Avoiding non-euro transaction fees on UK student loan repayments

KJK1LL3R

Hi guys, I recently moved from Northern Ireland to the Republic.
I have outstanding student loan debts from my studies at Ulster University when I lived in the North. This requires a monthly repayment of £77 and the debt (currently around £18,000) doesn't get written off for 25 years, so I will have these monthly repayments until April 2038.

I looked into the idea of potentially paying it off early, but it would use up about two thirds of my current savings and general financial advice seems to be that those savings would be better spent elsewhere since student loans are such low interest rates. I am in the process of buying a car and will soon be looking at buying a house here in the South so will have mortgage to consider.

I pay these £77 monthly repayments through my KBC current account, but they are incurring a non-euro transaction fee each time. These aren't big fees but I will have these repayments on a monthly basis for another 17 years (or 204 months) so these costs can add up over time.

Therefore, I am looking to see if anyone has any advice as to how I would avoid this scenario? I still have a UK current account in the North, so perhaps the best course of action is to pay these repayments from it instead? But this would require me to use something like TransferWise to transfer money from my ROI current account to my NI current account and there is an additional admin fee every time I'd need to do this too. So perhaps additional fees are unavoidable? And perhaps I would be better off with these student loan repayments coming out of my ROI current account in order to build up a credit history here in the South?

Speedsie

Could you set up a sterling direct debit in Revolut to pay your student loan?

You'd top up the Revolut account in Euro from your KBC account avoiding cross border fees. Just make sure there's enough in the Revolut worky account to more than cover the £77 outgoing payment.

3DataModem

What Speedsie said. Either Revolut or Wise (I use both for what you describe).

PHG

I looked into the idea of potentially paying it off early, but it would use up about two thirds of my current savings and general financial advice seems to be that those savings would be better spent elsewhere since student loans are such low interest rates. I am in the process of buying a car and will soon be looking at buying a house here in the South so will have mortgage to consider.

Whoever gave you this advice is an idiot! I would guarantee they have, car debt, credit card debt, loans etc. Get rid of the debt as the cost of servicing it with fees and others will cost your more than you think in the long run. One of the major problems in our schools is that it doesn't teach kids how to handle money and one of the reasons the personal debt is growing in the country. Also, this loan forgiveness this is not necessarily true if it goes the way the US did.

Low interest still means debt and lends itself to a habit of taking on more debt.

You have the money. so would advice

1. Pay off the the debt
2. Keep enough for 3 months expenses (guessing thats about 5k)
3. Pay cash for you car - I know guys driving expensive cars in their 30s but still living at home, not worth it. I'm not saying drive a banger but depending on your income level maybe something for 7/8k considering just out of college. Even switch to 1000 in the bank in line 2 and use the rest t buy a car and build up 3 to 6 months savings as quick as you can.
4. Save for the Mortgage

You are still very young so lots of time to save up for a big down payment on the house too whilst also being able to do fun things like travel (if that is what you want).

I promise you, life is a lot more stress free when you have no debt and living expenses in the bank. Most people live pay check to pay check unfortunetly.

KJK1LL3R

Speedsie wrote: »

Could you set up a sterling direct debit in Revolut to pay your student loan?

You'd top up the Revolut account in Euro from your KBC account avoiding cross border fees. Just make sure there's enough in the Revolut worky account to more than cover the £77 outgoing payment.

3DataModem wrote: »

What Speedsie said. Either Revolut or Wise (I use both for what you describe).

Thanks guys, I already use a similar method whereby I transfer money from my KBC Irish bank account down here in the South and I transfer it to my UlsterBank UK bank account up in the North and I pay my student loan repayments out of it. This avoids the non-euro transaction fee, but Wise due charge an admin fee for transferring the money so it would appear that additional fees are unavoidable in these circumstances? Perhaps my best bet is to transfer a lump sum once per year to cover me for 12 months of student loan repayments, that way I am only charged an admin fee by Wise once per year instead of doing a transfer each month.

But, I am wondering if it would be worth putting up with non-euro transactions fees and paying the student loan back from my Irish bank account in order to help build up a credit history for myself down here rather than kind of hiding these debt repayments in a NI bank account?

KJK1LL3R

PHG wrote: »

Whoever gave you this advice is an idiot! I would guarantee they have, car debt, credit card debt, loans etc. Get rid of the debt as the cost of servicing it with fees and others will cost your more than you think in the long run. One of the major problems in our schools is that it doesn't teach kids how to handle money and one of the reasons the personal debt is growing in the country. Also, this loan forgiveness this is not necessarily true if it goes the way the US did.

