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  • FIRST POST
    • King Mustard
    • By King Mustard 6th Dec 17, 10:18 PM
    • 141Posts
    • 24Thanks
    King Mustard
    Should I be paying my student loan off?
    • #1
    • 6th Dec 17, 10:18 PM
    Should I be paying my student loan off? 6th Dec 17 at 10:18 PM
    I finished university in 2008, owing SLC around £11,800.

    I hadn't paid anything until 2014, when it had increased to around £12,500.

    Since then, I've paid £25 manually each week.

    Between 2008 and now, I've never paid more than £8 each month from my payslip (many of the years, less than that).

    I'm now (late 2017) at roughly £7,900.

    I doubt I'll ever earn much above 25% on top of minimum wage per annum, due to anxiety issues.

    I've been told by many people I shouldn't have bothered and that I should keep the £109 each monthly to myself.

    I know is sounds silly but are they right?

    Is there an advantage to paying it off?
    Last edited by King Mustard; 06-12-2017 at 11:02 PM.
Page 1
    • PeacefulWaters
    • By PeacefulWaters 7th Dec 17, 9:34 AM
    • 7,280 Posts
    • 9,003 Thanks
    PeacefulWaters
    • #2
    • 7th Dec 17, 9:34 AM
    • #2
    • 7th Dec 17, 9:34 AM
    Googl "Martin Lewis and student loans" and you'll get an explanation as to why you shouldn't pay off more than the mandatory amounts you see deducted from salary.
    • adamh87
    • By adamh87 7th Dec 17, 6:00 PM
    • 40 Posts
    • 7 Thanks
    adamh87
    • #3
    • 7th Dec 17, 6:00 PM
    • #3
    • 7th Dec 17, 6:00 PM
    If you're on Plan 1 definitely keep repayments to a minimum. It's at less than inflation which means it's depreciating by itself in real terms.

    I also have anxiety and thinking about SL definitely aggravates it, but if you're earning below the threshold the money's much better in your pocket than with the SLC.

    Keep the money and use it to look after yourself. If you want to be really safe add it to a current account with decent interest. You'd theoretically repay the total off quicker by accumulating the money in savings accounts (you can find a fair few paying more than the SLC's 1.5% interest rate) than you would by making voluntary overpayments.

    If you ever breach the limit and need to make PAYE loan repayments, you can use a salary sacrifice pension to 'reduce' your wages back to below the threshold by making pension contributions.

    Edit: Plan 1 student loans have been privatised, some at quite ridiculous prices: https://www.standard.co.uk/business/anthony-hilton-real-story-exposed-by-student-loan-book-sale-a3712946.html

    There's always a chance the rules could be changed, especially now there will be some private interest in ensuring they're repaid. Still, given the low interest rate vs inflation it's still worth keeping repayments to a minimum.
    Last edited by adamh87; 09-12-2017 at 7:25 PM.
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