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Okay. Good evening, everyone. Apologies for the slight delay. Welcome to another edition of our financial webinar with Dr Sira Asher. This week's topic is student loans and whether or not usually try to pay them off early or whether you should try and pay what that's all. Um, as you may know, by now, uh, Doctor Asher is an academic foundation training in the Oxford Diener E. On is also a qualified chart to the counter on Actually has been enlightening us with her knowledge for the past seven weeks. Um, while the webinar is going on the semen, as always, I'll be monitoring their comments on Facebook. If you do have any questions, please pop in there on. I will relay them. Doctor Asher at the end of the talk. So is my absolute pleasure to hand over to, so I Russia. Thank you, everyone. Um, so we're going to talk about student loans today. We're going to talk a little bit about the different types of student loans. Um, as you know, um, changes introduced me. I've been doing seven sessions so far, um, on, um, I'm actually really enjoying it, so I hope it's been useful for you guys as well. I just want to say a big thank you to everyone who's been filling in for your back forms. Because I look at I do look at them on. I've been changing a lot of the stuff that I do in response to them. So thank you so much. Because your comments s are helping improve these every single time I do it. So thank you. So sorry. And lots of got cold. So what we're gonna talk about is what a student loan is. The types of student loans were just something you guys probably already know. Just we're gonna break it down a little bit, some key fax that you need to know, And then the big question should you pay it off, or should you, over pain on your student loan. So a student loan is composed of two things. It is a tuition alone that is paid directly to your university on being on your behalf. Um, it done has a maintenance known proportion, which is, um, a little bit of maintenance ground and mostly maintenance alone. The ground is mean testes. And that's for you to live on on. Then your repayments are based on your summary s so you only stop repaying once you reach a certain threshold. The specials differ. Depending on the plan on you, you pay a certain amount of your salary. So that type of student loans the three. There's John one plan to plan for, you know, ask me about 13. No idea where that went. Maybe it was a terrible idea. And they've been so plan one. If you were probably on plan one. If you went to university, started your university course before August 2012. Um, your interest rate is whichever is the lowest 11 is beautiful. Um is the lowest of RPI I from March of each year or the England base rate plus one. So at the moment, because interest rates are so low, your interest rate is 1.1%. The difference with your loan it plan one is that the social does a little bit lower from when you start paying back. It's when your pre tax so your basic gross salary is 19,895. Um, after that fresh hold, you pay 9% off your next salary So once all the tax deductions pensions, national insurance has been deducted from your salary on the money that you take home called your net salary. Once that's calculated, the 9% is actually taken off. That rather than the amount that's pre tax, that is based on. Okay, I will be very honest with you. They're know, very logical. They all kind of funny, which is which is going to make. Um Well, I'm about to say later on a bit more poignant. Um, So if you started on the, um, if you started studying in the 2506 academic year or earlier, um, your student can run alone will be written off when you tell me. 65. Uh, it was after this. So in 6 2007, they introduced that they would write it off after 25 years. So the old people who had it for before that I'm not sure how many of you will be in that category. You won't have your loan written off until you turn 65 but actually those who had alone afterwards from 6 2007 academic here onwards, your loan will be written out after 25 years. When I say written off, I mean, that's it. The debt is gone. It's no longer applicable to you. You don't have to pay anything to it. Next is planning to just jumping back to plan one. If you're in Northern Ireland, you will be on someone. Eso Northern Ireland didn't switch to a later one. It was only England and Wales that switched to the newer one planting. So if you Sergeant University after September 2012, and England and Wales, you'll be on plan to, um so the interest rate is much higher. So this planet it jumped right up. Um, so at the moment, it's all P I plus 3% after you graduate, the interest rate on your loan is variable, so it's actually salary based eso the lower your salary, the the interest rate changes and it goes up to 3% but only with a salary between 27,295 lbs and 49,130 lbs. Once you go to 49,830 lbs on up, it's going to be 3% so it will be our be. I lost 3% which makes all current interest rate. Sorry, um, 5.6 is, um which is a no, Um, So the threshold for this one, So is your pre tax salary of 27,295 lbs, which is much higher than the plan one. Um, threshold it. Then. After that, you'll pay 9% of your post tax pose deduction salary. Your next salary every month on with plan to the debt is written off after 30 years from when you first become eligible to repay. So it's not when you start taking the loan out. It's not when you graduate. It's exactly one year after you graduate. It's the April after you graduate. Sorry that you, the 30 year. How about down begins? Um okay, Steve, Me, um, so come for plan for applies to Scotland. Only plan for is what they will be on from 90. 