Warning: This is what I have gathered from this all. I could have bits and bobs completely wrong here, so please do correct me.
So today I was on student finance England, trying to work out how much debt I was in. Luckily for me, if you log into www.studentloanrepayment.co.uk you can check it out.
The below is a very honest account of my debt, hopefully will be able to lay it out honestly for prospective students about what they are facing.
So, I have a grand total of: £45,274.67 debt after just 3 years of studying, and 3.9 interest rate.
Wow. I am only halfway through.
So let’s work this out numbers wise. Between my maintenance loan and my tuition fee loan over the last 3 years (+ interest) I have this devastatingly big number for a 21 year old. Luckily for us, NHS England will cover years 5 and 6 tuition fee (maintenance loan is a different story..).
-I have worked every summer holiday, and during term times to fund this degree
-I haven’t gone travelling on some expensive trip around the globe, nor bought myself a pirate ship. I have just been spending normally!
-I have been trying to save up…sigh. But am still struggling to just cover rent with my summer jobs.
So I looked a bit further into how I am going to have to pay this off. Let’s assume I have a salary of £30,000, and I will be paying off my loan on “plan 2” as my fees were the 9K ones.
This is, according to student finance, how I will repay:
- Take away £21,000 from your annual salary before tax
- Work out 9% of the remainder
- Divide that figure by 12
- Round down to the nearest pound
For example, if you were earning £30,000 per year:
- 30,000 – 21,000 = 9,000
- 9% of 9,000 = 810
- 810 / 12 = 67.5
- Round down
So your monthly student loan repayment would be £67.
In real life terms, that is £810 a year. Now lets say I have a loan of 14k year 4, 2.5k year 5, 2.5k year 6. This means that at the end of medical school I will have: approximately £71,779 (assuming interest rates stay the same, they won’t). This means it would take me 89 years to pay off my medical degree on a £30k salary. This is…without interest.
Interest rates will be completely dependent on RPI, and in 2012/2013 that was 3.6% which meant that it was a 6.6% interest rate on loans. In 2015/2016 its been 0.9% so an interest rate of 3.9%. Yeah…did you know our loans increase with interest WHILST we are at uni, not just when we are working! Heaven help us. If the interest rate stays the same, on graduation I will be gaining debt of £2.8k a year in interest for my first year. I will therefore need to be earning over £52.1k a year to ensure that my debt does not get bigger each year.
Let’s say I earn 30k as a grad in my first year, it means that my debt will increase by just around £2k, so the salary I now need in my second year of being a grad to make sure that I break even and don’t increase my debt is now £52.9k. Gulp. I need to be paying back the interest rate to make sure I break even and don’t increase my debt. This 9% over my 21k base salary therefore needs to be more than the interest that my debt is earning. Let’s assume I don’t get a pay rise from Mr J Hunt, this could rack up.
I actually have zero idea how, when I have got another 3 years of debt, how I am going to pay this off. This repayment plan means that if I ever want to save up for a house or anything I have to find a savings account that gives more than my student loan interest. Otherwise, I need to pay off this loan asap before I start saving.
Is there any way out? According to student finance you don’t have to pay it off if:
-30 years after you become eligible to repay
-if you become disabled and permanently unable to work
-if you die
Is this degree worth it? 100%. Education is always a good investment in my eyes.
Are there ways for anyone struggling to get some financial help? Always. Imperial is awesome at this. If you ever find yourself in financial need the medical school, and imperial in general, have some great hardship funds and some great sources of money. Check it all out online.
Until then, I am closing my browser and making sure that I try and figure out a way to win the lottery!
Please excuse if I have made any errors here, this is all a bit confusing to understand!! Had a bit of help on this from one of my engineering mates who calmed me about this all!