Introduction - Moneymagpie

Transcription

moneymagpie.com eBooks
moneymagpie’s Student Loan eBook
Introduction
Introduction
The cost of going to university has been big news recently. Yet despite rising fees,
protest marches and a struggling economy, record numbers of young people applied for a place on a university course last year.
When you’re 18 years old, you might feel like you have more important things to
worry about than reading the small print on your student loan. First it’s UCAS
and clearing, then what to pack and how much partying you can squeeze in
around your studies.
But once you’ve spent your final term practically living in the library, donned a
mortarboard and cloak, shaken the dean’s hand and actually graduated, it’s worth
coming up with a strategy for paying back your loan, because there are lots of little things you can do now to save a bundle of cash in the long run.
We think everyone, no matter how little or how much they earn, needs a good
understanding of the clear strategy for paying off their loans and as many moneymaking tips as possible.
This is what we’ve put together here.
Keep in touch!
Jasmine Birtles and the Moneymagpie team (particularly Jennifer Coles,
Siobhan McCall, Chiara Cavaglieri)
“So much has changed recently when it comes to student
finance and rising tuition fees - students can no longer afford to
freely accept loans and overdrafts,whilst putting off thinking
about repayments until after graduation. Jasmine’s guide
provides everything students need to understand the loan
system and in particular valuable information about paying it back,
which is often a grey area for graduates.”
James Eder, Co-Founder, www.studentbeans.com
“As a student, getting into debt couldn’t be easier. This new book
from MoneyMagpie gives clear, friendly and definitive advice
about to get out of it.”
Johnny Rich, Founder www.push.co.uk
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Contents
1. Are student loans interest free?
2. What types of student loans are there and which one do I have?
3. When does my loan get written off and can I avoid paying it altogether?
4. How much does today’s loan cost?
5. How to understand your student loan statements.
6. How is your loan paid back if you are not working?
7. How is your loan paid back if you are working?
8. How is your loan paid back if you are self-employed?
9. Is it worth paying off your student loan early or could you just ignore
it and get on with saving and investing for other things?
10. What should you pay off first - your student loan or your other debts?
11. Don’t forget to repay your student overdraft.
12. Important information for anyone who has nearly paid off their loan.
13. Free money: ways to pick up free cash to pay off the loan.
14. Super savings - save money and put the extra into paying off your debts.
15. Making extra cash - how you can easily make extra cash to pay off
the loan fast.
16. Complain to gain - how to get compensation from SLC, HMRC or
your employer if they have made a mistake.
17. Pensions, ISAs, saving for a mortgage - should you put money
away for short-term and long-term savings while paying off your
student loan?
18. Free help - what to do if you have a problem with Student Loans
Company.
19. Free advice - what to do if you are in debt and need help.
20. Frequently Asked Questions
P.S. Do you have more questions?
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Section One: The nuts and bolts of paying off your student loan
1
Are student loans interest free?
Sorry...no!
Despite what you may have heard, student loans are not interest free. This is one
of the main queries that the SLC have to deal with, especially after students have
graduated and they see unexpected interest sums on their balance.
In fact, the interest starts as soon as you get the loan.
Interest free ‘in real terms’
You may have heard student loans described as interest free ‘in real terms’. This,
however, has a very different meaning from ‘interest free’. What they really mean
is that the interest you pay on the student loan is in line with inflation. This means
that ‘in real terms’ you don’t lose out.
The amount of interest you pay will be in line with how much inflation
rises over the years you have your loan - i.e. how much the cost of living goes up
and, therefore, how much the pound in your pocket can buy.
Therefore, the interest added to your loan balance will be the equivalent of what
the amount you borrowed would now be worth.
If that’s confusing, think about how prices rise. If you were to buy a loaf of bread
in 2005, the price you paid then would be less than what you would pay now in
2011 for the same product.
When does interest kick in?
In short, immediately. The interest starts as soon as you get your loan...not when
you graduate, but as soon as you get the cash in your bank account. This is another
issue which confuses many students. Interest kicks in from the moment you receive your first payment. The terms and conditions from the SLC state: “You will be
charged interest on your loans from when you receive your first payment until it has
been repaid in full”.
Many people assume that it starts when you graduate but actually you start ‘paying
rent’ on the money as soon as you get it. Even while you’re studying, you’re
being charged interest, even though you don’t have to start paying it back until
you leave and start earning a decent amount of money.
Here at Moneymagpie, we think this is unfair. After all, the reason you need a
student loan is because you do not have enough cash to live whilst you study. Why
should you be hit with interest repayments at this point?
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How often is interest added to my account?
The interest rate refers to how much interest you are charged over the course of a
year. You accrue interest on your account daily, but it is added on each month.
Let’s assume you are not yet making any repayments, in January the balance is
£1000, and the interest rate is 2%, APR. Over the course of the month you will be
charged £1.68.
The boffins at SLC use a rather complicated formula to calculate this amount.
In case you were wondering, the excel formula is =(((1+2/100)^(1/12)1))*(12/365), although the 365 becomes 366 in a leap year.
Don’t worry though, if you’re not a maths whizz. You can use SLC’s online tool to
calculate how much interest you are being charged on your loan each month.
The next month, your balance will be £1001.68, and you will be charged interest
on this whole amount. This is how a loan increases in size over time.
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2
What types of student loan are there and which
one do I have?
The type of loan you have and how you have to pay it back largely depends on when
you took it out.
To find out what type yours is, check out the table below.
Year of issue
Type and amount
Amount and type
How interest
accrues
How you pay it
back
1990-1998
‘Mortgage Style’
In 1990: £500.
The interest rate is
the same as the Retail
Prices Index (RPI) Matches March RRP
Sept - Sept.
Monthly Direct
Debit payments,
usually over 60
months. If you
earn under
£26,449 you
can apply to postpone
repayments.
1998-2012
‘Income Contingent’
In 2010: A maximum of £3290 for
tuition, £2906 for
living costs.*
The interest rate is
whatever is lowest;
the Retail Prices Index
(RPI), or the Bank of
England base rate +
1%.
When earning
over
£15,000, you pay
back 9% of the
portion of your
salary that is over
£15,000.
2012 onwards
‘Income Contingent’
(but the repayment
rules are different)
In 2012: Up to
£9000 for fees and
£5,500 for living
costs (or £7675 in
London).*
While you are studying, interest is charged
at the RPI plus 3%.
When you finish
studying, if you earn
less than £21,000,
interest will be
charged at the rate of
inflation. If you earn
more than £21,000,
interest will be
charged at the RIP
plus 3%.
When earning
over £21,000,
you pay 9% of the
portion of your
salary that is over
£21,000.
*Everyone on an eligible course of study gets 72% of the maximum loan, the rest is
means tested. A ‘means test’ happens when you apply for a student loan. You will be
asked to provide documents to show how much your parents or guardians earn and
the government will decide if you need the extra cash. This only applies if you are
under 25 years of age.
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Mortgage Style Loans
The pre 1997 loans are based on the Retail Prices Index. You can find out what the
current RPI is by checking the website of the National Office of Statistics which is
the organisation that calculates the inflation rates. Click Here.
The Retail Prices Index (RPI) is the measure of inflation (i.e.
how much the things we generally buy regularly cost) that
the government used to use as its official inflation rate. They
now use the Consumer Prices Index (CPI) instead. This one
doesn’t include housing costs in the calculations while the
RPI does. However the RPI is still used for calculating student
loan interest rates.The CPI tends to be lower than the RPI.
These types of loans usually accrue more interest than the post 1998 loans over
time. However, in certain circumstances it can work in your favour to have this
kind of loan. For example, in 2009-2010 we had deflation and the RPI was -0.4%,
which meant that graduates with mortgage style loans were in fact having money
wiped off their balance.
In 2009-2010 we had deflation and the RPI was -0.4%,
which meant that graduates with mortgage style loans were
in fact having money wiped off their balance.
Income Contingency Loans
The interest for these loans is either:
• The Bank of England base rate + 1%
or
• The Retail Prices Index (RPI).....depending on which is the lower figure.
So, for example, at the time of writing the Base Rate is 0.5% and the RPI 4.4%.
Therefore, the current rate of interest for Income Contingency Loans is 1.5%
(that’s Base Rate + 1) as that is the cheaper of the two.
The SLC state: “post 1998 students will continue to be charged 1.5% until the rate
is greater than inflation.”
It’s unlikely that there will be any change this year.
If you want to check the most accurate rates, see the SLC website
Does everyone get the same amount of money in their loan?
No.
Everyone on an eligible course of study gets 72% of the maximum loan, the rest is
means tested.
When you apply for a student loan, you will be asked to provide documents to
show how much your parents or guardians earn. This only applies if you are under
25 years of age.
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3
When does my loan get written off? Can I avoid
paying it altogether?
Like many of the rules on student loans, this depends on when yours was taken
out.
Year of issue
Term of loan
Before 1998
As your loan is not income contingent, you will pay it off over
a set number of months, usually 60 months however much
you earn. Tough.
1998- 2006
Your loan will be written off when you are 65. So if you
haven’t paid it by then the slate will be wiped clean.
2006 - 2012
If you live in England, Wales or Northern Ireland, your loan
will be written off after 25 years. If you live in Scotland, your
loan will be written off after 35 years. *
2012 onwards
The exact term of your loan has not yet been decided by the
government. Under proposed reforms to Higher Education,
one of the recommendations is that the repayment term is
extended from 25 years to 30 years.
*We asked the SLC if there was any chance this could change. They said:
“The current Student Loan Repayment regulations stipulate that the loan will be
written off after 25 years in repayment (35 years for Scottish Loans), therefore any
loans taken out under these regulations are subject to the provisions noted.”
This means that the government should stick to these terms for loans that have
already been taken out.
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4
How much does today’s loan cost?
Brace yourself....
