Student Loans

[soozypoo]

Hi, I took out a student loan in 2001 for my studies, and it total up around £6,000 over the two years I was at University, unfortunately I had to drop out because of illness and have pretty much been on benefits on and off upto now. I got a statement today, with the new balance which is £9,725 which has completely horrified me, obvously its added interest over the last few years, I was wondering if the interest should be frozen being as I was on benefits attall? Or does it just carry on building up. The thing that scares me the most, is I am unlikely to even start paying the loan off as I didn't qualify from the course to get a highly paid job and am still sick, i am just terrified that the interest is going to gather year in and year out, and gonna end up a constantly escalating loan, which I can't possibly pay, I know I don't have to pay anything untilI earn over a certain amount, its scary, I have had my head in the sand as far as the student loans worked, I was just concentrating on my studies at the time

[maroondevo52]

Hi, soozypoo.

 

I'll move this thread to the Student Forum, where hopefully you'll get some help.

 

Regards.

 

Scott.

[soozypoo]

thank you I was unsure where to post it

[chancerylawyer]

Hello!

 

I hear you indeed. My student loan seems to be the only debt that it feels like I will never be able to pay off! I'm sorry to hear that you didn't manage to finish your course and now you are on benefits. Hopefully, you will end up getting a job at some point in the future.

 

The first thing to remember about student loans is that there are two types: The first came into being between 1990 and August 1998. This type of loan (commonly known as a 'mortgage style' loan) was payable as soon as the studies ended by Direct Debit. The second type of loan was from September 1998 until the present and is called the 'income contingent loan.' This is the loan that you have. Although it racks up interest, it never becomes due until you earn (from employment, not benefits) in excess of £299 per week.

 

I would not worry about it, if you do not expect to work in the future, or if you do not think you will make over £299 per week when you do start working, you will never have to pay it back. Also, the loan will generally expire when you are 65 years old.

 

The mortgage style loan never was never provable in bankruptcy, which would the the only way to get rid of it. There was a time between 1998 and 2004 when one could have the debt placed in your bankruptcy, but the Education Act 2004 got rid of that loophole.

 

Hope this helps! I would put it to the back of your mind. Despite the interest, it is probably the 'best' debt one can have. When you do go back to work, the amount you pay will be very small per month.

[soozypoo]

thanks ever so much for answering, kinda of put my mind at rest, does seem incredible silly though to have a loan constantly getting bigger and bigger, makes no sense, should be interest free really, a kind of sponcership. Thank you again

 

Sue