Clearing my student loan

secretmachines

hi all
I'm in the fortunate position to be able to make a one-off payment and clear my student loan. I rang Honours Student Loans (who have taken on some of the SLC loans) to ask about a final figure for paying it off in one go. They quoted me a total which was a few percent above the actual outstanding balance.

My question is, do I have any negotiating leeway here? Can I argue that as I'm paying off around £4000 in one go, we could reach some kind of settlement which is less than the full total?

Lokolo

No. A loans a loan. The amount you owe will increase daily.

If you have £4000 in there. 4.8% a year. 53p a day it will increase

secretmachines

Lokolo wrote: »

No. A loans a loan. The amount you owe will increase daily.

If you have £4000 in there. 4.8% a year. 53p a day it will increase

that's what i'm getting at, i hear of people coming to an agreement with a credit card / store card company, etc. that they agree on a settlement price?

CLAPTON

secretmachines wrote: »

that's what i'm getting at, i hear of people coming to an agreement with a credit card / store card company, etc. that they agree on a settlement price?

yes this can work with credit cards or loan debts but I'm not aware of the position with student loans.

basically what you do is
stop paying the debt repayments
you then wait until they default the debt .. this affects your credit record for 6 years
they may apply to the courts for a CCJ or apply for a charge on the house
then sell the debt to a debt collection agency
after a year or so they will often agree a reduced payment.

secretmachines

CLAPTON wrote: »

yes this can work with credit cards or loan debts but I'm not aware of the position with student loans.

basically what you do is
stop paying the debt repayments
you then wait until they default the debt .. this affects your credit record for 6 years
they may apply to the courts for a CCJ or apply for a charge on the house
then sell the debt to a debt collection agency
after a year or so they will often agree a reduced payment.

i think i'll just pay it off straight forwardly

pinkshoes

secretmachines wrote: »

i think i'll just pay it off straight forwardly

Why??

If you have £4000, put it in an ISA, as you'll get more in interest in the ISA than it will accumulate in debt on your student loan!

Read Martin's Guide:
http://www.moneysavingexpert.com/loans/student-loans-repay

secretmachines

pinkshoes wrote: »

Why??

If you have £4000, put it in an ISA, as you'll get more in interest in the ISA than it will accumulate in debt on your student loan!

Read Martin's Guide:
http://www.moneysavingexpert.com/loans/student-loans-repay

i'm in a financial position to be able to clear some debts, so i'm looking to pay off as many things that are outstanding (credit card, student loan), that way i have a clean slate

pinkshoes

secretmachines wrote: »

i'm in a financial position to be able to clear some debts, so i'm looking to pay off as many things that are outstanding (credit card, student loan), that way i have a clean slate

But a student loan is completely different to a credit card loan!! It doesn't even get taken into consideration when getting a mortgage.

Paying off any credit card debts is an excellent idea, but paying off the student loan when you can invest the money makes no financial sense!

secretmachines

pinkshoes wrote: »

But a student loan is completely different to a credit card loan!! It doesn't even get taken into consideration when getting a mortgage.

Paying off any credit card debts is an excellent idea, but paying off the student loan when you can invest the money makes no financial sense!

but it's still a debt...
and i have the chance to clear a debt...

i'm still getting charged interest... the difference between the amount i could save by putting the amount in an interest account / ISA etc. and the amount i'm losing in Loan interest isn't going to be hugely significant...

chris_topher97

secretmachines wrote: »

but it's still a debt...
and i have the chance to clear a debt...

i'm still getting charged interest... the difference between the amount i could save by putting the amount in an interest account / ISA etc. and the amount i'm losing in Loan interest isn't going to be hugely significant...

If you own your own house, and are in a financial position to pay it off then well done to you, but if you pay a mortgage, or think you may get a mortgage at some point in your life, then theres no benefit from paying it off early, infact it may cost you a tidy sum in the long run.

Lets say you need to get a mortgage in a few years time, thats £4k less you can put down in a deposit, meaning you'll have to borrow £4k more on the mortgage at some sky high interest rate, pushing up your monthly payments.

Whereas for no hassle at all you could leave your £4000 in an ISA earning 6% a year (£240), and the student loan come september will only be costing you £152 in interest (3.8%)

Earning you a few extra quid in the meantime

In Short: your student loan should be the absolute last thing you ever pay off, once you own a house and know you will never need a loan ever again.

chris_topher97

This should be helpful, its where i got my wealth of knowledge from :-)

http://www.moneysavingexpert.com/loans/student-loans-repay