To answer that question we’re going to look at the interest that a typical student,
let’s call him Justin Bieber, will pay. Justin, as we all know, is an intellectual giant
who started a university course in 2010. Over the course of his degree he took out
the following loans:
> Year One: £3,290 for tuition plus £2,906 maintenance (total £6,196)
> Year Two: £3,375 for tuition plus £2,906 maintenance (total £6,281)
> Year Three: £3,465 for tuition plus £2,984 maintenance (total £6,449)
Grand total: £18,926
This is the interest he accrued during university:
> Year One: £6,196 + 3% = £6,381.88
> Year Two: (£6,381.88 + £6,281) +3% = £13,042.77
> Year Three: (£13,042.77 + £6,449) +3% = £20,072.52
So he leaves university with a total debt of £20,072.52.
Then Justin starts working and paying back his loan. To simplify calculations, we
assume the interest rate remains at 3%, that Justin spends 45 years in a job paying
£30,000, and that interest on his loan is added monthly. (Please note these
factors are likely to vary a lot more in a real life situation.)
Each year, he then pays the loan back at a rate of 9% of his earnings over £15,000,
so £1,350 each year.
At this rate it will take Justin 19.75 years to pay off his loan. He will be paying out
until he is 41. The total amount of interest he will pay is £6,544.27.
This means that although he borrowed just over £20,000, he will pay back nearer
to £26,500.
If you don’t think this is too bad, let’s take a look at the situation for Justin’s best
friend, Katy Perry, who starts university in 2012 (she’s a late starter).
Bear in mind the loan amounts for year two and three are our guess, as information
on what the exact amounts will be is not available at the time of writing.
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> Year One: £9,000 tuition plus £3,250 maintenance (total £12,250)
> Year Two: £9,000 tuition plus £3,300 maintenance (total £12,300)
> Year Three: £9,000 tuition plus £3,250 maintenance (total £12,350)
Grand total: £36,900.00
This is the interest Katy accrued during university:
> Year One: £12,250 + 3% = £12,617.50
> Year Two: (£12,617.50 + £12,300) +3% = £25,665.03
> Year Three: (£25,665.03+ £12,350) +3% = £39,155.48
So she leaves university with a total debt of £39,155.48.
Then Katy starts working and starts to pay back her loan. Again, we will assume the interest rate remains at 3%. Katy’s earnings are a bit higher than
Justin’s at £35,000.
Each year, she pays the loan back at a rate of 9% of her earnings over £21,000,
so £1,260 each year.
At this rate it will take Katy 90 years to pay off her loan. If she does somehow
live to be 111, the total amount of interest she will pay is a whopping
£35.899,29 (although that is assuming the balance isn’t just wiped off after 30
years which, in her case, would be a blessing).
How do you explain the shocking cost of borrowing this money?
Well, although Katy will pay £105 each month, she will be charged an average
of £68.64 in interest each month. This means that the bulk of the money she
pays will be wasted in interest repayments and she will pay off the main loan
at a very slow rate.
However, as we saw in chapter three, it is likely that Katy’s loan will be written
off after 30 years. Therefore she will pay a total of £37,800.
It is likely that most students starting university after 2012
will never finish paying off their loans.
9
5
How to understand your student loan statements.
When you’re paying off a loan it’s a good idea to monitor your balance. You can do
this in two ways:
> Checking the annual paper statement you receive from the SLC.
> Logging in to your student loan account online here
How to understand your paper statement
The paper statement can be a little confusing (you may have noticed already!).
Happily, though, the SLC website provides a mocked up statement and shows you
what each and every line of it means. Click here to view the mock statement and
check it against your statement to see what each bit means.
If you’re still unsure, email us at Moneymagpie or ring the SLC on 0845 300 50
90 (they’re open on Saturdays and Sundays too!)
How to use your online account
When you take out a student loan, you will be provided with login details. You
will be asked to provide your Customer Reference Number, password and a secret
question and your answer, for security.
Once your account is up and running, you can check your balance, find out how
much you have yet to pay and discover how much interest you are paying by logging
on.
However! It is important to note that the information on your
online account is not up-to-date for most of the year.
This is because of the way that HMRC and SLC work together:
1. At the start of each year, interest is frozen on your account for one year.
2. Then you pay your student loan contributions to HMRC through your pay
packet.
3. At the end of the year, HMRC passes on your student loan contributions
to SLC. SLC then take this money off your balance, and add your interest
retrospectively, as though you’d been paying money straight to them each month.
Don’t worry, you will not lose out. Essentially this works as though you are paying
off a little of your loan each month, and the month after that you are only charged
interest on your balance for that month. It just means that your online balance
could be up to a year out of date.
If you need a more up-to-date figure, and you have details of all the student loan
contributions that have been taken out of your pay packet since the last annual
statement was issued, you can use the balance calculator on your online account.
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6
How is your loan paid back if you are not working?
If you are not earning any money, then you will not have to make any repayments
on your student loan.
If you are on job seeker’s allowance, you will receive a maximum of £3,510
per year, so you will not have to pay student loan contributions.
The only exception to this is if you have any ‘unearned income’. This does
not include savings or inheritance, but it does include income from stocks
and shares, or from rental properties for example. You will have to pay 9%
per year of any unearned income over £2,000. Unearned income is normally
declared to HMRC through self assessment.
What about if you’re retired?
We wondered what would happen if you were retired. Someone who went to university recently in their 20’s would have the debt written off before they retire; as it
has a term of 25 years (it may increase to 30 years for loans taken out after 2012, 35
years in Scotland).
However, what if you go to university as a mature student at age 50? Will you have
to keep paying until you are 75?
This is what the SLC said:
“Any student loans taken out after 2006 have a repayment term of 25 years. State
pensions are not subject to Student Loan deductions nor are private pensions unless
they are declared as part of a Self Assessment return to HMRC who may depending
on the value and type of pension decide that it should be included for Student Loan
purposes.”
So it seems that if you are on a state pension, you shouldn’t have to worry about repayments. If you are on a higher pension, you may make contributions once HMRC
have assessed your situation by looking at your tax return.
New age discrimination laws mean that employers cannot force employees
to retire at 65, so you may carry on working for a bit longer anyway.
11
7
How is your loan paid back if you are working?
There’s nothing like the excitement of that first pay cheque, and if you’re anything
like us you’ll want to rush out and buy SHOES! Once the thrill has worn off a little,
though, it’s worth giving a though to how student loan contributions will be deducted from your wages.
Nine times out of ten, this will happen automatically, and you won’t have to do
anything. However, when you start a new job, you should mention to your boss or
payroll department that you have a student loan. This will ensure that you make
the right contributions.
If you leave your job or you are forced to leave during the year, you may end up
earning less than £15,000 over the year. If your income for the full year is below
the repayment threshold, then you can apply for a refund of deductions made
during the period you earned over the threshold. You can do this at the end of the
tax year and you must provide SLC with your P60 as evidence of your income.
Don’t forget that your employer isn’t able to make any deductions until the April
after you graduate. This means that the first year after graduating is effectively a
‘payment holiday’.
However, if you wish, you can make direct payments to the SLC via debit or credit
card. You’ll have to contact the SLC to arrange this and make sure you keep tabs
on what you have repaid as you won’t get an immediate up-to-date balance.
Although your employer deducts your student loan repayments from your salary
each month, these will only be sent from HMRC to the Student Loans Company
once a year. So don’t be alarmed if you receive a statement expecting to see a
smaller balance (provided it is the balance you expected to see less than a year
ago).
It really doesn’t help that the repayment of your student loan
is handled by two different organisations - HMRC and SLC.
This, in my opinion, is one of the main causes of confusion
for graduates trying to get clarity on their loan situation.
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8
How is your loan paid off if you are self-employed?
If you are self-employed you must complete a tax return at the end of each financial
year, to tell HMRC how much money you have made.
You will have to calculate how much tax, National Insurance and student loan
repayments you owe once a year.
If you have recently become self-employed, you must register for self-assessment.
You can do this online here.
Then you must file your tax return by a certain deadline, or face an expensive
penalty. The deadlines vary depending on whether you file your self-assessment
online, or using a paper form. There is more information on the Direct Gov
website here.
If you want to make any additional payments, you can do this by telephoning
the Student Loans Company (0141 243 3964) and making a one-off payment by card
over the telephone, or setting up a direct debit. However, if you do this, it will not
count toward the amount you have to repay for the year. It’s considered to be an
extra payment.
You will still have to pay 9% of your earnings over £15,000 at the end of the tax
year, and you will not be able to get these additional payments refunded. So only
do this if you’re certain you can pay extra.
However, if you do pay this extra, it will mean that your overall interest payments
will be reduced so it certainly won’t be wasted.
13
9
Is it worth paying off your student loan early or
could you just ignore it and get on with saving and
investing for other things?
This is one of the most hotly discussed issues around the subject of student loans.
Are you better off concentrating on paying off the loan or should you pay off the
minimum or do something in between? Hmm. Here are our thoughts:
The argument for paying the minimum
• The low interest levels mean that many people are in no rush to pay off this
debt and therefore, they only pay the minimum amount. Many financial
experts advise against paying back the loan quicker than necessary and suggest
that it should be the least of your priorities. After all, the interest rate is either
the same as, or lower than, inflation so it’s not like you’re saddled with a nasty,
high credit card debt that is going to balloon out of all proportion.
• Certainly if you have other outstanding debts or important payments, then
they need to be paid off first. Keeping up with mortgage payments or paying
off any high interest credit card bills should definitely take priority.
• You may not be able to afford paying more than the minimum. You don’t want
to have to take out another loan (with a not so favourable interest rate) a few
months down the line to tide you over.
• However, once you’ve paid off the expensive debts, the really important thing
for you to do is to start investing for your future - long and short term. Even
small amounts of money put away in your 20’s and 30’s will grow into something pretty impressive over the decades. As you’re likely to get at least 6% a year on
average from a normal pension and, ideally, more per year from a good stock
market investment (I like index-tracking funds for that), on paper at least you’re
better off putting extra money into those things than working at paying off your
student debt.
