#StudentLoanAdvice #StudentFinance #DebtManagement
Hey everyone! 😊
So, I just realized that I’ll be graduating with a whopping £96k of student loan debt to repay before any interest kicks in… 🙈 Any thoughts on how to handle this situation? Here’s a brief rundown of my dilemma:
– I come from a low-income background and qualified for the max student loan amount.
– Currently in my 3rd year of a 5-year degree course in London.
– Commuting 1h45 each way and dealing with a toxic family situation, so planning to move closer to uni.
– Estimating total debt around £96k (maybe £90k if I move back home for the final 2 years).
– Worried about the impact on future mortgage eligibility and repayments with a starting salary of £38k.
Here are my main concerns:
1. Can I request to borrow less to reduce my total debt burden?
2. How might this affect my ability to secure a mortgage in the future?
3. What if unforeseen circumstances lead to lower earnings post-graduation?
Any advice or insights on navigating this situation would be greatly appreciated! Let’s help each other out with some helpful solutions or suggestions. 🤔💡
Cheers, [Your Name]
Unless you get a part time job, I don’t understand how you’ll be able to borrow less, especially if you plan to move closer as the commute is getting too much.
I’d say it’s a future problem since you have already taken the loans. Just think of it as additional tax for the future until it’s dropped off. I’m assuming you’re on plan 2, so it’ll get written off in 30 years after you graduate.
Student loans in the UK are income contingent. How much you repay is based on your gross income. The more you earn the more you repay. If you’re not working they you don’t repay anything. Please note though that interest accrues from the day you receive your first payment. Also, when applying for a mortgage they take how much you repay into account and not how much you owe so I wouldn’t worry too much about this with regards to a mortgage.
Please go here for more info: [https://www.gov.uk/repaying-your-student-loan/what-you-pay](https://www.gov.uk/repaying-your-student-loan/what-you-pay)
I’m quite knowledgeable on this having worked there so feel free to ask me anything.
Student loan debt isn’t like other debts. It doesn’t affect your ability to borrow for e.g. a mortgage. Repayments are based upon earnings rather than what you owe, so it works more like a tax. After 30 years, the loan is cancelled and you pay nothing.
You should obviously plan your future finances around this debt, but the number is not something that should scare you. You can still get a mortgage, and if you don’t earn as much as you hoped then you won’t have as much to pay.
It won’t impact your creditworthiness just your affordability – what you can afford to pay back each month based on income v outgoings.
Meh mine’s 80k. I earn about 50k. I’ll never pay it off. Doesn’t affect ANYTHING except my take home pay. Even at earning 80k you probably won’t touch the interest on it, just see it as a tax for going to uni 🙂
1 – borrowing less may well make no difference long term if the extra gets written off. It’s worth working out if you will likely clear it before it gets written off, if this is unlikely borrowing less just adds financial stress now for no long term gain. Assuming a medical career and aiming for salaried GP looking at your numbers you aren’t looking at particularly high earnings at all.
2 – yes, in that you will have higher fixed outgoings which will therefore reduce what banks will lend to you. It doesn’t count as badly against you as having 100k in credit cards or the like though.
3 – you pay back 9% of gross earnings over the threshold. Its not a fixed payment every month, if you stop earning you stop paying.
In summary you may already be in a position where given the steadily decreasing medical incomes relative to the population and steadily increasing student loan threshold where if you borrow more you never pay it back anyway, assuming you are not aiming for a specialty or situation where you have reasonable earning prospects as your figures suggest. If so just take the money and move away from the family situation, the taxpayer will ultimately pick up the tab.
My assumptions from your projected earnings are that you plan on either being part time or doing something like a salaried GP role where earnings at the moment can be quite poor and are likely to worsen. If you were to make different career choices your earning potential could be rather a lot better. Putting figures based on your projected figures into [https://www.student-loan-calculator.co.uk](https://www.student-loan-calculator.co.uk) but allowing for a bit of wage inflation ends up with your loan being written off.
1. Definitely move closer to uni, the fact that you described your current situation as toxic says enough. You do not need a commute like that at a time when your work load will be increasing as well. Also being closer to uni and your course mates will give you the chance to socialise and actually enjoy your final two years!
2. I know the idea of the big number is scary but it isn’t a debt, it’s an education tax. You will only ever see this as a deduction on your payslip, which of course will be proportional to your earnings. It will NOT impact any other aspect of your life.
3. Max out the loans and make it as easy(easier!) for yourself as possible. I come from a similar background as you, no financial support and maxed everything out. Even if I had wealthy parents I would have still maxed the loans out. You will never pay it all off. Before I started uni I worked out I would never pay off more than £30k even with very good salary and pay rises.
4. Here’s my personal situation to give you something to relate to (I’m not upto date with the latest SLC plans)
– I studied Engineering 2013-2018
– graduated with a borrowed balance of £60k
– the interest applied WHILE STUDYING was £10.5k
– I’ve been working for 6 years and my loan balance is now £87,200
– last month I payed £99 from my payslip
– in the same month I was charged £460 interest
To summarise, it’s a big number that exists on paper somewhere and will never affect you. It will keep getting bigger until one day it will be written off. In the meantime you’ll pay a small amount of tax every month and not even think about it!
