Student loans - do we have to pay it back?

[Jon MW]

OK rather than speculating I thought I'd look it up. Obviously there isn't this specific case, but the general gist is that it's ........  unclear

It's all done through HMRC, so if you're in the tax system they work it out

Technically you are in the tax system so it should be none just as you don't pay tax, but as you don't pay tax (even though you're in the UK) they might classify you as being outside the tax system. If that was the case then it all depends on what they classify as income.

The easiest way of administering it would be to get a job for something like 10-15 hours a week and then their accountants would process it all for you, obv. the whole working part might be more hassle than just sorting it out with the SLC. But I would guess that it would be a quite tricky to get a clear answer for what exactly the answer is, and I would guess that they would probably make you jump through hoops every year to clarify whether you should be paying any back and/or how much you should be paying.

[boldie]

Yes you have to pay it back. You borrowed 19k and that money will have to be paid back...that's what you agreed.
They might not come after you for it now but sooner or later they will and it's much easier to just start paying it back now.

Obviously it is also just wrong to borrow 19k from the tax payer and then stiff us for it.

Bloody students, if you can't afford to go to uni they shouldn't let you into uni IMO 

[Girgy85]

Yes you have to pay it back. You borrowed 19k and that money will have to be paid back...that's what you agreed.
They might not come after you for it now but sooner or later they will and it's much easier to just start paying it back now.

Obviously it is also just wrong to borrow 19k from the tax payer and then stiff us for it.

Bloody students, if you can't afford to go to uni they shouldn't let you into uni IMO 

^^ THIS ^^

it's all one big jolly to them these days!!

[Jon MW]

Yes you have to pay it back. You borrowed 19k and that money will have to be paid back...that's what you agreed.
They might not come after you for it now but sooner or later they will and it's much easier to just start paying it back now.

Obviously it is also just wrong to borrow 19k from the tax payer and then stiff us for it.

Bloody students, if you can't afford to go to uni they shouldn't let you into uni IMO 

^^ THIS ^^

it's all one big jolly to them these days!!

lol

This was vaguely true of the first year when it was all done on student grants, the clever people coasted through the first year then worked in the latter years for their degree - the less clever people coasted through the first year then dropped out.

But now everything has to be paid for there may be an element of this but it's mainly students from well off backgrounds who still treat it like that, for example, when I went to Uni almost nobody had a part time job but now almost everybody does.

And to Boldie - you pay back a fixed percentage over £15k a year, and the loan is written off after 25 years, so plenty of people won't pay it all back.

Government policy on higher education is a complete mess, it'll take a lot of work to sort it out, it remains to be seen whether the current lot have the intelligence or the cojones to do it.

[DMorgan]

Yes you have to pay it back. You borrowed 19k and that money will have to be paid back...that's what you agreed.
They might not come after you for it now but sooner or later they will and it's much easier to just start paying it back now.

Obviously it is also just wrong to borrow 19k from the tax payer and then stiff us for it.

Bloody students, if you can't afford to go to uni they shouldn't let you into uni IMO 

You just read the thread title and not the actual post, right?

[DMorgan]

Phoned them and they said that the figure that you need to be earning is £15k but thats taxable income, so since I won't be paying any income tax or NI I wouldn't be liable for any repayments at the moment, but the loan will continue to accrue interest @ 1.5% p.a.

Obviously its gunna have to be paid back at some point, but while the interest rate is still low it would be pointless to pay it back now. The interest rate structure changes in September this year though. The interest rate will be the bank of england base rate +1% (which would currently be 1.5%) or 4.4%, whichever is the lowest figure. Should the base rate rise then that'd be a good time to start putting some cash towards it but for now I think I'd rather just pay £30-£40/year in interest.

If I win it in killarney i'll probably pay some back too

[Jon MW]

I thought there was a fair chance that their definition of income would be taxable income (as it's being repaid through the tax system), so that's pretty much the answer I was expecting.

The interest rate was always tied to the inflation rate - is the 4.4% the inflation rate?

If it is, it sounds like if the base rate + 1 is lower than inflation then they're using that instead.

If that's the case, isn't it better (economically not morally obv.) to never pay it back?

[erse]

I think I'd rather just pay £30-£40/year in interest.

1% of 19k is £190

taxable income

I'd double check on this. Even though gambling isn't subject to tax... I must admit though, I've never seen a question about gambling/poker winnings on a self-assessment tax return. I do my tax return online and it asks questions to calculate any student loan repayments required.

Also bear in mind if you have kids and are into the idea of them inheriting something... the debt will have to be deducted.