• If you’re really not making much money at all, and you continue on this low
income for years, your debt will eventually be wiped off anyway. Admittedly
you’re talking decades so you will have to be on little or no income for a very
long time, but if you really don’t want to pay it back and don’t see why you
should, there is that get-out clause.
14
Also, don’t forget how cheap this loan is. Although a student loan is a heavy
burden, it is still probably the cheapest way to borrow money. If you have any
spare cash, it may be tempting to pay off your loan totally so you no longer feel as
though you are in debt.
However, if the interest rate on your student loan is currently 1.5%, you’d be much
better putting this money into a stocks and shares ISA or a pension product which
should be making you at least 6% a year.
Also, here is one scenario to avoid:
You pay off your student loan early. A few years go by. You decide to buy a house
with your partner, because you’re currently spending £1,000 a month on rent,
and you would rather invest this in a property of your own. The trouble is you
need a deposit. Your only option is to take out a loan at an interest rate of 12%. If
only you hadn’t paid off your low rate student loan, not only would you save on
interest, you’d also save on rent.
So, in that scenario you are better off over-paying a bit on your student loan but,
at the same time, putting more away into a savings account for the deposit on
your home (just try and find the best rate you can on that account).
The argument for paying it off as fast as possible
• A student loan is a debt and debts are nasty, money-sucking monsters that
need to be destroyed asap. Thanks to the joy and wonder of compound
interest, if you’re not paying off enough to cover at least the interest payments
each year, your debt will actually grow year-on-year, not get paid off.
• It’s certainly important to invest for short and long-term goals, and you are
likely to make more money in the long-term by doing that than by paying off
your loan at such a low rate. However, nothing is certain and at least by paying
off your loan you know you have paid it off. With investments, although in the
past they have done well, no one knows if they will do in the future.
• By the same token, who knows what will happen with the Bank of England
base rate and with inflation? We might find ourselves in the unhappy
position of facing high interest rates and high inflation in the future. That
means that student loan payments will be high and could even be higher than
the returns on pension and stock market investments. In that kind of situation
you want to have paid off as much as possible of your debt so that you don’t
have to pay over the odds for it.
What the Student Loan Company recommends
SLC suggests that you should try and pay back your loan as soon as you can, if circumstances permit. Don’t forget that it is a debt, and each time interest is added
on, it grows. Although the interest rates are favourable at the moment, this could
change in later years.
15
What we at Moneymagpie recommend
We think you should do a mix of the two if you can.
1. Ideally, if you can manage it, we suggest you overpay a bit each month of your
student debt. It doesn’t have to be loads, just a bit. This way at least you are
bringing the debt burden down and you can see that you are making progress.
Also it brings you more security. If interest rates and inflation go up (and it’s
always possible) then you’re in a better position because you will have a lower
amount to pay interest on.
The thing is that it’s true that the interest on your student loan is much lower
than any other official loan you’re going to get, so there’s not quite the urgency
to pay it off that there might be with, say, a nasty credit card bill. However,
having to pay any interest is effectively wasted money so you certainly don’t
want it.
2. At the same time, though, it’s important that you put more money aside for
your retirement (yes, you should be investing even now - you don’t have to
put loads in as even a small amount in a pension or stocks and shares ISA
will grow really well before you retire).
On the whole, the money you make in interest and growth on your investments
is going to be much larger than the interest you’re paying on your student loan.
Also, remember, with your investments the returns are compounding over the
years so it’s a good idea to start it as early as possible. Even if it’s just £20 a month
into a stakeholder pension or a stocks and shares ISA (see our article here for
info on good funds to put it in) over time that money will grow to help keep you in
cruises round the Med when you’ve retired.
If you’re employed and your employer offers a company pension scheme, grab it
with both hands, particularly if they put money in as well. You need all the investment you can get right now so make that your first priority.
Something to think about if you got your loan after 2006
If you are just earning over the minimum repayment amount of £15,000 - and
you expect to continue on this low wage for a few years (why? Are you a journalist
or something?) - then it could actually be quite pointless to pay back the loan any
quicker (it’s slightly different in Scotland where loans are wiped after 35 not 25
years). The expiry date of your loan might pass before you paid it off at 9% of your
earnings and therefore, any extra payments would just be throwing money away
unnecessarily.
Example:
If you’re earning £16,000 and have a student loan debt of £20,000 then it will
take until 2041 to clear your loan. If you graduated in 2009, that means that the
25 year expiry date on the loan will have passed in 2034 and your debt will be
wiped before you can clear it.
However, we at Moneymagpie expect you, esteemed reader, to be earning squillions very soon. After all, a talented, insightful genius like yourself, who has had
the intelligence to download this ebook and is armed with all the fantastic money
making ideas suggested in our Make Money section is bound to rake in the cash
in double-quick time. So don’t use the above note as an excuse not to fulfill your
fabulous potential!
16
Is your loan growing or shrinking?
If you are paying a portion of your earnings to the SLC each month, you might
assume that your overall debt will be going down nicely.
Sadly, this may not be the case if you’re on a lower income. For example:
If you earn £17,000, and you have a loan of £20,000, you will only pay £180 each
year towards your student loan (under pre 2012 arrangements). However, the
interest you will accrue (assuming a rate of 3%) will be £600. So your debt will
actually be growing in the year as you will accrue a net £420 in interest for that
year, and your debt will stand at £20,420.
Under the rules of compound interest, the next year, the interest you accrue will
be 3% of £20,420. In this way, your loan will get bigger over time.
This is why we like the idea of overpaying a bit at least each year, particularly if
you’re on a lower wage. If you could afford £600 per year, for example, you would
pay off the interest and the amount of your loan would remain static at £20,000.
Otherwise, your loan may continue to grow, and then if you start earning a lot
more, say £50,000 before tax, you will be hit with payments of £3,150 each year,
clearing a much larger debt than you originally started with.
So the true answer to the question ‘Is it worth paying off your student loan early
or should I just ignore it’?, is ‘it depends on how much you earn over the course of
your career’.
17
10
What should you pass off first, your student loan or
other debts?
If you have a range of debts, you will save yourself a lot of money by prioritising
them and making sure you pay off the most expensive ones first while paying the
minimum on the rest. This is called ‘snowballing’ your debts and is the quickest
and cheapest way to pay them off.
It’s important to do this as soon as possible, before a few credit card bills become
a major debt crisis.
At the same time, though, you need to make sure you can keep the roof over your
head and body and soul together. Living frugally will help, but it’s no substitute
for sitting down and looking at the figures.
You can get a lot of help in paying off debts of all kinds in our ‘Get out of Debt’
section on Moneymagpie and if you want to do it quickly, here is our step-by-step
guide to getting out of debt speedily and safely.
Step One
Dig out all your paperwork (i.e. bills, statements, leaflets explaining the terms and
conditions, and any e-statements) and put them in order (in sections and in date
order).
For each debt, you need to know the amount still to pay and the interest rate. Also
check the small print for additional fees, which may cost more than the interest
(see example below).
Step Two
Put them in order of urgency.
1. Essential bills
If you live independently from your parents, you should prioritise the payment of
bills that keep the roof over your head. So make sure you pay your rent/mortgage,
your utilities and essential insurances.
Also make sure you pay your Council Tax as the local council can bankrupt you
quite easily if it wants to.
2. Debt repayments
With the money left over after you have paid your essential bills, the next priority
is your debts. As a rule of thumb, you should concentrate first on the debts with
the highest interest rates.
18
For example, if you had the following debts:
> £20,000 student loan, at 3% yearly interest, added monthly,
repayments taken directly from your paycheque.
> £600 on a store card with a rate of 29% APR (i.e. the annual interest).
> £1,000 credit card debt at 17% interest.
> £70 outstanding gas bill, final warning.
The gas bill should come first, as it would be pretty miserable living without heating or hot water.
In these circumstances, your priorities should be as follows:
1. Pay off the gas bill. This comes first because it is an essential service you need to
live. Credit card companies may hassle you to make repayments but in reality
they have relatively little power to change your circumstances.
2. Pay off as much as you possibly can on the store card. This is the most
expensive debt you have, even though you haven’t borrowed as much on it as
you have elsewhere, and it should be got rid of as soon as possible.
3. Pay off the minimum monthly payment on your credit card.
4. Pay the minimum on your student loan (which goes out of your salary anyway).
5. Once you’ve cleared the balance on your store card, pay off as much of your
credit card as you possibly can until you have wiped that out.
Once you have paid off your serious debts one after the other like this, you then
need to consider whether you want to concentrate on paying off your student debt
to the exclusion of all else, pay off a bit more than the minimum or just continue
to pay the minimum and concentrate on building up savings and investments
elsewhere.
Other things to consider if you are a graduate in debt
> Transferring the balance on your credit card to a 0% card. There is
lots of information on how to do this on the Moneymagpie website. It
can be a very good way of massively reducing the amount of interest
you have to pay on your outstanding balance, although you have to
check that it is worth it after you have pay the fee for transferring the
cash over (usually about 2.75% of the amount you are borrowing).
> Taking out a graduate loan at a lower rate of interest in order to
pay off your credit cards. Some graduate accounts offer
comparatively low cost loans as part of the package.
19
If you cannot afford to repay your student loan
You won’t start to repay your student loan until you are earning over £15,000,
but if you have other debts and you are trying to live on a low salary, student loan
repayments may seem like more than you can afford. Sadly, although in the past
you could take a ‘repayment holiday’ (a set period of time in which you do not
have to make repayments), the SLC say this is no longer possible.
Happily we’ve got lots of suggestions for you to make extra cash on the side to pay
these debts in chapter 15 so we recommend that you look at those and pick up a
few money-earners on the side to stop you worrying about debt repayments.
20
11
Don’t forget to repay your student overdraft.
Did you use your lovely large interest-free overdraft when you were a student? Let’s
be honest, many wouldn’t get through their courses without this extra source
of finance.
The big bad news about these overdrafts, though, is that they do not stay interestfree forever. So, if you have one it needs to be factored into your repayment strategy.