98. Um, previously would have been on plan one on. The only difference now is the threshold is higher, so it's actually better, Which is why there's a little protein box in there that you just you did. You get a little bit more just before you start taking the the payment out. I'm not focused on this one too much, because I I'm kind of ah, lot of the stuff I've done has focus on the England stuff, so I didn't want to confuse it too much. But if this is something you'd like me to talk about, then just drop it in the comments, and I'll be happy to sort of do something a bit later. That would explain the rules in the different parts of the country, if that's useful to you. So Okay, so this is This is where we come to the whole bit. I really struggled with this because it's complicated. Anyway, the interest rate is ridiculous. On top of that, our salary doesn't grow linearly. It grows and steps. So initially we start off with on F one F two, and then it jumps when we go into CT one and two, and then it jumps again, and then it stays stagnant. And then it jumps or not when we get to consultant. So it's really hard to actually use the calculators available online. Excuse me at the moment because of how the salary jumps. It's It's not linear on. A lot of these calculators take into account linear, linearly, growing salaries, so that makes it quite difficult. So I'm going to talk about a few factors and then about how, um, we sort of worked out what the best thing to do is. So, first of all your loans statement, this is a statement that tells you how much you owe it is just doesn't matter. Um, unless you're planning to pay it back. The reason I'm saying this is because you're not paying, um, a certain amount off each time based on the debt you're paying off based on your salary. So you're always paying off 9% off, whatever your salary. Is that the time? Know what your lower statement says on a lot of places online? I've looked at the money saving expert, Um, and it's It's very much a psychological thing looking at this, and it's quite disheartening to see this huge figure booming over you. But I want you to remember that your student loan does not affect your credit score. It isn't required to be paid if you on earning above the threshold, which is great it means that if you're not learning enough to pay it, you're not gonna be paying it. Um, so that's that's good as well. It's not like a normal own way. You have to keep paying it, regardless of what your situation is. It also doesn't affect your overall debt figure. So when I'm talking about practice cause I'm also talking about when lenders look at you and see how much alone you have, So it's more or less just sitting there and it works. More is like a graduate tax. If you think about it, because what it's doing is just constantly taking 9% off your salary every year on because of how big the interest rate is, it just grows more exponentially than we can actually pay it off. Um, so there is that, and we've drawn about talk about fresh hold that you don't pay it if you're if you're not, if you're not over the fascial story Now, the people who need to worry about student loans are the ones who are the eye Iron Ear's. I'm talking about people who go on work in the city, and they start on 40 k 50 k a soon as they graduate. The the thing is, we're not going to be higher in as early on when we start foundation. Even between, I think, um, ct. Really? Yes. To we're not going to be higher earners, but when we get later on, especially consultant. Yes, we are higher. Nissa that for you on, then, By that point, I'm you know, 10 15 years of already elapsed 10, 15 years off the interest rate building up building up in building up has already elapsed. So the debt has gotten to a point where actually, if we are going to pay 9% of it, um, of our salaries, we're still not gonna pay off our student loan because it's gonna have grown that much, that it's probably going to keep going for the next 30 years, and we'll just keep growing over the next 30 years. Um, I'm get so big that you know, the payments that we make. I'm not going to meet how big the student loan grows. Next is the loan amount. If you're a graduate with a lower amount of debt, so I'll give you an example. I I didn't undergraduate degree on day I did a gradual entry med degree on, but I did them both after 2012. So I'm I'm plum to for both of them. My current debt