Student “Loans” (England)

MoneySavingExpert are doing a student loan survey as part of a push to get the SLC to show more clarity. Their suggestion is better than now, but I think it only becomes really clear with a spreadsheet. Well, I would, wouldn’t I!

I believe that a clearer statement from the SLC would show a projection up to year 30, and show the 31st year when the balance becomes zero.

One thing that MSE show, but which is slightly dodgy is the present value of the payments. They discount at RPI, presumably so students can decide whether to pay off now or pay the charges for 30 years. But if you have that sum available and instead of paying off the balance you invest that sum, then an investment return of RPI+3% is a better rate to use for the discounting. Using the investment return gives a much lower present value. I have to assume some astoundingly high pay rates to make it worthwhile paying off the balance at the start.

The other considerations that doesn’t appear in most projections are career breaks (for starting a family, for example) or early very retirement. Both make it less attractive to make an early paying-off.

I’ve made a page on student loans.

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