Paying off your student overdraft
Many banks reduce the interest-free amount a year after graduation, and then
again a year after that. It’s a good idea to use these reductions as a minimum for
your repayment schedule.
In other words, if your interest-free element reduces from £2,000 to £1,500 after
the first year, try to make sure that you have paid off at least £500 in the first year.
Obviously, if you don’t repay the free overdraft in time, your bank is likely to
charge you a high rate of interest on the amount that is not interest-free (19.5%
EAR at Lloyds TSB for example).
The rates of repayment at the biggest high street banks are as follows (figures
correct as of summer 2011):
Bank
Maximum
interest-free
overdraft in
third year of
university
Interest-free
overdraft
amount during your first
year after
graduating
Interest-free
overdraft
amount during
your second
year after
graduating
Interest-free
overdraft
amount during your third
year after
graduating
Lloyds TSB
£2,000
£2,000
£1,500
£1,000
RBS
£2,000
£2000*
£1,500*
£1,000
HSBC
£1,500
£1,500
£1,000
Barclays
£3,000
reduces
gradually
reduces
gradually
reduces
gradually
Santander
£2,000
reduces
gradually
reduces
gradually
reduces
gradually
*From 2013, you will have to pay the overdraft off within two years.
Do bear in mind, though, that if you have other debts, say credit or store cards,
that are more expensive than your new overdraft rate, it’s best to concentrate on
those first. As I pointed out earlier, you should ‘snowball’ your debts and pay off
the ones with the highest interest rate (APR) first.
21
12
Important information for anyone who has nearly
paid off their loan.
This is going to sound odd but the SLC has quite a headache with people not only
paying off their loan but paying too much!
It’s because HMRC only send SLC the amount of repayments you have made once
a year so your balance is only officially adjusted on one occasion.
This means that if you have overpaid during that year SLC won’t know about it until
later.
This is not a major problem while you’re in the middle of paying off the loan but
it can be difficult when you get to the end of the loan as neither HMRC nor SLC
will be immediately aware that you have paid off the full amount (another reason
why it’s not that helpful to have two organisations administering your loan
repayments).
However, if you do end up paying more than you should on your loan it’s quite
straightforward to claim the cash back. You just need to send your P16 for that
year (or if you don’t have your one yet, a letter from your employer detailing what
you have paid over the year) and SLC will refund whatever amount you have overpaid.
They’ll contact you first before paying back any funds to ensure that they
have the correct bank details, so make sure you listen out for that call!
A clever way to avoid over-paying...
In order to try and eliminate this problem, SLC have introduced a direct debit
scheme which stops when you have paid everything back
This means that 23 months before you expect to complete your repayments, you
can opt to pay the rest by direct debit. This will ensure you only pay the amount
on your balance and nothing more. Many people are unaware of this scheme or
forget to contact SLC about it so make sure you act if you don’t want to get caught
out. You can even set it up online.
If I do overpay, will I get my interest back?
Don’t worry; you’ll also receive all the interest back on the amount you overpaid.
22
Section Two - our tips for paying off your debts in double-quick
13
Free money: Ways to pick up free cash to pay off
the loan.
If I came up to you in the street and offered you £100 would you take it? I hope
so, unless you were paranoid about some Candid Camera hidden round the corner.
Well, if you play your cards right, free cash is exactly what you can get your
hands on in this chapter.
There’s a load of free cash and free stuff out there generally if you know where
to look. We’ve got a bunch of ideas in our ‘Free Stuff’ section on Moneymagpie and
we regularly come up with new ones for our free weekly newsletter so make sure
you’re on that.
Here are some basic rules for getting stuff for free and the products that can help:
Rule 1: Get the banks to pay you for a change
When it comes to taking money off your bank, don’t feel guilty (as if!) about playing
them at their own game. They see you as a money-maker and you have every
right to do the same with them. This means keeping on top of all your financial
products and switching whenever it suits you. Never be loyal to your bank. They
despise that!
Current account cash
First of all, check your current account. Many banks and building societies offer
incentives to get you to hand over your money each month.
I’m a big fan of First Direct – they have a reputation for great customer service
(not something to be sniffed at these days) and fortunately, they are one of the
banks offering a fantastic incentive. They pay new customers £100 to switch to its
current account within three months of opening an account as long as you transfer
£1,500. Even better, if you’re not happy within 12 months, they’ll give you another
£100 and help you move your account!
The account also offers an interest-free overdraft of £250 – the only downside is
that you must deposit £1,500 each month. If you don’t you’ll be charged £10 a
month to hold the account so if you can’t meet this amount, don’t bother with the
account.
.
23
Section Two - our tips for paying off your debts in double-quick time
Cashback when you shop!
Most of us love to spend but dread getting the bill afterwards. If you’re good at
managing your money though, a cashback card will pay you to shop, giving you a
percentage of the purchase price back as cash (yes really!).
Read about other reward credit cards if you’d rather have air miles or points
to spend in your favourite department store and supermarket.
The best one for cashback is the American Express Platinum Moneyback
card which offers 5% cashback for three months, up to a maximum of £1,000
(£100 cashback earned). After that the rates are tiered depending on how much
you spend but you can earn up to 1.25% cashback.
If you can’t get the Amex card, another good one is the MBNA Visa Card which
pays 1.25% on supermarket shopping and petrol and 0.5% on everything else.
Amex is not as widely accepted as Visa or Mastercard so this is a good alternative
as well as offering a decent cashback rate.
The Halifax Rewards Clarity card (which you must apply for by phone or in
branches) pays £5 for every month that you spend over £300, although to get
one you must have a Halifax Reward current account – luckily that happens
to be one of our best buys anyway as this pays £5 every month as long as you
deposit £1,000 each month. Daily overdraft fees are steep (from £2 per day to
£5 per day) though, so steer clear if you are often in the red.
The golden rule with cashback cards, or any other reward card, is that you MUST
pay back in full every month as these cards tend to have fairly high APRs. If you
can’t do this, stick to a card offering 0% interest for as long as possible to give you
some breathing space to repay. You can find the best buy credit cards for
purchases in our article here.
Grab credit card freebies
Companies make a lot of money from credit cards so they are usually willing to
spend a little to entice a new customer, knowing that they will get that back and
then some later down the line.
Although you must take credit card debt very seriously, if you’re confident that
you won’t get sucked into missing payments and you can afford to pay more than
just the minimum repayment each month (if you don’t you will be in debt for
much, much longer) sign up for cards with the best incentives, grab the freebie,
then forget about it!
Most of the free gifts will only be triggered if you spend on the card – there may
be a minimum spend but obviously try to spend as little as possible. Then, pay off
the balance in full so that you don’t get stung with any interest.
Right now, you can get £90 of bonus points when you apply for the American
Express rewards card . With this card you earn up to 3 points for every full £1
spent at major UK supermarkets, 2 points for every £1 at UK department stores
and 1 point for every £1 spent elsewhere. To help get you started, you’re also given
18,000 bonus points (equating to £90 worth of gift vouchers) as long you spend
£500 each month in your first 3 months. To make life that little bit easier, you
also enjoy 0% on new purchases for the first 6 months!
24
Section Two - our tips for paying off your debts in double-quick
Other credit cards offer free flights. You can find out how to get free flights
regularly with your credit cards in this article.
Rule 2: Turn trash to cash
Reach into the back of that dusty drawer, raid the boxes in the attic and you may
be surprised at what you find. The amount of money you could make from all that
supposed tat could come as an even bigger shock!
Mobile phone moolah
The first thing you can trade for easy cash is your old mobile phone (or you might
have several in drawers and cupboards). There are lots of companies to choose
from who will pay you for your old handsets. See our mobile phone recycling
guide for details on some of these companies.
How much you get will depend on the make and model but if you have one of the
swankier phones in good condition you could easily make over £150.
Sometimes if you have been with your network for a long time, they automatically
offer you a new phone just before your renewal date – if you’re not bothered
about having the latest handset and you’re happy with your network you could try
to get the best possible deal on a new handset, then sell it and put your SIM card
into an old phone instead.
Use our comparison tool to see which one will offer the best price for your
particular phone.
Recycle all your gadgets
It’s not just your old mobile that you could turn into a money-spinner. You can
recycle other gadgets too.
Sainsbury’s Recycle will give you money for digital cameras, MP3 players,
games consoles etc. As with any of the other recycling sites all you have to do is
tell them what you’ve got, the condition it is in, then send it off to their freepost
address and wait for your cash!
If you have a more obscure electrical gadget Weeebuy is the place to go. These
guys will pretty much recycle anything from the more conventional, such as
phones and iPods, to hair straighteners and e-book readers. If you want to recycle
something that isn’t on their list, you can get in touch with them directly to see if
they can help. They’ll get back to you in 48 hours with an answer as to whether
they can accept the item, and if they can, a quote for how much they’ll pay you.
Find out more here.
You can even sell your old ink cartridges to companies such as Cashforcartridges
and Inksave. This is by no means a quick way to make a lot of cash – you may only
get up to £4.50 per cartridge – but every little helps.
For anything else, there’s always the good old-fashioned car boot sale – read our
top tips on how to get the most out of your bits and bobs – or you can sell your
things on eBay by registering as a buyer and paying a small fee to list items for
sale. Read our article on selling things on eBay for some help.
25
You can earn £3 for every book sold on Green Metropolis but generally, for
books and CDs, Amazon is the best option. You only need to type in the ISBN
number, add a short description and the marketplace listing lasts until you sell
the items, or close the listing yourself.
Rule 3: Be proactive
Money doesn’t grow on trees, so you do need to put in some effort if you want to
get your mitts on it. The good news is that a little bit of effort could go a long way
so make sure you tick off this checklist carefully and your wallet could soon feel
much heavier!
Check if you’re due a tax refund
Mistakes made by the tax office mean that many of you could have been on the
wrong tax code and are due a tax rebate which could be worth thousands of
pounds. There are lots of reasons why you may have ended up paying too much
tax, for example, leaving work in the middle of the tax year, being on the wrong
tax code, or having more than more one job at the same time.