Enjoy your final 2 years of university.
honestly, bigger the number the better, it’s just a ridiculous number that spirals out of control which ultimately should get written off in 30 years. The loan would probably spiral out of control at a base of 10k for most earners. The threshold and interest rates are phenomenal
There’s a lot of dud advice here, from people saying it doesn’t matter to people saying drop out.
Ultimately it does matter – you will end up paying way more than you borrowed and it will affect your take home for decades. Do whatever you can to reduce the amount you borrow. Some kind of part time job sounds sensible.
I would also recommend checking out Ali Abdaal and Dave Ramsey on YouTube for some perspectives on being a medical student / earning money through a side hustle and debt respectively.
Do not worry about these numbers, they are barely real! Take all the money you can get also, it will make no difference. You pay the same amount each month if you have £5k debt or £100k, for example I earn £30k/year, my monthly repayment for student loan is a whopping £18, so £216/year. Makes no difference to my life. In terms of mortgage affordability banks will only look at what’s being taken off your payslip, and won’t know how much you owe in student finance.
Genuinely just think of it as a graduate tax you pay for going to uni, you also only pay it off after earning a certain amount, if at any point you start earning below that amount you stop paying that tax until you’re earning above again, and the 30 year clock keeps ticking whether you’re paying it or not, so it will get wiped in your 50s no matter what.
TLDR; do not panic! Honestly don’t even bother looking at that number because no one actually expects you to pay it off in full. Just think of it as an extra bit of tax, not a debt 🙂
Take as much as possible. 100k+ and you haven’t even finished yet. You probably won’t be able to pay it off. So just think of it as a tax.
Don’t even bother worrying about it. Repayments are income dependent and unless you become a very high earner, you’ll pay roughly the same back regardless of what you borrow.
It’s just a tax. If you don’t earn you don’t pay
Honestly you need to spend some time reading up on student loans because 2 and 3 are things that are explained(and will have been in all your initial documentation and are on the website).
You really shouldn’t worry about it, your student loan isn’t really a loan it’s better to think of it as a tax with a financial end point attached to it i.e. pay at least this much and you can stop paying the tax. When they brought out the policy the interest rate was low so it made less difference, but it was the alternative to the graduate tax and all the higher interest has done has made it that for everyone other than high earners that can afford to pay it off at a higher rate or as a lump sum.
Repayment is based on income, you can overpay, but they can’t make you pay if you don’t have income. It doesn’t count for a mortgage other than the payment is just a payment factored in respect to affordability.
If you actually want to pay it off you can simply overpay or wipe it off in a lump sum.
Take the money and get your degree.
There is absolutely no benefit to borrowing less, you will repay the same amount each month regardless. You won’t pay back if you don’t earn enough or become disabled and don’t earn.
It may affect mortgage borrowing, but not based on the size of the loan, based on the amount you are repaying each month. It’s considered when they look at the affordability criteria.
It’s not a normal loan so don’t worry about it. It’s written off after 20/30years. It doesn’t go on your credit rating and doesn’t affect any ability to borrow money other than the monthly payment going out of your bank account which is a percentage base on YOUR INCOME. Also if you become self employed you can stay below the profit margin.
Stop stressing.
You effectively have an extra tax now for the rest of your life.
If you stop earning, you stop paying.
I paid I believe 9% of my wage for around 8 years until it was paid off. It’s a significant chunk of your take home but worth it to land much higher paid jobs. For the record I went to uni before the prices went insane which has allowed me to pay off quicker. I really do feel for people now.
Don’t worry, you only pay back once you reach income thresholds. If you don’t earn enough, you simply never pay it back.
As a dentist you’ll likely earn enough in your 30-40’s to comfortably pay it off and afford a property.
Good plan to move closer to Uni, medical / dentistry degrees are very hard work in 4th and 5th year so less commuting will be a big help, plus less family stress!
Please please please listen to Martin Lewis’ recent podcast on student loans. It explains it all very clearly and will make you feel a lot better:
https://www.bbc.co.uk/sounds/play/p0j8671s?partner=uk.co.bbc&origin=share-mobile
Edit: and to answer your questions clearly.
1. No. Borrow the max (just make your life easier). It’s unlikely you will pay back all of it anyway and the amount you pay back is based on your income, not what you owe. See the podcast episode for more examples.
2. No. Student loans are not counted against mortgages. The podcast also explains this. In addition, most lenders don’t even look at “credit score” they have their own profiles based off of people in your generic situation, so a higher earner would likely be paying back a student loan and that would be taken into account by default – again not based on the amount you owe.
3. You would but it doesn’t matter. Again, it is based off n what you earn, not what you owe. You pay a percentage of your income like a tax, you are not expected to keep up minimum payments. You don’t ever even see it unless you look at your payslip as it’s dealt with through PAYE.
Please. Please. Please listen to the podcast episode. Make yourself a cup of tea, grab a pen and paper and sit down for the hour it takes. It will answer essentially every question you have.
The amount you will repay a month is linked to a percentage of salary over a threshold rather than the amount you owe.
No point worrying about it, you may as well take the maximum as you are unlikely to ever pay it off.
OP, as a future dentist you have a significant PP earning potential – my dental counterpart from A levels is bowling around in a Ferrari whilst I’m in a Golf…
Treat the student loan as a tax but one you’ll probably pay off reasonably soon after graduation (say 10 to 20 years)