stumps and 90,000. Um, if so for me, I don't have ah, big lump sum sitting there that I can just pay off most of it with to me, um, over the next 30 years over next working life because of how high the interest rates are, I'm not going to be able to actually pay off this debt. Personally, I'm not going to be able to actually pay off the whole day. It's going to grow so big that it will. There will be a portion written off after 30 years. The argument made at in on different online forums and resource is, is that most people will not be earning enough over 30 years to actually pay off their entire student long, Which is why they say it's not worth paying it, um, or paying it off in full. But when it comes to us, when it comes to doctors, the story is much more different. We're more likely to get screwed by this, Um especially those who are, um, at the level, but probably 40,000. 50,000. It's kind of that that kind of debt level, um, you could actually do over payments and pay it off, and you might actually end up paying off a lot more. Then you would have done, um, if you hadn't let it carry on as a debt, that will make more sense in a minute. Um, so next thing buying a house. So if you've got a lump sum and you're trying to decide between, do I use this as a house deposit or do I pay off my student loan? Think about it this way. Buying a house, you need a deposit on house. Prices are rising all the time, so you're either losing money and rent or you're losing money and student loan interest. It's it's a lose lose. Unfortunately, because house prices just continuing to rise, they're just gonna keep rising on. You might want a beat the house first part where you might want to beat this the student loan interest part. Unfortunately for most people, be especially. I don't have these kinds of lumps, some sitting around. I'm still trying to save up for a deposit. So it's It's quite, you know, for me, I'm just thinking I am going to lose money and run anyway, Um, so I might as well put every from my head and I'm get a house instead. So there is there is, um, those kinds of factors to think about. Um next is all Prso All, um, interest rate is I'll be I plus 3% on our p i e. Is inflation, um, infections going to increase At the moment, it's great. At the moment, it's not very high, but it's going to get higher on as inflation increases our interest rates with increasing. So this means that it's really unreliable toe be able to sort of calculate what are interested. It's gonna be in what our debts gonna be. For example, if you try and pay off half of your student No, no early. The other half might grow big enough or not too much it in the first place. So it's really difficult to actually predict what you're interested. It's one of you. Um, next thing is, our salary increases. Like I mentioned, salaries are not linear. They're really hard to predict as well, because our student loan is 9% off. Ah, our our salary, which includes over time, which include two nights, which includes all the weekend Premier. Then you take off your pension's your national insurance and your income tax. And then any other deductions that childcare vouchers on, then 9% of that is taken. So, yes, we can use our base salary as, ah, as a way of trying to figure out, um, what our payments going to be. But we actually have no idea what are extra bits are gonna be, and they do actually make quite a significant amount. They're not They're not small. Um, so to try and you try and predict that isn't there enough? Impossible? Um, James and I, um, we we made a spreadsheet. Um, on it took us absolutely ages because we took away the, um my James, if you do you want to talk about this word, she actually, since you made it, Yeah, I can briefly talk about it. Um, yeah, it was quite a complicated and convoluted process. Um, a couple of things that Cyrus already touched on that kind of makes it difficult is you don't know exactly what you're gonna be paid. So we weren't talking kind of base salary that then from that, you don't have to work out your net salary because that's what the, um, the kind of standard 9% repayment is based off. Um, so once you've done that, yours have to take into account things at the different pension rates, depending on that salary on at what point you're going to go over. Um, but we had a little play around with kind of different numbers on Do Double sira talked about her student loan debt of 90,000. Um, basically, there's no chance she's gonna pay that off for years without, like, a large wind. Pull on that, trying to add kind of more money into the pollen over pay. It just means that she would just pay more than she needs to. Whereas when we put in a much lower figure, so again, about the 90,000. So, Mark, you actually sound a really good chance of over 30 years paying off. So if you can afford to talk a little bit more money in and start, but not too much, it actually saves you paying quite a hefty amount further down the line because when you're a consultant, you'll be paying 5 to 6000 lbs a year toward