In fact, if you graduated recently it’s likely that your tax affairs haven’t quite
settled down yet so you have a pretty good chance of getting a refund.
Claiming is fairly straightforward and we walk you through the process in this
guide.
Check if you’re due a council tax rebate
When the council tax system was put in place in the early 1990s, houses were put
into bands from A-H according to their value. The valuations were done in 1991
and so are not necessarily accurate and you could be paying more than you should
be.
Take ten minutes to see if you are on the correct council tax band and you could
not only cut your current costs, but you could also get it backdated to when you
moved in – potentially worth hundreds, or even thousands of pounds!
First of all, you need to be a nosy neighbour and see which band other similar
properties in the area are on. You can check the Valuation Office Agency for
England and Wales, or the Scottish Assessors Association. You may have
a claim if they are in a lower band than you. If you don’t know how much your
house is now worth, you can check out the prices at which similar houses have
sold on nethouseprices or ourproperty.co.uk.
If you are certain that your band is inaccurate, take the challenge to your local
listing office (England and Wales) or your local assessor (Scotland).
26
Check for unclaimed assets
Who needs the lottery when you could have thousands of pounds lying in a
dormant account? Okay, so this is a bit of a long shot but actually the estimates
are that there is as much as £15 billion in unclaimed financial assets lying around
in Britain according to the Unclaimed Assets Register.
Go to Mylostaccount.org.uk, a free online search service that will rummage
through bank records for you. You have to enter your details and it will tell you if
you’ve got any old accounts you’d forgotten about.
For pensions, shares and investments you will need to approach different institutions, read our guide to free money for all the information.
27
14
Super savings - save money and put the extra into
paying off your debts.
You might think you’re not over-spending day-to-day but it’s likely that you have
several habits that are losing you money without your realising it. Add up all these
little bits of cash that go out day in, day out and it comes to a lot of money at the
end of the year that could have been paying off your loan, or going into savings for
a house deposit.
Keep up with the latest news on ways to save money by signing up to the Moneymagpie newsletter . Right now, though, you can save £100s (literally) just by
following these simple steps.
Keep your eye on the ball
Do a budget - if you want to stay on top of your spending, you need to do at least
a basic budget. All it is is an idea of what money you have coming out and what
money you have to spend each month. You can put yours together on the back of
an envelope (just do a couple of columns - one for incomings and one for outgoings)
or do it the easy way and use the Moneymagpie budget planner.
Once you know what money you have to play with you can work out what you can
spend on and what you have to sacrifice.
Check your statements regularly - this could save you big money. Banks do make
mistakes, and if you spot a charge added to your account in error, you can claim it
back and possibly gain compensation too.
The same goes for energy statements. Here at Moneymagpie, we’ve known
friends receive gas bills with the decimal point in the wrong place! Don’t let this
go unchallenged.
Blast those bills
We’ve all heard about switching providers to get cheaper versions of everything
but still a lot of people don’t bother.
It’s a shame because you can save money - and make money if you switch savings
accounts. It’s worth doing once a year (you don’t need to bother more often than
that).
And while you’re switching you might find that you actually drop some services
altogether. For example, you might check your broadband bill and realise you
hardly use it now you have an iPad. And do you really need that mobile phone
insurance when it’s covered on your particular home contents insurance policy?
28
Save energy and money
Reduce the amount of energy you use and cut your costs even further. Anything
from using energy-saving light bulbs to avoiding tumble drying can save you loads
in the long-run, and it’s a great way to do your bit for the environment too. There
are plenty more energy-saving tips in our article on Heating: Easy ways to cut
your bills.
You can also receive grants for insulating your home: find out how to get as much
as £2,700 to make your home more efficient here. And have a look at our 50 ways
to save money by being green for loads of quick and easy ideas.
Switch credit cards, loans and savings accounts
You could definitely save money by switching to a 0% deal or a low lifetime
balance transfer. See how you can save by switching your credit card here.
Also, make more money and stop losing it by switching your savings accounts to
better deals. Here’s a list of the best instant access ones but you can also make
more with fixed rate savings bonds if you’re willing to put your money away for
longer. See where to put your cash here.
Switch insurance
Insurance is a highly competitive area so there is no excuse for sticking with the
same provider year-in year-out. Car insurance is particularly competitive so always shop around when your policy comes up for renewal. See how to here.
Then there’s home insurance - there are new deals coming out on that all the time
too. Make sure you switch each year and here’s how.
We’ve got loads of ways to save on other types of insurance too such as travel
insurance, pet insurance and critical illness. Check out these comparison tables
to find out much better deals and save yourself £100s a year (seriously, those are
the savings).
Food for less
Check the amount of money you spend on food each week. If you’ve got a family
to feed, this can be a huge expense. Could you reduce your food bills by buying
supermarket own brands or shopping elsewhere?
MySupermarket.com is a great resource for reducing your food costs. It will tell
you which supermarket is cheapest and will also show you which items you can
swap to make the most of the special offers.
Make sure you’re savvy to all those sneaky supermarket tricks, so you know what
to look out for and don’t get conned into spending more.
We also love Sainsbury’s weekly meal planner too – it tells you how to make
five delicious and healthy meals for a family of four on a budget for just £20. It’s
great value, and great for recipe inspiration too – check out the latest weekly meal
plan here.
Once you’ve tackled the big scary amounts of money, look at the smaller things
you spend money on. Do you need that paper on Sunday when you can read it
online for free?
29
Buying your lunch every day at work can cost you an extra £1,000 a year, so get
your lunchbox at the ready. This also goes for a coffee every morning. Buying a
flask and making your own every day can save you loads on your caffeine fix.
If all these ideas aren’t enough to make your outgoings less than your incomings
or if you just want to save more, we’ve got some great tips for cutting out expenses
you don’t need and which ones you can’t cut in our article on Reducing your
outgoings.
Living with friends?
Flatmates often nominate one person to be responsible for paying the energy bills,
but this can mean a lot of hassle for the person who has to collect the money.
Consider setting up a separate ‘bills’ bank account for the household. Each member of the household should then pay into this account by standing order each
month. The bills will then be taken out of this account by direct debit. If you are
not on a fixed tariff, ask everyone to pay a little extra each month in case prices
rise. If a surplus is left in the account, it can be refunded after the winter (the
most expensive time for bills).
Alternatively, some energy companies allow you to split a direct debit. If you have
four housemates, for example, the energy company will take 25% of the bill from
each account by direct debit each month. Not all companies will do this, but it is
worth asking.
It’s good to talk…cheaply
After university, you may find that communication suddenly becomes more expensive. Your friends move to all corners of the globe but you still want to stay in
touch, and you have to spend a lot of time on the phone to recruiters and job
agencies. If you’re getting huge phone bills, make sure you target this expense.
Here are some ways to cut the cost of chatting:
> Use our free comparison tool to get the cheapest landline and broadband
deals.
> Use our easy mobile phone comparison tool to get a cheaper and better phone
tariff here.
> Avoid calling telephone numbers starting 0870 and 0845. Use websites
such as www.saynoto0845.co.uk to find alternative numbers to call.
> Send free texts from your computer.
> Sometimes loyalty pays. Never renew your contract with a mobile network
without haggling the price down a bit first!
> Keep your old handset, or buy a handset for as little as £16 from Tesco
and switch to a SIM-only tariff.
> Be very careful about using mobile internet abroad, this can cost
hundreds.
> Use Rebtel and Voip Stunt to call friends overseas.
30
Graduate discounts
Big companies offer discounts to graduates for the same reason they offer them
to students - they want to encourage loyalty, and hope you continue to buy from
them when you are further along in your career and earning more money.
If you have a graduate account with a bank, you may be able to get freebies in
the same way as when you first signed up at university.
At NatWest, for example, you can sign up for a graduate discount card which
offers savings across a range of fashion, entertainment, mobile phone, electrical
and travel providers, from New Look to Pizza Hut. At Lloyds TSB, you get commission-free foreign currency and Lonely Planet Miniguides covering a range of
destinations. If your account is in the black, make sure you look at the interest
rates the different banks offer when weighing up the value of these discounts.
You can always switch to a graduate account at a different bank-you don’t have
to stay with your student bank.
Also, remember to make the most of any free services available after graduation.
For example, many university unions continue to offer free careers advice
for between one and three years after you’ve graduated. Career consultants
charge hundreds for professional clients, so this is a pretty good deal.
Transport
You can still get a Young Person’s Railcard if you are under the age of 26, and
this will save you 1/3 on all rail travel. National Express offers a similar deal.
Another excellent way to save money is to cycle as much as possible, as this
is free, and keeps you fit. If you don’t have a bike, you could ask friends and
relatives if they have any unused bikes vegetating in the garage, or look for a
bargain on Freecycle or eBay.
If you buy a second hand bike it is worth paying a small amount for a ‘bike
safety check’ by a professional at a bike shop. There is more on cycling safety
here and it’s also worth checking to see if your local council offers any free courses
on how to stay safe on busy roads.
Holidays
It can be a bit of shock going from the lifestyle of a student to that of a full-time
employee. Sure, many students take temporary jobs in the holidays, but it’s a bit
different adapting to a full-time job with more responsibility and just four or five
weeks off each year.
You’ll want to make the most of your holidays, not worry that you are going over
budget. If you can cut down bigger costs like accommodation (perhaps through
a house swap) or travel (we found advance train tickets from London to Paris for
£34.50 each way using www.raileurope.co.uk, you’ll have more to spend on
fun. There’s a lot more advice on cheaper hols here.
On the other hand, if you’re job hunting, you have quite a bit of flexibility (aside
from job application deadlines) but less cash for hols. They say a change is as
good as a rest, so why not go on a working holiday?
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Nature lovers could try Workaway, who offer working holidays in farming or
conservation. In return for picking fruit in the south of France, helping a cowboy
in Arizona, or painting a barn in Portugal, you will get free food and accommodation. Friends of Moneymagpie.com have tried this and loved it.
