Paying off Student Loan in full

miketaff1408
miketaff1408 Posts: 351 Forumite
First Anniversary Combo Breaker
in Loans
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
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Comments

  • Dunroamin
    Dunroamin Posts: 16,908 Forumite
    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
    just_a_tad_of_help Posts: 7 Forumite
    exactly as above no need to pay it off at all when you can actually earn more not doing so
  • miduck
    miduck Posts: 1,800 Forumite
    I've paid mine off (although it was not nearly that much) - I just don't like having debt. ;)
  • miketaff1408
    miketaff1408 Posts: 351 Forumite
    First Anniversary Combo Breaker
    miduck wrote: »
    I've paid mine off (although it was not nearly that much) - I just don't like having debt. ;)

    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
    AFK_Matrix Posts: 682 Forumite
    edited 10 December 2012 at 2:50PM
    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.
  • becominganobsessivesaver
    becominganobsessivesaver Posts: 827 Forumite
    First Post First Anniversary Combo Breaker
    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
    miketaff1408 Posts: 351 Forumite
    First Anniversary Combo Breaker
    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
    patrickbateman Posts: 83 Forumite
    First Anniversary Combo Breaker First Post
    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
    benweston Posts: 42 Forumite
    First Post First Anniversary Combo Breaker
    miketaff1408 wrote: »
    Is the student loan taken into account with regards to credit rating or mortgage applications?

    I'd be very interested to know this too!
  • Herzlos
    Herzlos Posts: 14,683 Forumite
    First Anniversary Name Dropper First Post
    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).
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