Low interest still means debt and lends itself to a habit of taking on more debt.

You have the money. so would advice

1. Pay off the the debt
2. Keep enough for 3 months expenses (guessing thats about 5k)
3. Pay cash for you car - I know guys driving expensive cars in their 30s but still living at home, not worth it. I'm not saying drive a banger but depending on your income level maybe something for 7/8k considering just out of college. Even switch to 1000 in the bank in line 2 and use the rest t buy a car and build up 3 to 6 months savings as quick as you can.
4. Save for the Mortgage

You are still very young so lots of time to save up for a big down payment on the house too whilst also being able to do fun things like travel (if that is what you want).

I promise you, life is a lot more stress free when you have no debt and living expenses in the bank. Most people live pay check to pay check unfortunetly.

Apologies but I probably should've given you more information as it would appear that I've given you the impression that I am a young guy who is just fresh out of college when that is far from the case.

I graduated in December 2012 and my student loan repayments are due to be written off 25 years from the April after graduation so in my case that means I've already been making these repayments for nearly 8 years since April 2013 and I've got another 17 years to go until it is written off in April 2038.

I am turning 33 years old this summer and I have just relocated from Northern Ireland to the Republic. I have around €30k in savings but I am going to have to spend around €10k in cash to get a decent car because I have no credit history so would be unlikely to get a car loan as I cannot even get a low-limit credit card down here. I am currently living with my girlfriends parents but that is only a short-term plan so I kind of need the rest of my savings to go towards a house deposit in the next 6-12 months. So I'm reluctant to spend all my savings at a time when I know I'll need the money in the not too distant future.

I read this article which seems to recommend not repaying early since my interest rate is only 1.1%
https://www.moneysavingexpert.com/students/student-loans-repay/

PHG

Thanks for the additional info.

From looking at the link

- You will pay BoE rate + 1% or Inflation, whichever is the lowest.

It then gives these 3 reasons

Reason 1: You may be able to earn more saving than the loan costs

This is impossible in any standard bank account now so null and void. You have DIRT in Ireland and if you invest in Ireland CGT is super high. Between now and 2038, it is highly likely rates will rise and not stay at the current levels.

Reason 2: Avoid having to borrow back at higher rates


- They are essentially stating its ok to borrow for everything, that you will not control your income and repaying early will put a financial burden on the person. If putting yourself in financial distress to pay it off does this then why would anyone do it. There is no mention of getting a 3 to 6 month emergency fund and wipe it out.

Reason 3: You can put the cash to better use

As they state buying a mortgage BUT it will limit the amount you can borrow for a mortgage, so do not understand this. I do not know in your case but may cause issues when buying a place in the South.

Now you are paid in EUR you have FX risk every repayment too so will cost you small difference each month.

How much can you and your partner save a month atm? It is good you are paying for a car in cahs, car loans are so expensive here. The PCP movement is ridiculous. Some people earning 50/60k a year in a 36k cars, madness!

It is great you 30k saved. If I was in your shoes (remember I am just a randomer on the internet) I would do the following

- Keep 3-6months expenses, as you are living with limited rent (say 10k)
- Put 10k into the loan
- Buy the 10k car

Depending on the incomes of you and the gf, you could save for the house and triple or more the loan payment each month. Its gone then by your 35th birthday and you will have a house deposit. Try for 15% with a 25 year max mortgage. Its what the gf and I are currently doing and waiting on approval. You will hear people say, go for 30 year cause its cheaper and you will make more money in the markets. Yes, this is technically true but calculate the difference in interest you will pay over the 5 years in the mortgage. It also assumes people are emotional disciplined, we are not. When the market crumbles every 10 years people take their money out instead of leaving it in and get burnt. The other factor is, would you not rather be finished a mortgage at 60 then 65 and not have to worry about payments.

There is a podcast called the Ramsey Show which is about life and money management. He is a tad religious so quotes the odd phrase from the bible but the advise is really good and transferrable in most part from the US to here. Our just google the Dave Ramsey baby Steps which will tell you what they talk about.

Hope that helps, though a bit ranty

PHG

Speedsie

KJK1LL3R wrote: »

Thanks guys, I already use a similar method whereby I transfer money from my KBC Irish bank account down here in the South and I transfer it to my UlsterBank UK bank account up in the North and I pay my student loan repayments out of it. This avoids the non-euro transaction fee, but Wise due charge an admin fee for transferring the money so it would appear that additional fees are unavoidable in these circumstances? Perhaps my best bet is to transfer a lump sum once per year to cover me for 12 months of student loan repayments, that way I am only charged an admin fee by Wise once per year instead of doing a transfer each month.

