Just been sent a screen grab from my Sons student loan account. 7.8% APR!
Interest payable from the moment funds are released.
He has already amassed nearly £5k in interest charges alone.
It would be far cheaper to extend my mortgage and pay it off. I’d rather pay interest to HSBC than the government.
Sent from my iPhone using Tapatalk
Don’t worry about it as he may well not ever pay it off anyway. Think of it as an extra tax not a loan.Originally Posted by eletos
Yes interest rate is ridiculous. My son has approx £45k loan (as do many/most students after 3/4 years). He’s now working and started paying it back but it is a fairly small amount each month.
The absolutely last thing I would do is take out a mortgage to pay it off!!
No idea on what basis they claw it back, but compounding at those rates and you’re swimming against the side somewhat.
Not really considering a mortgage bail out as I’ve got 2 at Uni and one to come, but the rates are taking the piss!
Sent from my iPhone using Tapatalk
Friend's neice borowed money from her uncle due to the rates - she was studying economics and wanted to work in finance and there is some increased rate if a higher earner.
Agreed many won't ever pay it back however.
Sort of depends on their expected earnings. The good thing about student loan is that you don't pay it if you're not earning over a certain amount (in this case equivalent to £25k per annum).
However if someone's in a career where they're earning good money (relatively speaking) then it may well make sense to pay it off early, rather than taking the hit on 7.8% annual interest. I paid mine off early and it was factually a better financial decision for me than paying that extra capital off the mortgage. But definitely needs some careful consideration.
Not an increased rate no. You pay a set percentage on anything you earn over a threshold amount. For plan 5 (i.e. the 7.8% being referenced in the thread) it's 9% of anything earned above £2,083 per month.
What happens when a student graduates and then emigrates to work outside the UK? Just curious.
Posting Permissions
Reply With Quote