A colleague of mine was asking me the other day about the joys of student loans. In fact, they were asking me what the payments are on my loan.
I’m in the fortunate position (as are most people my age and younger) of having a student loan whose interest rate is fixed at the rate of inflation with an income contingent repayment schedule. This means that there is no incentive to pay off the student loan any more quickly than I have to and so, as I explained to my questioner, I pay it off as slowly as possible and put any extra money into savings and investments. The rate at which I pay it off is set by the government at 9% of everything I earn over Â£15,000 per year and it comes out of my pay like a tax.
Now, the guy that was asking me these questions is approximately my age, and has a similar student loan himself. So he should know these rules – and indeed I mentioned them. I wondered if he was actually trying to find out how much I earned, so I didn’t tell him the exact figure that I pay (Â£90 per month, if you’re interested).
Should I be so quick to hide how much I earn? I am relatively fairly paid. If I was looking for a new job, I’d want more money, but not that much more. If he wanted to know how much I made, would it have been more honest if he’d just asked me? Should we all be more honest about our renumeration within the company? Would that lead to more or less satisfaction with salaries? What do you think?
- why i’m not paying off my student loans early
- compare and contrast: UK and US tax burdens
- what do you assume?