But, I am wondering if it would be worth putting up with non-euro transactions fees and paying the student loan back from my Irish bank account in order to help build up a credit history for myself down here rather than kind of hiding these debt repayments in a NI bank account?

Hi, there are no cross boarder fees with Revolut. Sign up for a Revolut account.
Top up from your KBC account to Revolut in Euro (no cross boarder fee)
In the Revolut App, tap on your free Sterling account, locate your Sterling Account and Sort Code. Send these to your loan provider to update the direct debit.


No need to convert from Euro to Sterling wallet in Revolut, just make sure there is enough Euro to cover the loan repayment.


You will also benefit from a good exchange rate on Euro/Sterling.

Large thread on using Revolut here which will prove useful to you with regard to FX transactions.


(BTW - I'd tend to clear loans as quickly as possible myself.)

etchyed

PHG wrote: »

Hope that helps, though a bit ranty

PHG

PHG, your advice seems to be about debt in general, rather than about the highly specific world of UK student loans. Generalised advice from a podcast you like can't always be applied in specific circumstances, and may in fact be harmful or wrong.

The OP states that they are paying £77 per month. In the UK the monthly payment is linked to earnings (9% of all earnings above approximately £20k), and deducted at source from your salary like PAYE. I'm not sure how this works if you move abroad as the OP has, but presumably the OP knows and has drawn their own conclusions. One thing is certain - if they continue paying £77 a month for the next 17 years it'll be a bit of a bargain, as they won't have to pay off the £18k in full, let alone any interest on that £18k. In this case, treating the debt as a graduate tax makes more sense.

If, however, the OP expects their income to grow over the next 17 years, and if the £77 payment would increase as a result (again, I don't know whether it would, and neither do you, PHG), there may be some circumstances where it would make sense to pay off the debt early. But even then there are other factors to consider, as the OP pointed out to you, such as buying a house.

So your advice is pretty badly informed, not to mention unsolicited.

I make larger less frequent payments against my student loan with SLC - I do one a year at the beginning and the monthly amounts are taken off the 'credit' balance each month. I only hear from them once a year now to do my annual overseas assessment and that's it. I still have my UK bank account and use Currencyfair to move money into it as needed (this will show up on your bank statements so keep that in mind re. mortgage applications).

In terms of repaying it in full I have had enough money to do that since I graduated and I've never once considered it. I don't even think about my UK student loan debt.

KJK1LL3R

Hi guys, I am still looking for some financial advice, having lived in the Republic now for nearly 2 years since moving from Northern Ireland.

Here is my current financial situation:

Current Annual Salary:

€45,957 (gross) / €35,140 (net)

Emergency Savings (3 months net salary):

€8,787 (Credit Union)

Regular Savings:

€31,178.43 (KBC)

Discretionary Savings:

€2,719.75 (Revolut)

I am still living rent-free with my girlfriend at her parents home, but I intend to move out as soon as I can find a suitable place that I could afford to rent. I don't really want to spend more than 35% of my net salary on rent, so it is proving very difficult to find anything to rent for under €1000 per month. I know that renting is possibly a waste of money compared to buying, but I don't feel ready to buy at the moment until I feel fully settled in the Republic as I am still at little homesick. I also think I'd be better positioned to avail of first-time buyer assistance from the government after I had paid tax here for 4 years so that might make more financial sense to wait. My girlfriend is currently employed on short-term one year contracts with no guarantees of extension, so it might be wise to hold off on potentially buying until she has established more secured permanent employment. At the moment, the maximum mortgage I could get is €170,733.50 so I would need €18,970.39 for a 10% deposit or €42,683.38 for a 20% deposit.

I have a UK Plan 1 Student Loan (1-1.5% interest rate) with an outstanding balance of £16,665.20. My original loan was for a total of £18,419 and so far I have made total repayments of £4,896 since 2015. I have thought about the idea of paying this off early in one lump sum, as my earnings will most likely see me pay it off before it was due to be written-off in the year 2038 when I would be 49yrs old. But most reports that I’ve read seem to indicate that it is rarely wise to pay off a UK student loan early given that it is really more of a graduate tax where you only pay back whatever you earn. So if I paid it off in full, and then ended up suffering a future loss of income then I will have paid back unnecessarily. They have currently asked me to repay £145 per month for the next 9 months from July 2022 until March 2023. What is the cheapest way for me to do this? I have thought of sending one lump sum (£1,035) via Wise to my existing UK bank account to cover these next 9 months of payments, but I am wondering if there is a better way to do this? Given that Wise charges a fee per each transfer, I thought the best method was to send one lump sum instead of nine monthly transfers.