I am sorry if this isn't the right type of question for this thread, but it is something that is on my mind often I and thought I would try to get an outsider's opinion.
Some background info because UK student finance is probably different to other places. Sorry in advance if it is confusing.
You get a loan from the government which starts gaining interest at quite a high rate (I believe it is currently around 6.5% annually) already as a student, from the day you take out your loan. You start paying it back when you earn a certain amount, but it is a tiny amount if you're only just qualifying for repayments (think less than £100 per year). From the day you start making repayments, you pay until it's fully paid back, or for 30 years at which point it is scrapped. Because of this system, if you do not have a high income during those 30 years the amount you pay back is miniscule and you essentially never pay it back and have it deleted at the end of those 30 years.
Most people view it as a form of taxation rather than a debt as such and just deal with it for the 30 years.
Because of the degree I am doing, provided I graduate and nothing terrible happens, I should be able to find a job and earn a steady living. I would be graduating with roughly £55,000 debt due to the already accumulated interest. The interest drops down to 3% after you graduate but climbs back up quickly with your income.
Because of the high interest rate if I only pay back the necessary percentage through taxation I will not get rid of the debt in the 30 years and end up paying back +£150,000 accumulatively as long as I do not lose my job within the profession. However, this will be over the span of 30 years and the majority of it will come from years when I have a relatively high income and am (hopefully) not struggling financially.
If I do try to pay it back I will need to essentially keep living a student lifestyle and won't be able to make any significant savings for about 5-6 years after graduation, at which point I will be about 30yo. When I say living a student lifestyle I mean I would struggle to afford a car, certainly wouldn't be able to live on my own, couldn't even think about having children, etc.
However, at that point I would then be debt free and wouldn't have to worry about it if I wanted to move abroad for example, as I am not originally from the UK.
I'm sorry it ended up being this long. Any thoughts would be highly appreciated.
Submitted December 14, 2019 at 07:49PM by T4k141537 https://ift.tt/2EiXcsA