Culture vultures could volunteer at a festival. If you can get a sought-after job with
a charity such as Oxfam, you could spend 6 hours handing out goody bags each
day, leaving your evenings free to watch live music. If not, you could work for a
catering company. Be careful, as we’ve heard the odd horror story about volunteers flipping burgers for 14 hour stretches and missing the main acts. But as long
as the terms and conditions are agreed in advance, this could be your passport to
summer fun.
Up-to-the-minute information
Sign up for email alerts at www.Moneymagpie.com and make sure you don’t
miss any money saving opportunities!
Loads more ideas
> Find out how you can live on half your salary, Click here
> How to detox your finances every now and then, Click here
> 50 ways to save day-to-day, Click here
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15
Making extra cash - how you can easily make extra
cash to pay off the loan fast.
Make the most of what you already have
The easiest way to make money quickly is to sell stuff you don’t want anymore.
Take a look around your home and gather up anything you don’t want/need anymore. Do you have expensive textbooks left over from university that you could sell
on to current students? Do you have a university library photocopying card which is
still in credit? If so, sell this on.
If you did a fine art degree, could you sell some of your paintings? Is there an expensive, impulse-buy dress lurking in the back of your wardrobe, bought for graduation
celebrations and never worn? You could take it back and get store credit to spend on
your working wardrobe.
Gather up books, DVDs even CDs you don’t want and sell them on Amazon Marketplace. Put clothes and other stuff on eBay or do a car boot sale and meet some ‘interesting’ people. If you have second hand shops near you, sell what you can there.
If you find yourself actually enjoying selling things on eBay you could start doing it
for others for money. The going rate is generally about 30% of the price you manage
to sell things for. Ask around, you could have a little business going - but make sure
you only sell things from people you know and trust. Don’t accept offers through
Gumtree or Craigslist from strangers. Sellers have been stung by these dodgy
schemes before.
Do online surveys for quick cash
You’re not going to make big money this way but if you want to make a bit of pocket
money while you’re on the computer anyway, online surveys can be a quick and easy
way of doing it. Here are our 12 favourite sites and what the potential earnings are:
> Toluna - With Toluna you’ll get 500 points just for signing up, and you’ll get an
additional 500 points for recommending friends too (as long as they complete their
sign-up).
You can earn between 1,000 and 20,000 points for each of their surveys depending
on its length, and they are sent directly to you. The great thing about Toluna is that
you have other opportunities to collect points by doing smaller polls or giving an
80 word opinion about something - perfect if you’ve got a spare 15 minutes on your
lunch break.
You need 80,000 points to convert into the lowest £15 voucher which you can spend
in a variety of places like Amazon or HMV.
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It’s reasonable to assume that this would take two or three months to reach, depending on the survey screenings and how active you are on the website.
>Surveyhead - Surveyhead offers all kinds of surveys about films, travel and gaming and will pay you £3.50 just for signing up. They send you invitations every
time a survey comes up and will reward you with points for each one you
complete.
Once you’ve reached a minimum threshold of points you can either claim vouchers to spend across hundreds of different online stores, or you can opt to ‘cash out’
- claim your rewards in their cash equivalent. These are paid using Paypal.
The Moneymagpies we’ve heard from have given Surveyhead a big thumbs up for
good rewards and prompt payment, so give it a go.
>Panelbase - Another popular site with the Moneymagpie regulars, Panelbase
has turned many of the drawbacks of online surveys into positives for its users. For example, all respondents who are screened out of a survey are put into a
monthly prize draw to win £50 cash.
The surveys they offer pay between 25p and £10 each, and often include additional entry into prize draws for big value prizes like TVs and iPods. Once you reach
your redemption threshold of £10 you can opt to receive it as cash (via a BACS
payment into your account) or you can choose vouchers.
What’s good about Panelbase is that they offer Love2Shop vouchers which can be
used in over 70 high street retailers, so you don’t have to choose a specific store to
get your rewards in. This is a good site to join so sign up here.
>Lightspeed Panel - These guys are another popular choice with our readers.
You’ll earn between 50 and 150 points for each Lightspeed survey or MiniPoll and
you need a minimum of 1,100 points to convert your points into vouchers. You
can receive your rewards as cash (via Paypal) or in vouchers for a variety of online
and high street retailers like Amazon, M&S and Argos.
Completing surveys and MiniPolls will not only earn you points, but also enter
you into a quarterly cash prize draw for £2,000! So to be in with a chance, join
here.
> Valued Opinions - A firm Moneymagpie favourite, Valued Opinions will enter
you into a prize draw to win an iPad as soon as you sign up. They offer short surveys of just 15-20 minutes which will earn you between £1 and £5 each time.
They’ll also give you £2 when you refer a friend who joins and completes a survey.
Plus there’s also the chance to do product testing which means free stuff!
Once your account reaches £10 you can redeem your points for vouchers at
Amazon, Marks & Spencer, Argos, Tesco, Boots, John Lewis, HMV, Arcadia and
Marriott, or you can choose to donate your rewards to charities like the British
Red Cross, Amnesty International and World Vision.
> GreatSites - Every 6 months a cash prize of £5,000 is given away - not bad for
just answering a few simple questions. The site is free to join (as it should be) and
once you’ve registered they will email you special offers and surveys based on the
information you provided them with (i.e. your profile).
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The more you respond the greater your chance of scooping the £5,000, plus
you’ll gain access to the various other competitions the company has running.
> Ciao for Product Reviews - You write reviews for Ciao and earn money when
people read them. Different reviews are given different rates of pay. The rate for
each review changes monthly because of how Ciao is financed. Reviews are worth
0.5p per rating, 1p per rating or 2p per rating and you earn more if you write a
first review of a product or very high-quality reviews.
You can invite friends and earn a commission equal to 50% of your friend’s earnings for the first 6 months of their membership. Once you’ve reached £5 or more
you can request a pay-out into your bank account.
> Onepoll - A new kid on the block, Onepoll will pay you £2.50 just for joining
and then you can make between 10p and £1 for any surveys you take with the
chance of winning £500 in a cash prize every now and then. Onepoll also pays for
real-life stories you might have for the papers, so worth considering!
Use your degree and make up to £80 an hour as a tutor
Good tutors are in demand. An Ipsos MORI survey found that nationwide, 22% of
11 to 16-year-olds have received private tuition, whilst in London the figure is as
high as 43%. From a parent’s perspective, if a tutor can help their child get a good
start in life, or the grades they need to pursue their chosen profession, they are
worth their weight in gold.
The first thing you need to do is to decide what subject and age group you would
be best suited to teaching. There is generally more work for pupils coming up to
exams like GCSEs, A-levels and SATs, but any child who is struggling in the classroom would benefit from your help.
Then you can either register with a tutoring agency, which will put you in touch
with parents, or simply advertise your services directly to parents.
The agency UKtutors allow you to set up a profile that can be searched by parents.
They take a cut of £3 plus 4.5% of your hourly rate for the first five hours of tuition, and 2.5% of your hourly rate after that.
To advertise your services, the School trader website is a good bet. It’s free and
covers 30,000 independent primary and secondary schools across the UK and
Ireland. Otherwise, try your local press, local free pages, school magazines and
websites.
Whether you work for yourself or for an agency, you will need a CRB check. This
shows parents you have no criminal convictions that would prevent you from
working with young people. You can find out more on the Moneymagpie website.
Finally, consider your professional safety. Some parents might suggest you tutor
the child in their bedroom while they watch TV. Many teachers working in schools
would be wary of this, as it leaves them open to false allegations. It’s far better to
tutor somewhere visible, perhaps around the kitchen table, with a parent nearby.
There’s even more information and advice on Moneymagpie.
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Grow and make things to sell
There are loads of different things you can produce at home to sell, and with locally sourced food all the rage, you could charge a premium for what you make. If
you can grow fruit and vegetables, bake bread, simmer up jam and chutneys, brew
wine or beer, ice wedding cakes or keep bees or chickens for honey and eggs, and
market it effectively, it could be a great money-spinner.
We’ve got a lot of information on how to make cakes and jams to sell at markets
and car boot sales (car boot sales are particularly good because it’s so cheap to
have a stall there). Take a look at this article for information.
Or if you have a garden and you’re green-fingered, you could propagate seedlings
in your greenhouse and sell them at car boot sales and local shops. We show you
how you can do that here.
Babysitting
Although it is often seen as a job for teenagers, babysitting is fantastic for new
graduates too. It takes place in the evening, in a comfy home environment, and
once you’ve put the kids to bed, you can relax in front of a good movie. It stops
you going out and spending money, and you might get some good tips at the end
of the night from tipsy parents returning from a meal out!
Not only that, you get enough cash to sort out your food bill for the week (that’s
the way I’ve often looked at it).
You can get babysitting work through agencies, although you will need a CRB
check and some childcare experience in your CV. Or you could do it through
word-of-mouth among friends and neighbours. Maximise the time by taking tiresome paperwork with you while you’re there.
Rent a room
If you’ve got a spare room, or you could create one in your place, rent it out now!
Rental income under £4,250 a year does not get taxed, and you can advertise your
room for FREE on Spareroom - it covers the whole of the UK.
A friend of Moneymagpie did this as a way of getting free accommodation while
she completed a post-graduate medical course. Over five years at university, she
lived rent free just by being a landlady, and she owned a portion of the house
when she was finished. Unfortunately you will need a deposit to do this, so this is
not for everyone.
If you can’t bear the idea of someone renting from you, go for a short-term option
by renting a room to foreign students. Get in touch with local language schools to
get visiting foreigners.
Focus groups
Are you an opinionated sort? If so, why not tell companies what you think of
their product or advert and make £30- 50 per session in return? The actual focus
groups usually take place at an office local to you. A session will take a few hours
and you collect a cheque on the way out.
