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  • FIRST POST
    • miketaff1408
    • By miketaff1408 8th Dec 12, 5:21 PM
    • 337Posts
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    miketaff1408
    Paying off Student Loan in full
    • #1
    • 8th Dec 12, 5:21 PM
    Paying off Student Loan in full 8th Dec 12 at 5:21 PM
    Hi.

    Mrs MikeTaff has about 15.5k of outstanding student loan debt to clear. She is currently only working part time and so only pays back 32 a month. The current % APR is 1.5 on the loan.

    We are now in the fortunate position of being able to pay off this debt in full within the next month or so.

    My question is this - As the student loans company seems so useless at calculating balances, if I pay off the full balance, how long will it take them to stop the payments from her pay packets? I don't want to be in the position where they owe us money and we have to chase them. Should I pay it all off bar say 2 x 32 to allow them time to sort it?

    Cheers for any advice
Page 1
  • Dunroamin
    • #2
    • 8th Dec 12, 5:24 PM
    • #2
    • 8th Dec 12, 5:24 PM
    Why do you want to pay this off when your money can earn more interest than the loan is accruing?
  • just a tad of help
    • #3
    • 8th Dec 12, 5:29 PM
    • #3
    • 8th Dec 12, 5:29 PM
    exactly as above no need to pay it off at all when you can actually earn more not doing so
  • miduck
    • #4
    • 8th Dec 12, 5:43 PM
    • #4
    • 8th Dec 12, 5:43 PM
    I've paid mine off (although it was not nearly that much) - I just don't like having debt.
    • miketaff1408
    • By miketaff1408 8th Dec 12, 6:16 PM
    • 337 Posts
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    miketaff1408
    • #5
    • 8th Dec 12, 6:16 PM
    • #5
    • 8th Dec 12, 6:16 PM
    I've paid mine off (although it was not nearly that much) - I just don't like having debt.
    Originally posted by miduck
    I agree. We want to see it gone. Yes, we can get around 2.5% savings rate on the money, which is reduced again with tax to 2%. So is it worth it for 0.5% on say 15k which would be about 75?

    We already have used our full cash ISA allocation. I suppose we could put it in a stockmarket ISA but obviously that comes with a possible loss instead of a gain.
    • AFK_Matrix
    • By AFK_Matrix 8th Dec 12, 6:45 PM
    • 633 Posts
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    AFK_Matrix
    • #6
    • 8th Dec 12, 6:45 PM
    • #6
    • 8th Dec 12, 6:45 PM
    Well not really as with that kind of money you can put over 5k into a long term isa which is 5% or more. Then you can get the first direct savings account at 8% where you put 300 a month for a year and get interest of around 125. Then you could setup for instance a 123 current account to get 3% for balances over 3k. So there are a ton of options out there that could earn you like 300 a year, and then times that by the amount of time it would take to pay the loan off year by year and to me it's a no brainer! Don't pay the loan off and instead earn some money!

    And you may have used this year's isa but it's only 4 months till you can add another 5000 whatever it is.
    Last edited by AFK_Matrix; 10-12-2012 at 1:50 PM.
    • becominganobsessivesaver
    • By becominganobsessivesaver 8th Dec 12, 9:42 PM
    • 772 Posts
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    becominganobsessivesaver
    • #7
    • 8th Dec 12, 9:42 PM
    • #7
    • 8th Dec 12, 9:42 PM
    If she was to go on maternity leave or lose her job then no payment would be due and you would probably appreciate the savings buffer. I chose not to think of student loan as debt, but as a tax. Having the savings in the bank encouraged me to save more, but also to spend a little (or a lot) on some special things. I also now have more of a deposit for my new house, giving me a much lower mortgage rate.
    • miketaff1408
    • By miketaff1408 9th Dec 12, 10:08 PM
    • 337 Posts
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    miketaff1408
    • #8
    • 9th Dec 12, 10:08 PM
    • #8
    • 9th Dec 12, 10:08 PM
    I am coming round to the thinking of not paying off the loan and investing it.

