How student "loans" really work

[Hibbyradge]

https://scontent-lhr3-1.xx.fbcdn.net/v/t1.0-9/19657259_10211426139683614_5162931673889694048_n.j pg?oh=27ebc539796693c0019cf6ba239a7c9e&oe=59D5EBE6

[calumhibee1]

https://scontent-lhr3-1.xx.fbcdn.net/v/t1.0-9/19657259_10211426139683614_5162931673889694048_n.j pg?oh=27ebc539796693c0019cf6ba239a7c9e&oe=59D5EBE6

Doesn't make sense to me. How can 9% of vastly different amounts always equal £900?

Edit: got it! So in theory, as a student, take as much out in student loan as possible as you'll get hit for the same amount every year anyway?

[CropleyWasGod]

Doesn't make sense to me. How can 9% of vastly different amounts always equal £900?

Edit: got it! So in theory, as a student, take as much out in student loan as possible as you'll get hit for the same amount every year anyway?

The problem with that is that, if you're going for a mortgage, you'll have a better chance of succeeding if you have "only" £20k of student debt, than if you have £50k.

[Sylar]

If you're genuinely interested, the full article is definitely well worth a read:

http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes#tabThree

Critically, is the end section - that all of this can (and probably will) change, and that may well have retrospective consequences.

Thankfully, coming from the Scottish system and with a considerable bit of hard work on my part, I never paid any tuition fees or graduate endowment, never had to borrow any money for living expenses (as I held down a 20 hour part time job with a bank) and because of my hard work, ended up being awarded scholarships for both my Masters and PhD.

In Scotland, that's a possibility, but it's not the case in England because you start your account on -£27k before a baw's kicked.

[High-On-Hibs]

What happens when the economy turns to complete rubble and they bend the policy and start demanding repayments of 50% of anything you earn over £1?

[Onceinawhile]

The problem with that is that, if you're going for a mortgage, you'll have a better chance of succeeding if you have "only" £20k of student debt, than if you have £50k.

Not as important now, it's about affordability. So they will take into account the money coming off rather than the amount of debt.

That's certainly been my experience in the last few weeks looking at mortgages anyway.

[CropleyWasGod]

Not as important now, it's about affordability. So they will take into account the money coming off rather than the amount of debt.

That's certainly been my experience in the last few weeks looking at mortgages anyway.

That makes sense, of course.

Different lenders take different views of various circumstances, which is one of the more frustrating things about mortgage-hunting. Good luck :greengrin

[Sergio sledge]

The problem with that is that, if you're going for a mortgage, you'll have a better chance of succeeding if you have "only" £20k of student debt, than if you have £50k.

I don't think they ask the amount of the loan IIRC, although it has been about a year since I last did it. They just asked if I have a student loan and worked out how much my net pay is based on whether I have a student loan or not.

Edit: someone else got in before me. I should add I only spoke to a couple of providers at the time so others may be different.

[frazeHFC]

I'm sure for tuition fees in Scotland the government pays a maximum of 5 years worth of fees. Do SAAS have any caps on the amount of years you can take out a student loan? Or can anyone that's a student apply for one even if they are still studying after a decade as some people do?

[Hibbyradge]

What happens when the economy turns to complete rubble and they bend the policy and start demanding repayments of 50% of anything you earn over £1?

What? "When the economy turns to complete rubble"! :hilarious

If the country is in such dire financial straits, student loans will be the least of our worries.

[Sylar]

I'm sure for tuition fees in Scotland the government pays a maximum of 5 years worth of fees. Do SAAS have any caps on the amount of years you can take out a student loan? Or can anyone that's a student apply for one even if they are still studying after a decade as some people do?

They only provide 5 years of funding to Scottish students - so you can do a year at College (or an MEng etc), and probably have enough left in your 'balance' to get your degree paid for you too.

[steakbake]

What? "When the economy turns to complete rubble"! :hilarious

If the country is in such dire financial straits, student loans will be the least of our worries.

It's not at all connected and I'm definitely not wanting to bring it up as a discussion here, but it brings me in mind of the old canard about the "How would Scotland defend itself from invasion?" during indyref.

Yeah, if that was happening, I'm pretty sure there'd be quite a lot going on to get to that stage...

[Hibrandenburg]

It's not at all connected and I'm definitely not wanting to bring it up as a discussion here, but it brings me in mind of the old canard about the "How would Scotland defend itself from invasion?" during indyref.

Yeah, if that was happening, I'm pretty sure there'd be a few other countries to go through first...

Unless it was England :duck:

[steakbake]

Unless it was England :duck:

Ha maybe that was the implied threat!

[danhibees1875]

They take a chunk out of my pay every month, but you've just made me realise I've not checked the balance for a while and no idea when it'll stop.

I remember being told that the interest rate was always really low on it and to not worry about it paying it off early but I'm not sure if that still holds true or not... Given the rates, it's probably the best debt to have though (safe from debt that you only owe to yourself, obviously).

[Onceinawhile]

They take a chunk out of my pay every month, but you've just made me realise I've not checked the balance for a while and no idea when it'll stop.

I remember being told that the interest rate was always really low on it and to not worry about it paying it off early but I'm not sure if that still holds true or not... Given the rates, it's probably the best debt to have though (safe from debt that you only owe to yourself, obviously).

Yeh interest rate is roughly .75% or something.

[lapsedhibee]

Yeh interest rate is roughly .75% or something.
Rate I think depends to some extent on when the loan was taken out, but my niece is currently being charged 3%. The days of ultra-cheap student loans are over, as I understand things.

[Hibs Class]

It's about to become c.6.1%, as the rate was changed to, I think, inflation plus 3%. Not sure if that is a UK rate or England only, but as interest rates go it's pretty high right now

[Speedy]

Rate I think depends to some extent on when the loan was taken out, but my niece is currently being charged 3%. The days of ultra-cheap student loans are over, as I understand things.

Yeah it depends when you took the loan. Pre 2012 loans are paying interest of 1.25% which isn't bad at all.

[Bristolhibby]

They take a chunk out of my pay every month, but you've just made me realise I've not checked the balance for a while and no idea when it'll stop.

I remember being told that the interest rate was always really low on it and to not worry about it paying it off early but I'm not sure if that still holds true or not... Given the rates, it's probably the best debt to have though (safe from debt that you only owe to yourself, obviously).

Do check with them, because they won't automatically turn it off.

With 12 months to go I switched to Direct debit, then I knew exactly when my last payment would be made.

J

[heretoday]

Martin Lewis should be PM, or at least Chancellor. He'd have to take a cut in salary mind.