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To get started you need to register with a market research company like Saros Research. Other market research companies include: > Toluna
> Valued Opinions
> Opinion Surveys
Mystery Shopping
Mystery shopping involves visiting a shop or restaurant ‘undercover’, and
reporting back on the service you receive. You can make around £15 an hour on a
flexible basis while you shop, and you might also get a few freebies such as restaurant meals and hotel stays.
The Moneymagpies go mystery shopping on a fairly regular basis. We think it’s
best to arrange your mystery shopping trips to take place when you’re already
going into town, that way you don’t spend any extra time or money on travel.
The best way to get started is to sign up with an agency. Some good ones are:
> Checkout
> ESA
> Gfk NOP
> JKS Mystery Shopping
> Mystery Shoppers Ltd
> Performance in People
> Retail Active
> Retail Maxim
> Retail Rapport Ltd
> Storecheckers
> Stratagem Marketchecker
> TNS Global
You’ll be asked to fill out a questionnaire on your background and shopping
preferences. The information you have to give is quite personal, but most of the
companies have strict data protection policies.
Then you’ll be able to pick an assignment in your area. Examples include visiting
a mobile phone shop to see how the sales consultant deals with you, trying out a
new restaurant or bar, or telephoning a call centre to see how you are dealt with.
A detailed scenario will be emailed to you, and it’s important you follow this to the
letter.
Once you’ve completed the assignment, you fill out a detailed online form.
In return, you get a small fee and your expenses paid. If you can organise this so
you only go mystery shopping when you were already going shopping for yourself
anyway, you’ll be able to make some quick easy pocket money.
Sometimes mystery shopping companies have to complete a nationwide audit of,
say, every branch of a high street store. If their deadline is approaching and they
still have stores to assess, you will get an email saying ‘urgent jobs’ and this is the
time to haggle for a slightly higher fee.
Find out more about our experiences on the Moneymagpie website.
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Take rover roaming
Dog walking is a great way to make money on the side. In London and the South
particularly people are willing to pay £10-15 per dog, per hour or part of an hour.
So if you walk four at a time you could make £60 an hour, while enjoying the
health benefits of a brisk stroll!
To become a dog walker, you’ll need to either register with a dog-walking agency,
or set up and promote your own dog walking business. There’s lots more useful
and important information on dog walking on the Moneymagpie website.
Switch your savings
Switch to a First Direct 1st Account and they will give you £100. The Moneymagpies think this is a great account with outstanding customer service.
You have to have at least £1,500 per month coming into the account to get it for
free. If you don’t like the account after you’ve tried it, they’ll give you another
£100 and help you get set up with another account elsewhere!
Model behaviour
You don’t have to look like Kate Moss to be a model. Lately there’s been an explosion in plus size modelling, as fashion and cosmetic companies strive to reflect the
needs of ‘real women’. You could also consider shedding your threads and posing
as a life model for art students, or, if you have a well-behaved pooch, you could
sign him up for pet modelling.
Good agencies are: www.hiredhandsmodels.com for hand and foot models,
www.hughesmodels12plus.co.uk, for plus sized models and www.petlondonmodels.com, for animals. For life model assignments, try your local art college or university. For information on how to avoid modelling scams, www.albamodel.info.
Make a bit on the side here and there
We have hundreds of money-making ideas in our Make Money section on Moneymagpie so check that out.
Also, do check out our updated article on quick and easy, short-term money-makers here. And our ever-popular 10 easy ways to make quick cash article.
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16
Complain to gain - How to get compensation from
SLC, HMRC or your employer if they have made a
mistake.
If there is an error in your student loan repayments it’s most likely to be the fault
of your employer. If you work out that they’ve done it wrong then they will need to
rectify it and you might be able to claim compensation (see below)
The next most likely organisation to be culpable is HMRC. Again, they can put it
right and you can ask for compensation but the answer is likely to be no. It’s not
impossible, though, and it has been known for them to compensate people who
have been harmed by their mistakes.
If it’s the SLC (and they say it usually isn’t...mind you, they would say that) there’s
an outside chance that you could get compensation for it, but you will need to
fuss!
Next the tips:
If you think you might be paying the wrong amount, make sure you know how
much you should be paying each month. Generally, this should be 9% of your
wages over £15,000. If you find that more than this amount has been deducted
from your payslip, your first port of call should be your employer’s accounts
department. There could be a good reason for the extra deduction. For example, if
you have worked overtime or earned a bonus, a larger repayment will be deducted.
However, if it turns out there has been a mistake in processing your student loan
repayments, you can complain and ask for compensation from your company.
Explain what effect the mistake has had on you. Have you had to use overdrafts or
credit cards to make up the difference? Has it caused you worry and anxiety? Has
it affected your lifestyle or future plans?
To actually claim the overpayment back, you will need to speak to HMRC. Again,
if this is your employer’s mistake they should do what they can to help you. They
should provide copies of previous payslips if you are unable to find them, or give
you a statement on company headed paper showing all the payments you made
last year, quoting your tax code. They should also compensate you for the time
you are forced to spend chasing HMRC.
HMRC should refund the overpayment, along with any interest you could have
made on the extra money taken from your salary. It would be reasonable to
request this at the interest rate paid by your current account. If you overpay your
loan by continuing to make payments once you have cleared the balance, interest
is refunded tax free. Therefore, if there has been a mistake at any stage, you
should try to get your interest refunded tax free at that point too.
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If you have paid too little in student loan repayments because of a mistake, and
you are prepared to make up the difference now, you could still complain. After
all, if you pay less than you are supposed to, you accrue more interest in your
student loan in the long run. You should at least get the interest on your account
recalculated as though you had made full payments.
Who to contact
HMRC
You can call HMRC on 0845 300 0627, or to avoid using a pricey 0845 number,
call 0135 535 9022. Unfortunately email service is limited for HMRC, and does
not currently include student loan enquiries.
You can also write to:
HM Revenue & Customs
Pay As You Earn
PO Box 1970
Liverpool
L75 1WX
SLC
Please see chapter 16
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17
Pensions, ISA’s, saving for a mortgage - should you
put money away for short-term and long-term
savings whilst paying off your student loan?
Yes, is the short answer.
The reason is two-fold:
1. The student loan debt is at a low interest rate (as explained above) so although
it is important to pay it off, it’s not the end of the world that you’re paying some
interest on it. The interest you should make on long-term investments
(particularly anything based on the stock market) would far outweigh the
interest you are paying on the loan.
2. As you are young your investments (pension, ISAs, property etc) have a long
time to grow and therefore even a small amount put in them at this stage will
grow to a good lump of cash when you retire. Even if you only have a tenner a
month to invest, it’s worth it. The earlier you get in the better and the more
profitable it will be for you.
Pensions
If you’re employed and your employer has a company pension scheme, join it.
If your employer puts money into it as well, grab it with both hands.
This is free money! I want to hear that you are making the most of it.
Certainly, some company pension schemes are better than others but generally
speaking, it’s a good idea to simply develop the discipline of putting money into
a long-term investment every month. It’s a habit that everyone should adopt as
early as possible, even if you can only afford a tenner a month.
The advantages of pensions are:
1. You get the tax put in at the beginning. This is particularly good if you are a
higher rate taxpayer because it means that the government adds in another
40% when you contribute your own money)
2. You can’t get your hands on the money until you’re in your 50s. This is very
good for those of us who aren’t disciplined enough to keep our hands off our
savings. Your future self will thank you for this!
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The disadvantages of pensions are:
1. When you come to retire you will have to pay tax on the money you get from
your pension. It’s not tax-free, more tax-deferred (although you’re likely to be
making less money when you retire than when you are working so you should
pay less tax)
2. At the moment you are only allowed to do what you like with 25% of your
pension pot when you retire. The rest you have to use to buy an annuity (an
annual payment that you are guaranteed until you die). Things are changing so
probably when you retire the rules will be quite different.
3. With most pension funds you don’t have a say in how your money is invested.
That is unless you go for a SiPP where you get to run your own pension fund.
Find out what a SiPP is here.
Stakeholder pensions
If you don’t have access to a company pension you can easily set up a private
pension for yourself.
Most private pensions perform very badly - they’re expensive and run by people
who are over-paid and largely inept.
However, in 2000, the Labour government brought out Stakeholder pensions
which are nice and cheap (they can’t charge you more than 1.5%) and they’re
simple.
Many of them are based on Index-tracking funds which are funds that are
just run by computer and don’t cost much to manage.
You can read more about Stakeholders in this Stakeholder Pensions article. If
you would like to contribute to a pension but you can’t get a company one, these
are the cheapest, easiest and probably the best for starters.
ISAs
It’s a good idea to invest in ISAs if you can as they will help you build up wealth
for your retirement.
You don’t have to put money into them but it’s worth putting a bit in, if you can
afford it, each tax year.
Right now (the 2011-2012 tax year) you can put up to £10,680 into an Isawrapped
investment. You can put that full amount into a stocks and shares ISA or
you can put just half of it, £5,340, into a cash ISA and the rest into a stocks and
shares one.
Personally I never put money into a cash ISA because over the long-term cash
ISAs don’t keep up with inflation. I only ever put my money into a stocks and
shares ISA, usually into an index-tracking fund (see why here).
ISAs are like reverse pensions. With a pension, the money you put in has the tax
you would have paid added to it, but when you draw your pension when you retire
you have to pay tax on that.
With ISAs, you invest in them net of tax (no extra money is put in) but when you
take the money out you get it tax-free and any gains you made on it while it was.
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The best way to look at ISAs is that they are there to help you save for your future.
If you can’t bear the idea of pensions then definitely put at least some money into
an ISA product every tax year. Even better, when you have spare cash, put money
into both a pension and an ISA to spread your investments.
Saving for a mortgage
Ideally it’s probably best to save for a mortgage while you’re still paying off your
student loan.
You probably want to pay off the loan first - and I don’t blame you! But if you’re
really set on buying your own home it’s best to start saving for a deposit as soon as
possible. As I’ve said all along, your student loan is at a relatively low interest rate
so you can put it aside while you save for a deposit before house prices rise again.