    Is the student loan taken into account with regards to credit rating or mortgage applications?
  • patrickbateman
    • #9
    • 9th Dec 12, 10:29 PM
    • #9
    • 9th Dec 12, 10:29 PM
    A good friend of mine told me recently that he paid his off early in 2010 (I think), and received a discount.
    I am not sure if this is still possible, but if it is then perhaps worth it.

    Even if that isnt the case, it is a psychological lift not having the debt. I wish I didnt have to pay mine every month.
  • benweston
    Is the student loan taken into account with regards to credit rating or mortgage applications?
    Originally posted by miketaff1408
    I'd be very interested to know this too!
    • Herzlos
    • By Herzlos 10th Dec 12, 9:54 AM
    • 3,110 Posts
    • 2,523 Thanks
    Herzlos
    It's a constant repayment, so it'll definitely be counted. I've always been asked about it.

    But having the money towards a deposit would have a better positive effect than having a 32/month repayment.


    The student loan interest rates are as cheap as you'll ever find, so it's unlikely you couldn't benefit from investing or using the money elsewhere (mortage, etc).
    • AFK_Matrix
    • By AFK_Matrix 10th Dec 12, 1:49 PM
    • 633 Posts
    • 773 Thanks
    AFK_Matrix
    And personally I would be far happier knowing I had 15k in savings for any emergencies etc, than having 32 a month taken off my pay. But then were all different but it does seem silly to pay the loan off if you can be making a decent amount of money year on year. Just my opinion though :-)
    • Lokolo
    • By Lokolo 10th Dec 12, 2:00 PM
    • 19,507 Posts
    • 14,465 Thanks
    Lokolo
    A good friend of mine told me recently that he paid his off early in 2010 (I think), and received a discount.
    I am not sure if this is still possible, but if it is then perhaps worth it.

    Even if that isnt the case, it is a psychological lift not having the debt. I wish I didnt have to pay mine every month.
    Originally posted by patrickbateman
    I believe the Welsh do. Although that is what my colleague tells me... and a another thread on this forum

    http://forums.moneysavingexpert.com/showthread.php?t=3506257
  • nicolula87
    Is the student loan taken into account with regards to credit rating or mortgage applications?
    Originally posted by miketaff1408
    No.

    When I took my student loan out, they told me that it is not taken into account on your credit history / report and therefore has no bearing on application for a mortgage etc. And when I have received copies of my credit report for various reasons, there is no mention of it on there.
    Kitchen Debt - 2820/260
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    • BristolBob
    • By BristolBob 10th Dec 12, 2:38 PM
    • 92 Posts
    • 159 Thanks
    BristolBob
    It will be factored into some affordability checks for mortgages.
    • Paul the Painter
    • By Paul the Painter 10th Dec 12, 8:04 PM
    • 748 Posts
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    Paul the Painter
    Of course there is also the possibility that she will NEVER have too pay it off. Depending on when it was taken out, there will be an age/time period when they will write off the outstanding balance. Just imagine that you have a couple of kids, you get great job, and together you decide that she will be a stay at home mum. She'll never earn enough to pay it off!
    My thinking is that until the rate charged starts costing you a lot of money, keep the cash!
    • malcolmffc
    • By malcolmffc 10th Dec 12, 10:11 PM
    • 330 Posts
    • 175 Thanks
    malcolmffc
    The returns may be measly in a savings account, but remember you may just end up borrowing the 15k again at a much more expensive interest rate in a few years if you buy a house or car. If you already have a mortgage then I would throw the 15k at that. That way you are effectively earing your mortgage interest rate tax-free, much better than 1.5%.

    Additionally, student loans get cancelled after 25 or 30 years (depending when you got them) so it's possible this would happen before she paid it off and you'd be wasting your money.
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