Clearing my student loan

FreheitOverture

You have to pay it off at some point, so just do it now and get it over with. If you have the money to clear it and have no other pressing debts that otherwise need clearing then pay it off.

secretmachines

FreheitOverture wrote: »

You have to pay it off at some point, so just do it now and get it over with. If you have the money to clear it and have no other pressing debts that otherwise need clearing then pay it off.

phew, at least i'm not the only one to think that way!
i totally get the idea about being able to invest that £4000 and earn some interest.

it's the same principle as buying a car i think, you can either pay for the car outright, or take on finance... if you can earn 6% interest on savings, and are charged 4% interest for the finance, then in the long run you 'make' some cash.

however on a day-to-day living basis, i would argue that by paying off the loan / car in one hit makes for a more manageable financial life, as you have less payments / DDs coming out every month to pay installments for loans, car finance, etc... and that equals, if not outweighs, being able to save a few hundred quid over a few years.

ps. as that link above says "While there's a gain it isn't huge"

JoeA81

You will definately be worse off financially if you pay off your student debt earlier than you have to. See my previous posts on this:

http://forums.moneysavingexpert.com/showpost.html?p=11486431&postcount=26
http://forums.moneysavingexpert.com/showpost.html?p=8287599&postcount=15
http://forums.moneysavingexpert.com/showpost.html?p=6449970&postcount=4
http://forums.moneysavingexpert.com/showpost.html?p=6005106&postcount=5

secretmachines

i appreciate the argument and realise that this site is about saving every possible penny

however, as others have mentioned in threads, when other priorities come along in life and i've still got £100 coming out of my account in student loan installments, then i'll probably wish i'd have cleared it when i had the chance!

as i have the fortunate opportunity to pay it off, having a current account with minimum DDs coming from it is going to make things much more simple and manageable.

JoeA81

secretmachines wrote: »

having a current account with minimum DDs coming from it is going to make things much more simple and manageable.

I appreciate your aim in this case, but the Student loan does not come out of your current account as a direct debit, it is taken directly from your paycheck just like income tax, national insurance, pension payments etc

So you never really miss the money like you would if it was being taken direct from your account.

I dont see this as trying to save every possible penny. Rather having money in reserve just in case you need it in the future. Once you have paid off that loan you can never get that money back. But if you keep that money in a high interest savings account you can get at it anytime you want...and you never know what life is going to throw at you. I just like to keep all my options open, and paying off your loan now will reduce those options.

secretmachines

JoeA81 wrote: »

I appreciate your aim in this case, but the Student loan does not come out of your current account as a direct debit, it is taken directly from your paycheck just like income tax, national insurance, pension payments etc

So you never really miss the money like you would if it was being taken direct from your account.

it does if you have loans from courses starting before 1998

JoeA81

secretmachines wrote: »

it does if you have loans from courses starting before 1998

Oops!

Then consider me too young to understand and disregard that advice!

I should've realised that just because something happens to me does not mean it happens to everyone, and things were always different in't ye olde days!

Every day is indeed a school day. :rolleyes:

secretmachines

JoeA81 wrote: »

Oops!

Then consider me too young to understand and disregard that advice!

I should've realised that just because something happens to me does not mean it happens to everyone, and things were always different in't ye olde days!

Every day is indeed a school day. :rolleyes:

hehe no probs
loans for courses started before 98 (i started in 97) are kept separate from salaries and are just regular direct debits.
I took a 4 year course and had a loan each year... 2 of which are with SLC and 2 are now with HSL (Honours Student Loans).

which was actually quite good because i could defer the HSL ones and start repaying the SLC ones