It'd be worthwhile putting 1k lump sums to knock the debt down... while you can. Interest rates could easily be 10% in 5 years time

// I take the bit about inheriting back. Apparently if you don't pay the debt within 30-40 years...get very ill or  you happen to keel over and die, the debt is wiped.

[Jon MW]

25 years or you die the debt is cancelled

It is technically possible they could change the rules on how the interest is calculated - but politically it would be very difficult, difficult enough to not really worry about it.

Confused about your query on the taxable income, you say to double check this (even though he phoned the SLC) then reiterate that gambling has nothing to do with tax, and add that online self assessment asks you questions to recalculate student loan repayments - all of which just adds to the evidence that it is all based on the tax system and taxable income.

[erse]

Confused about your query on the taxable income, you say to double check this (even though he phoned the SLC) then reiterate that gambling has nothing to do with tax, and add that online self assessment asks you questions to recalculate student loan repayments - all of which just adds to the evidence that it is all based on the tax system and taxable income.

I say double-check because although there are exceptions made for gambling income, i.e. it's tax free because of the tight margins generally involved... it's not like the government are really into the idea of a good % of people finding a way not to pay their debt back.

http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@educ/documents/digitalasset/dg_173548.pdf

Why might I need to pay more in this way?
Additional liability under SA can arise if:
• you have more than one employment because the
annual threshold will have been applied by each
employer when making Student Loan deductions
• all of your relevant earnings were not taken into
account by an employer
• you have other income: such as self-employed profits
and or unearned income in excess of £2,000.

http://www.hmrc.gov.uk/manuals/cslmanual/cslm16035.htm

Is unearned income always taken into account in computing Student Loan repayments?

Unearned income may be taken into account in computing loan repayments only if

    * The amount of unearned income exceeds the threshold, currently £2,000
    And
    * The borrower receives an SA return

So yeah... if you manage to stay in a job that earns less than 15K a year and don't have any reason to run a company... looks like you could get away with it   I think the SLC could still ask you to pony up if they suspect you're earning a living wage though.

[boldie]

Yes you have to pay it back. You borrowed 19k and that money will have to be paid back...that's what you agreed.
They might not come after you for it now but sooner or later they will and it's much easier to just start paying it back now.

Obviously it is also just wrong to borrow 19k from the tax payer and then stiff us for it.

Bloody students, if you can't afford to go to uni they shouldn't let you into uni IMO 

You just read the thread title and not the actual post, right?

Pretty much.

[Jon MW]

...

http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@educ/documents/digitalasset/dg_173548.pdf

Why might I need to pay more in this way?
Additional liability under SA can arise if:
• you have more than one employment because the
annual threshold will have been applied by each
employer when making Student Loan deductions
• all of your relevant earnings were not taken into
account by an employer
• you have other income: such as self-employed profits
and or unearned income in excess of £2,000.

http://www.hmrc.gov.uk/manuals/cslmanual/cslm16035.htm

Is unearned income always taken into account in computing Student Loan repayments?

Unearned income may be taken into account in computing loan repayments only if

    * The amount of unearned income exceeds the threshold, currently £2,000
    And
    * The borrower receives an SA return

...

Blimey, good find

I was rather foolishly thinking the SLC would have the information on their own site.

I've got an 'old style' student loan as well as a 'new style' one, the deferment form for the old ones asks for details of unearned income but virtually says, don't worry about it we won't use this info against you'. I was always slightly suspicious of this but I'm a bit shocked at how low a level the unearned income has to be before they'll consider taking it into account.

[Jon MW]

Actually, although he's not a tax expert the MD of my company says he's pretty sure the accountancy definition of unearned income is stuff like interest from savings and still wouldn't include gambling winnings.

So looks like technically the previous point of view was correct.

[piemaster]

I say double-check because although there are exceptions made for gambling income, i.e. it's tax free because of the tight margins generally involved... it's not like the government are really into the idea of a good % of people finding a way not to pay their debt back.

It's nothing to do with tight margins.  The way the tax law works, you can only be taxed on something if it meets a set of criteria to be described as a 'trade' and gambling, simply doesn't qualify, because there is no proper 'business model' which generates income.

Of course you will probably think that's bollocks, because bookmakers, casinos and such share effectively the same base business model as professional poker players and sports bettors and they clearly pay tax on their gambling winnings.  But the fact is that nobody high up in HMRC simply really understands gambling as is it practiced today and definitely doesn't understand poker.  They're certainly not interested in taxing us, because if they do then unlike in the US we can start off-setting future gambling losses against any other income we make.

[outragous76]

Is the OP for real?

This is a guy who binked a big score back in November @ DTD, is quite clearly and intelligent kid.

Where do you get off "lending money" and not wanting to pay it back. I cant believe people responded with anything other than pay what you borrowed.

CLassy post