Should I Pay Off My Student Loan? 2008/09 article discussion

Umski

After my query about interest payments and my new-fangled SLC login, I gave it a go to see what I could see through the system. All seemed well until it gave me the option to input my 2004 and 2008 payments Now I recall (vaguely) something about 2004-05 payments being delayed via the HMRC and that they would be sorted soon (this was 2 years ago!).

So I dug out my statements and guess what? - no update on any statements from that year so I'm 1500 odd quid down on what the balance should be :mad: Phoned up this morning with my P60 etc and told the lady and she explained that HMRC STILL haven't updated them for that year in some cases :rolleyes: So I've had to write them a letter with a copy of my P60 and they will chase it before updating my balance formally. Good thing I checked this - wonder how many other people are in this situation?!

WetSawdustDemon

Hi there,

My first post here, just wanted to say thanks for all the helpful advice I've read here over the years!

While I am here I wanted to ask a question concerning student loans. If anyone could help I would really appreciate it!

I currently owe around £13,000 on my student loan, I have a similar amount in savings but have no intention to pay my loan off given the very useful information in Martin's article.

However I next year I plan to move to work in Japan as a post doctorial researcher, I would be paid a monthly allowance (If I get it the award that is!) so I guess that is the same as a wage. If I am therefore liable to pay 10% above the threshold for my loan repayments is it no longer more efficient to keep my savings? I would afterall be responsible for converting the currencies from Yen to Pounds which increases the amount I would have to pay. Should I pay off my loan before I go, or is it still better to keep my savings?

Any advice on this matter would be great! Thanks,

Paul

neas

with the interest rate of BoE dropping to 3%... next year it would prob be prudent to repay your student loan isntead of dump it into an isa... if you pay more interest on your loan than what your bank pays you... be a no brainer...

WetSawdustDemon

Cheers Neas! That's very good to know!

Chris2685

Banks are still paying a much better rate than BOE base rate. Also, the student loan rate tends to go down if BOE rate goes down... Who knows what will happen if inflation goes out of control though!

Lokolo

Chris2685 wrote: »

Banks are still paying a much better rate than BOE base rate. Also, the student loan rate tends to go down if BOE rate goes down... Who knows what will happen if inflation goes out of control though!

Other way round my friend. As Bank of England rate lowers - inflation raises (inflation is basically the amount of profit banks are making - in simple simple terms, so with interest rates lowering, people spend more -> inflation raises).

But don't forget, this is only for 1 year. If you take out the loan and have this high 5% interest rate, it will be for 1 year. This means that you will make a loss of 1 year, keep the student loan in savings, you will make a loss next year, but the next 5 you will make a gain :cool:;)

lexio

hey,
sorry to pester you all but just wondering if anyone would care to advise me...

i graduated uni in june 2007 with about £10000 debt. Ive started work in sept 2007 earning over the threshold on an annual salary of about £20000. Ive only started paying my loan back in april 08.

ive paid back £300 in 7 monthly repayments, a figure which varies every month.

ive had an INGDirect ISA (current interest rate of 4.17%) since february (9months) which has the maximum £6,600 allowance in, of which ive made £230 interest on that in making a total of £6,830.

in my own bank account i have amassed £3,350 but that has no real interest on it. ive created another ING savings account which has a beginners 12month interest rate of 6.0% so im gona transfer the money to the ing account asap.

Therefore i have saved around £10,180 and in the next few months will be able to pay off the whole sum easily.

soooo... i know everyone suggests not paying off the loan, following the payments and earning money through interest as i am doing. However i was wondering as im pretty financially secure, i live at home so no real funds outgoing should i just pay it off and then start saving again cos it wont be hanging over me.. or just carry on paying off the lesser amount?

sorry for boring you with all this and all these figures, i just thought id ask for your opinion. thanks anyways.

(ps how would i work out how much i will actually pay back in total? does anyone know)

Lokolo

Why not use the money for something else?

Overpayments on house or something? Or use the money for a house deposit?

Also there is a student loan repayment website: https://www.studentloanrepayment.co.uk/

There you can see how much you owe - supposedly, although the site is down at the moment.

Oldernotwiser

I'd hang onto it and keep saving. You're not going to want to live a t home forever and this will give you a decent deposit for a house or flat for when you decide that prices have dropped low enough for you to buy something.

spendthrift2005

Since the base rate decrease my tracker mortgage is now at an interest rate of 3.54%. This is lower than the student loan interest rate of 3.8%...
...so should I make overpayments on my student loan rather than my mortgage?

I have used up my ISA allowance already and already have a regular saver so don't think I could do any significant saving with the money.

Comments appreciated, I'm a new member so sorry if i'm posting in the wrong place