your student loan if you're still paying it. So if you can put in an extra you know 3500 lbs a year early on actually give you a good chance of saving yourself those years when you would have been taxed. That being said nothing, so I was already touched on this quite nicely. Is that money that you can additionally pay? Now what else could you be using it for? Is that having you know an extra 1000 lbs in the bank this year? If your left eye one is that more useful here? Is that helping you buy a house? Is that helping you get a new car or fix your car when it breaks down? Um, so, yeah, we could definitely kind of go through the process of making a spreadsheet, but it's no, it's not super accurate and a service a very, very time consuming. No, that was James is driving all spreadsheet. We are. We were, If you want, do you drop it in the chart? If you'd like us to talk us, talk you through how to make it. But we discussed this, and neither of us are happy with sharing the spreadsheet because there's just too many assumptions on the assumptions we've made, all based on our own personal financial situation. And so we don't really feel like sharing this much. It's gonna be any help to anyone else, and it's probably easier just telling you how we did it on your you're able to still go on break one that's more personal to you and tailored to you. Um, so do that's know if you'd like us to talk about that. So coming back to the, um, this slide, the last thing is, a lot of places have said these are a lot of medics has Basically, you said, just you have to think about it is a graduate taps you have to think about. It is, um, it's just a taxi or paying to have gone to university because it's the psychological impact of having a loan. Hanging over you is just insane on unnecessary, because that's what this is. This is basically attacks that were never going to be able to pay off most of us, anyway. Me are definitely a 90 grand. Um, to me, it's just gonna be a 9% tucks on my net salary for the extremities is, um, on the way it builds up for me on Probably it's gonna be written off in 30 years for me because it's going to get that big with the interest rates I'll never be able to pay off. Um, those are on plan one on DTaP to have a look at how it's been divided for you because those on plan one, actually, a 1.1 interest rate is no bad. So keeping on paying that it really is. And no, I I wouldn't I wouldn't say it's detrimental. I actually think it's it's not bad. It's a really good deal it plan to. That's the, um, the big one, that that's the difficult one. Unfortunately, and I looked at the Governor website for quite a while, we're trying to figure this out. You can actually decide which plan to repay against when you make a repayment. Say your your entire student loan. It's 50,000 lbs on DTI. Part 1000 lbs of it is, um, can one and 20,000 by 30,000 lbs of is plan to, um if the payment you make is divided between the two by 2030. So, um, you can actually even decide that. Oh, my plan to is is quite big. I haven't, um, some I'll pay that one off in keeping my plan one monthly. You can't even do that because you can actually dictate which plan you want to pay off first or against. It's just assigned or dramatic in, um, so if you're paying it all fuel, you're going to end up paying a little bit of both. So you still have the rest of both to deal with. Um, so those are all these things to consider, So in summary, um, we said, based on our spirits again, this is not tailored advice. Please, please don't take away for do your own calculations. Um, but we found under 50,000 alone amount of under 50,000. Consider overpaying to see if you can save yourself the interest rate. Um, because it's not going to grow that much as competitive, bigger debt amount. So it might. You might actually be realistically paying it off in 30 years time. therefore, the sooner you pay off the last interest you recruit, it's really impossible to predict interest rates. So even if we wanted to do our calculations, even if we had the best spiritually in the world, we have no idea what inflation is gonna be s so we can't even predict what the interest rates are gonna be. House prices are rising. So if you're keen to get on the property ladder, you're having to choose between paying off your student loan a silly interest rate or you're having to choose between her saving up of deposit in on environment where house prices are growing on salary growth. It's quite a difficult position for us will be in. Basically, I found this whole exercise a little bit depressing. Uh, it's it's just, uh it's kind of choosing the the thing that's most important to us rather than trying to do what's financially best, because it's not actually impossible to figure that out. It's impossible to meet all of the demands at once. Um, the good thing is, this loan doesn't affect your credit school on diets written off after 30 years. So, um, I've left plenty of time for questions because, um I'm not sure uh how help? Well, this was communicated by me. So please, just