This is the issue really: although it’s wonderful to pay off your student loan, you
are potentially fighting against house price rises in the future so it’s better to get
on the ladder sooner rather than later if it’s possible.
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18
Free help - What to do if you have a problem with
the Student Loans Company.
Whether you are waiting for your final loan payment to be paid into your bank
account, or you’re having trouble paying it back, problems with your student loan
can be very stressful.
Making a complaint
If you’ve tried telephoning the relevant department at the SLC and your issue
hasn’t been resolved, you can make a formal complaint.
If it’s an urgent matter, you are probably best off telephoning the SLC and asking
for a telephone complaint to be logged. The number is 0845 300 50 90
You can also back this up with an email, send it to
[email protected]
If your complaint is of a more formal, on-going nature, you should put something
in writing. The address is
Customer Assistance,
Student Loans Company Limited,
100 Bothwell Street,
Glasgow G2 7JD
Whichever method of communication you choose, make sure you quote your loan
account or student support number.
SLC say you should get an acknowledgement within two working days and a
response addressing your complaint within ten working days.
TIP: When complaining - to any organisation, including SLC or your employer try not to become aggressive or emotional. Focus on the result you would like to
achieve. Calmly detail what has happened, in the order it happened, sticking to
the facts. Once you’ve done this, explain how you have been inconvenienced, and
the impact the problem has had on your life. You could then ask for the result you
would like to see, or you could wait to see what the company offers.
Taking it further
In some circumstances, you may feel that the SLC’s response does not fully address
your complaint. In this case you should ask to escalate the complaint. Say
which bit of the response you disagree with and why. The complaint will then be
passed to a Head of Service, who will reply within ten days.
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Still unhappy?
Again, you need to ask to escalate the complaint, and say why you disagree with
the response from the Head of Service, and your complaint will be passed to the
Executive Team, who will reply within ten days.
Final stage
Once you’ve gone through all the stages outlined above, the next step is to ask for
your complaint to be referred to the Independent Assessor. The Independent
Assessor is completely impartial, and will report any findings to you and the
Student Loans Company simultaneously.
Don’t leave it too long to complain. If there is a delay of more than six months
between any of the stages of the complaints procedure, SLC reserve the right to
treat the matter as closed.
Delayed loan payments
In 2009, 50,000 students had to wait several weeks for their full loan payment
to reach their account. If your payment is delayed (if you are still a student) you
should listen, watch or read the news to see if this is a national problem, with the
SLC giving out advice to all students.
If not, contact SLC as soon as possible. They may be able to give you something in
writing to say your loan has been delayed. Speak to your university to see if they
will give you some extra time before paying your fees and accommodation, and
tell your landlord what has happened if you live in privately rented accommodation.
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19
Free advice - what to do if you are in debt and need
help.
In an ideal world, students would avoid incurring any debt other than their official
student loan.
However many students find themselves in difficult circumstances, and feel they
have no choice but to turn to credit cards.
It’s not surprising, then, that graduates sometimes find themselves in a spiralling
debt situation. It can look really scary when the interest mounts up and mounts
up.
If you have got into debt, there is little point blaming yourself, and if you avoid the
issue, it will only get worse. The best thing to do is to get some good, free advice,
and work out a plan of action.
Sources of help while you are still at university
The first point of call should be your student union. Most university unions have
a welfare office or drop-in centre offering advice on budgeting, getting out of debt
and any emergency sources of funding you could consider.
The lovely people at Keele University told us that students should never be afraid
to ask for help. They said:
“Students need to be able to manage their money, so we run ‘Money Matters’
sessions at the start of the year. Any student, who is having money troubles, who
has had a student loan and who meets the government’s eligibility criteria can apply
for funding from the Access to Learning Fund. This is usually small amounts, maybe
£100, but can be up to £3,500 in exceptional circumstances.
“We can lend students small amounts of money if they need to get home, or if
they’ve lost their bank card. We can write to mobile phone providers for them to
ask if their payments can be spread out over a longer period of time, and companies
such as Barclaycard tend to respond well to our letters. Sometimes some advice is
enough to get a student back on track.
“We are not judgemental: if a student has no money, they have no money, and we
try very hard to make sure everybody can stay on at university, that nobody slips
through the net.”
Our advice? Make the best use of the services your university provides because
you never know; they might show you a way to manage your money that you
hadn’t thought of before.
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After graduating
> The Citizens Advice Bureau (CAB) offer a wide range of help on debt
matters, in fact in 2009 it was estimated that 1 in 3 of the calls made to
the CAB were from people who needed help getting out of debt. You
will generally be offered a short session with an advisor, who will
decide how the CAB can help you. The CAB office also offers a wealth of
information on debt matters, all collected together in one place. Find
your nearest branch by visiting www.citizensadvice.org.uk. If
you can’t travel in to the CAB, you can get telephone advice by calling
08444 111 444 (0844 477 2020 in Wales).
> The Consumer Credit Counselling Service (CCCS) offers a similar
service to that of the CAB, in that it will be able to talk you through
your options. They know exactly how you should speak to your
creditors, and the format and style that is most effective when you write
to them. They’ll be able to tell you the best way to get your creditors on
your side and therefore get some extra time to pay stuff off. There is
also an online ‘Debt Remedy’, which includes budgeting tools.
> National Debtline offers free independent, confidential advice on debt
issues over the telephone. Simply call 0808 8084000 between 9am and
9pm Monday to Friday, and between 9.30am and 1pm on Saturday.
There is a separate number for business debts (0800 197 6026) and the
advice is tailored to the country you live in (the rules are different in
Scotland, for example).
Also, we have loads of help and advice on getting out of debt on Moneymagpie in
our (wait for it...) Get out of Debt section.
We also have a free series of emails you can sign up to that will support you in
your fight against debt. It costs nothing and it’s very supportive. Sign-up here
47
20
Frequently Asked Questions
I’ve got problems with my account but I can’t get a sensible
answer out of SLC. They keep telling me to talk to HMRC. What
can I do?
It seems to us that one of the biggest causes of confusion and misunderstandings
is the fact that while it’s the Student Loans Company (SLC) that lends you the
money and gets paid back, it’s HMRC (formerly the Inland Revenue) that oversees
that paying back. They liaise with your employer (another layer of administration)
to take money from your pay each month to go towards your loan, then, at the end
of the year, they transfer that money to the SLC.
So while you’re fuming about the SLC not being able to explain to you why you’ve
had weird amounts taken from your pay packet, it could be the fault of one of
three lots of people. It could be SLC or (more likely) it’s HMRC or (even more
likely) it’s your employer’s accounts department.
So you really do need to start with your employer and then the HMRC for most
problems, including paying the whole lot off, if you have the money to do so. It’s
HMRC that takes the money out of your account and your employer has to send it
to them if it’s demanded.
Why are different amounts taken out of my account each month?
Your employer will make deductions based on your income for each pay
period. If you earn a different amount in a particular pay period (perhaps you’ve
worked some overtime, taken unpaid leave or earned a bonus) this could affect
the amount of deduction taken.
However, if you haven’t had a change in your income over the last few months,
talk to the accounts department. It may be that they have made a mistake.
What happens if I work abroad?
If you are going abroad for more than 3 months then you must let SLC know.
SLC will contact you to confirm your circumstances and if you are working
you will be required to provide evidence of your income in order that a
repayment schedule can be set up. You will make repayments direct to SLC.
What happens if I go bankrupt?
Provisions were included in the Higher Education Act 2004 to prevent
student loans being written off on bankruptcy, so since then, loans have
only been written off on bankruptcy which occurred prior to this
48
What if I have two jobs?
Pick your situation from the following:
Both my salaries are under £15,000 and add up to less than £15,000
If the total you are paid from your two jobs is under £15,000 (say you have one
job paying £10,000 and one job paying £3,000), you won’t make any student loan
repayments.
Both my salaries are under £15,000 but they add up to more than
£15,000
If your two salaries add up to more than £15,000 together, but not individually,
your employer won’t take any student loan contributions from your salary. However
HMRC MIGHT send you a tax return at the end of the year and ask you to
repay 9% of any income over £15,000, so try not to spend it!*
One salary is more than £15,000, the other is less than £15,000
Repayments will only be taken from the salary over £15,000. However HMRC
MIGHT send you a tax return at the end of the year and ask you to repay 9% of
the second salary.*
Both my salaries are over £15,000
Each employer will only take 9% of anything over £15,000. However HMRC
MIGHT send you a tax return at the end of the year and ask you to repay 9% of
the entire amount of your second salary.*
*Consider putting 9% of your second salary into a high interest account, so even if
you have to pay it back at the end of the year, you still get to keep any interest you
make.
P.S. Do you have more questions?
If you have a question or issue that is not covered in this eBook, feel free to email
us at [email protected] and we will do our best to get the issue
resolved.
49
Index
Credit cards................................................18, 19, 24, 29
Debt............................................................14-21, 23, 24, 28, 41, 46
Discounts....................................................31
Free money.................................................23-26
HM Revenue & Customs (HMRC).............10-13, 22, 39, 40, 42, 48, 49
ISAs.............................................................15, 16, 42, 43
Making money............................................33-38
Means testing..............................................6
National Insurance.....................................13
Pensions......................................................11, 14-16, 27, 41, 43
Saving money..............................................28-32
Savings........................................................28, 29, 31, 38, 41
Student loans
Types..............................................5, 6
Term...............................................7
Student Loans Company (SLC)
Complaints....................................39, 44, 45
Interest.........................................3-6, 8-10, 13-19, 22, 40, 41
Overpayment................................16, 17, 22, 39
Rates.............................................6
Receipt of loan.............................45
Repayment of loan.......................12, 15, 20, 48, 49
Statements...................................10
Student overdraft.......................................21
Tax..............................................................11, 13, 17, 26, 29, 39, 41-43, 49
49

Introduction - Moneymagpie

Transcription

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