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Need Some Advice Re: UK Student Loans

Discussion in 'I Have a Question...' started by Butterfly, Jun 6, 2013.

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  1. Butterfly

    Butterfly Sim Addict Staff Alumni SF Author SF Supporter

    Hi guys,

    In some desperate need of some advice and probably some education. It's not for me but for my fiancé. Today he received his statement from the student loans company, and was completely shocked and devastated by it. He was under the impression that it was an interest free loan when he applied for it (not true!) and the rate of interest he is getting on his current loan is shocking, especially as he it not earning enough to pay any of it back. It just seems to be sitting there, gaining and interest rate of £30 a month, increasing and he is powerless because he is not able to pay any of it back yet. Even if was earning above the £15K threshold, they only take out something like £7.50 a month, which would mean it would still be gaining about the same amount of interest and he would not be getting anywhere!

    He is worried because he feels that it is something that is going to continue to increase and at present, it is something he is powerless against because he cannot pay it back. Even when he is able to, the debt will be so much that it would probably never go down and will be something he will not be able to pay off in his lifetime. I know student loans are unique as in the don't come knocking at your door asking for the money and I believe they don't affect credit ratings, but it is something he is worried about, and he worried about how corrupt this government is and if they change the goalposts in the future.

    His friends were also shocked and under the same impressions, and are also worried about the implications this might have. They always sold student loans as something glamorous, but the reality is not that at all!

    Any help, or advice is much needed! I have no clue about student loans as my university course was paid for by the DOH and I was entitled to non means tested bursarys!
  2. Theodora

    Theodora Well-Known Member

    The Debt Advisory Foundation and the Consumer Credit Advice Service are both charities with phone lines. Many 'debt advice centres' are for profit companies to be avoided. CItizens Advice Bureau are good but are very over stretched so getting an appointment with their debt advisor may take time.
  3. emily83

    emily83 Well-Known Member

    good luck butterfly.

    sorry i can't help (even though i live in the UK!)
  4. snarrylover

    snarrylover Well-Known Member

    I second what Theodora said. I, too, was shocked by the amount of interest - for some reason I was under the impression it was interest free as well and I'm sure I was told that when I first signed up all those years ago (2006/2007.) I was only at Uni for a year before I dropped out and I can't even look at the letters they send as I'm terrified of seeing the amount.

    My only peace is knowing I won't ever have to pay it back as I will never be earning the required amount.

    Do they really continue adding interest more than the amount which is being repaid? It just doesn't make sense!

    https://www.gov.uk/student-finance/repayments - I'm sure you've read this already, but thought I'd link to it anyways.
  5. Petal

    Petal SF dreamer Staff Member Safety & Support SF Supporter

    That's a shocking rate esp since he thought it was interest free. Sorry I can't help, but hope the both of ye can work this out :hug:
  6. Freya

    Freya Loves SF Staff Member ADMIN SF Author

    I have around £22k in student debt to the government, and no unfortunately the debt is not interest free - my understanding is that the interest is in line with the base rate of interest so it is still a considerably lower rate of interest than you would get with any other debt. It alarmed me, also, at first but I have long since come to terms with the fact that it will be sitting there until I retire at which time it will get written off.

    I earn above the £15k threshold (I used to earn in the region of £26k and the payments then were around £80 a month) but I see it as little more than a minor inconvenience. The loan affects nothing in real terms; when you apply for a mortgage for example, the bank does not even ask to have it listed in the experience of several friends, as it is not 'real' debt in their eyes.

    I do know people who try to pay it off faster - but in reality this is silly and makes no sense to. You would be better saving extra money and using it as larger deposit for a house, for example, as a mortgage has a far higher interest rate than your student loan.

    Your fiance needs to take some deep breaths and chalk it up as an investment - that is the idea anyway. The student loan is nothing to get worried about. It is there and it is irritating but it is not going to affect either of your lives other than to make him more employable in a wider variety of fields than if he had no bachelors degree.
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