let me know if you have any questions. Okay? Thank you. So we've really got one question from Harriet. She says that she has got a post grad loan. Uh, she knows it's taken separately from her plan to a student loan, which is unsure whether or not that she should pay that loner. And do you have any thoughts about that? Um, Harry it at the top of your head. Do you have any idea what the infantry is? I'm not. No, Um, I'm not sure. Um, if so, it'll be done together the same way as if it was part of the student loan. Um, I sink, um, if you can pay it off. Um, like I said, it's once you start making repayments to the student loans company, you can actually dictate what you're paying off. It just gets assigned to proportionately to what your debt is. So if you've already got the post grad loan out, I'm afraid to say you're not actually able to specifically pay that one off. Um, you kind of have to either decided not to take the loan. I think it's one year anyway, So you call you and say I won't take it in future years? Um, it's now kind of lump together with your Children student loan. Um, I will double check if it's different because I didn't actually check post world loans. I'm I'm sorry. I should have done that. So I'll double check. And if the answer is any different, I'll put it in the comments, but I'm pretty sure it's just lumped together on you. Can't pay them off separately. Okay. Thank you. Harry says that she can't remember what the interest rates up the top of the head. Yeah, we will. We'll have a look. Works. I will have a look at that. And if it is any difference what she just said, she will get back to you. Um, we have another question from Neeraj. So what voice would you get? Two students when they are, how much maintenance loan they should take. So is it best to take the max using the excess of things like the deposit on? Just accept the 9% 30 years or borrow kind of just, you know, as you need it, um, personally, that you can take that, Um there is what a hard question one so much, Um, it I think that the less you take, the better because you're gonna be taking it on plan to, Which means you're gonna be hit with a silly interest rate. Um, unfortunately, there's a lot of people who can't help it on. They call it, actually live off what they have their parents called. Contribute as much as the government expects them, too, on they need that loan. So if you can actually afford not to take the maintenance alone or take less of the maintenance on fantastic, it means your lump would Let's start at the end. Like basically what you're saying is just a lot of people just have to take that 9%. Sorry, that, um 5.6% at the moment. Interest hit because they have no choice. But if you are able, Teo, um, carry on not taking that maintenance on than 100%. Don't take it because you're just gonna end up adding it to the to your debt, So I would just add to that list like caviar. Having played around with my spreadsheet a little bit too long. What's healthy? If, for example, you're someone in the same situation that Cyrus in or myself was in as graduate students? Uh, we know we have a party much better already, and we are unlikely to ever pay that back. So which points? You're looking at a really kind of a nice loan that yes, adds more to your debt afterwards if you're never gonna pay up on, I mean, your 100% sure you're never gonna pay off. Getting that as kind of an extra loan is not a bad idea. However, if you are doing a standard undergrad course, and you think, well, actually body into this. But you said I can afford I can't afford not to take this on. It may give you, you know, keep your options open. That Cyrus. Yeah, like for May, it made some I needed to take it anyway. Festival. And secondly, I was gonna end up with his massive number anyway. So even without my maintenance low, and I think I would have ended up with, um 70 okay or yeah, 70 cave debt, which based on population's one that paid off in 30 years anyway, So adding on another little bit. And so yeah, James is called appointment. Um, Okay. So I can't see a further questions at the moment. Um, but there are a couple links in the comments to our feedback form as serious of right the star. We've actually got some really good quality responses in the last few weeks. On way. Do, read them. We do sit down and we try to see how we can work on them. Um, and try and improve these sessions, be you guys. And we do appreciate you taking the time and actually writing something that we can work on and use reflect on rather than kind of This was good. I don't like this with the real justification. So you have a big thank you to have one that's been doing it on Denny one that's watched this evening or is kind of what you and catch up later. Run. Please do Just take a little bit of time to fill out the feedback for very much appreciate it. Um sorry. Doesn't have anything else that she would like to add. I believe that is for this evening. Thank you. Always. There will be an article following this up. Uh, sometime in the next week or so.