2019: £48,977.78
* 2019 / 2020: £59,244.44
* 2020 / 2021: £60,400.00
* 2021 / 2022: £65,652.78
* 2022 / 2023: £87,550.56
* 2023 / 2024: £75,961.67
Obviously I’m in one of the best positions to repay my loan having only studied for 3 years (no masters degree), going straight into work and quickly gaining a very good salary. Projecting my repayments forwards I’ll repay my loan by age 40 (another 10 years), over which I’ll make another £65k of repayments for an approximate total of £90k, over twice the loan I borrowed.
My take away from all of this is that for the vast majority of people it is best to view it as a tax. At my relatively low plan 2 loan the current breakeven salary (where repayments perfectly offset the interest) is £62,277. It’s a tax which can be avoided if your parents are wealthy enough to pay for your student loans up front, which mine were not.
The system is clearly broken looking at what it takes to repay the “loan”. I have no regrets taking out my loan and no problem repaying it, I couldn’t earn my salary without the degree it funded. The bit that annoys me is that if my parents had a bit more money when I attended university then by age 40 I would be around £90k better off – just another way the wealth divide continues growing.
I would love it if everyone just collectively decided to stop paying or overnight.
I’m aware it is automatically deducted but a mass strike would quickly resolve that.
It’s not advisable but I don’t pay mine back, I’m either schedule D or a LTD company and I’ve just never paid anything. I get a letter like once every year saying if you’re working let us know. And I just don’t.
Yes thats how interest works.
You went to University, you are supposed to be the best and brightest of all.