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

nikkim_3

i finished uni 2 yrs ago but dnt earn over the threshold, when i do overtime slc take small paymentss, I hate the thought of repayin for the next 20 yrs but understand i would be better off savin money as opposed to paying money off the loan rite now. my question is once i have saved a decent amount of money would i be able to make a lump sum payment off my loan or will slc not allow this??

sly_dog_jonah

nikkim wrote: »

i finished uni 2 yrs ago but dnt earn over the threshold, when i do overtime slc take small paymentss, I hate the thought of repayin for the next 20 yrs but understand i would be better off savin money as opposed to paying money off the loan rite now. my question is once i have saved a decent amount of money would i be able to make a lump sum payment off my loan or will slc not allow this??

Martin's advice is to pay back your student loans as slowly as possible, ie via PAYE deductions only. Manual overpayments to the Student Loan company are possible, but cannot be refunded if your circumstances change in the future. The interest rates you can get on savings will usually exceed the cost of borrowing for student loans, so you are better off holding onto the cash, particularly in tax-free cash ISAs where the interest margin is improved. Make sure you shop around for the best savings account. Martin's article explains how the interest rate charged on post-1998 loans has dropped this year inline with BoE reductions. Hopefully the RPI for March will be 0% (or negative) which will mean that the interest rate from Sept 2009-Sept 2010 for SLC loans will be 0% (ie your loan debt will not grow at all), or possibly negative.

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

argood

nikkim wrote: »

i finished uni 2 yrs ago but dnt earn over the threshold, when i do overtime slc take small paymentss, I hate the thought of repayin for the next 20 yrs but understand i would be better off savin money as opposed to paying money off the loan rite now. my question is once i have saved a decent amount of money would i be able to make a lump sum payment off my loan or will slc not allow this??

You can certainly make a lump sum payment if you want. You can pay by debit card, credit card, electronic bank transfer or cheque.

Details here: http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3866890&_dad=portal&_schema=PORTAL

Oldernotwiser

argood wrote: »

You can certainly make a lump sum payment if you want. You can pay by debit card, credit card, electronic bank transfer or cheque.

Details here: http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3866890&_dad=portal&_schema=PORTAL

Bear in mind that normal payments are made out of gross income, whereas extra payments have to come out of taxed income; this makes extra payments much more expensive. Keep your savings.

Chris2685

Oldernotwiser wrote: »

Bear in mind that normal payments are made out of gross income, whereas extra payments have to come out of taxed income; this makes extra payments much more expensive. Keep your savings.

That is an amazingly good point!

That equates to approximately 32% savings for someone on regular tax & NI contributions!

argood

Oldernotwiser wrote: »

Bear in mind that normal payments are made out of gross income, whereas extra payments have to come out of taxed income; this makes extra payments much more expensive. Keep your savings.

Thanks oldernotwiser. I'm well aware of the perils of paying extra but the poster was asking if he could rather than if he should.

Oldernotwiser

argood wrote: »

Thanks oldernotwiser. I'm well aware of the perils of paying extra but the poster was asking if he could rather than if he should.

YOU may be aware of this point but it's quite possible that the poster isn't. In my book there's no such thing as too much information.

argood

Oldernotwiser wrote: »

YOU may be aware of this point but it's quite possible that the poster isn't. In my book there's no such thing as too much information.

There's really no need to be so hostile.
I answered the question that was asked and your extra information, while relevant, was directed at me and not the original poster. Therefore I responded to you that I was aware of the fact that it's not sensible to make extra payments.

Oldernotwiser

argood wrote: »

There's really no need to be so hostile.
I answered the question that was asked and your extra information, while relevant, was directed at me and not the original poster. Therefore I responded to you that I was aware of the fact that it's not sensible to make extra payments.

I'm sorry that you may have read my reply as hostile; it really wasn't intended that way!

I had no way of knowing whether either you or the poster were aware of the facts I mentioned; how could I?

argood

Oldernotwiser wrote: »

I'm sorry that you may have read my reply as hostile; it really wasn't intended that way!

I had no way of knowing whether either you or the poster were aware of the facts I mentioned; how could I?

I tried to send you a PM but the system tells me that you haven't got room for anymore. I'll try again soon.