Student Loan

Giddy307

Hi,

I'm new to the forums and need some advice with regard to my student loan.

I have recently come into a small amount of inheritance which means I could pay off my student loan. What I want to know is:

1) Can I pay it all back in one go?
2) Is it a good time to pay it all back?

Any other advice?

Many Thanks:j

CLAPTON

There are about 1,000 threads on the student board on this subject.. the 99% concensus is save your money and only pay the necessary amount off each month

the answers to your questions
1. yes
2. no better or worse than any other time.

Rafter

Giddy - don't do it!

The interest rate on your student loan is peanuts with the base rate so low.

You would be much better off investing your inheritance in a good savings account to start saving for a house deposit.

I'd suggest looking for a best buy cash ISA and investing your full allowance either side of the April ISA year date and the rest in a best buy account - either internet instant access or if you are happy to lock the money away then a fixed rate bond.

If you are prepared to take a bit of a risk, you could look at a stocks and shares ISA or fund of some sort, but this should only be a longer term investment.

Good luck

R.

Idiophreak

If I came into the money to clear it I'd *definitely* be saving it for a house deposit or just for a rainy day - it *would* be nice to get rid of the monthly outgoing, but the cold, hard, cash would be much more useful at this point in my life....

Robert_Sterling_3

CLAPTON wrote: »

The 99% concensus is save your money and only pay the necessary amount off each month

I will represent the other 1%.

Times have changed.

A student loan now charges interest based on the rate of inflation. The inflation rate although not high at present is likely to be high in future. Pay off
the Student Loan Debt now.

Be debt free as far as possible. The only exception to this would be a mortgage.

Idiophreak

Robert_Sterling wrote: »

A student loan now charges interest based on the rate of inflation. The inflation rate although not high at present is likely to be high in future. Pay of the Student Loan Debt now.

Err, but then the inflation rate will be higher?


Doesn't make any odds what inflation's doing, you'll still pay back the same amount (more or less), that's kinda the point.

CLAPTON

Robert_Sterling wrote: »

I will represent the other 1%.

Times have changed.

A student loan now charges interest based on the rate of inflation. The inflation rate although not high at present is likely to be high in future. Pay of the Student Loan Debt now.

There are several reasons for the 99% view ..not just interest rates.

However, whilst none of us can be sure, high inflations tends to go with high interest rates.

Giddy307

Many thanks for that. I believe I am paying 3.8% interest at the moment on the student loan. Is there an ISA that will offer a better rate than that? I haven't opened one this side of the tax year, so I can do so and then open another after April 5th to put the rest in there.

I don't need money for a 'rainy day' or house deposit as I already have both. This is simply (and sorry to put it crudely, but it's the only way I can explain it) surplus money, so I could lock it down in an account for now.

Thanks for the advice:beer:

Idiophreak

Giddy307 wrote: »

I don't need money for a 'rainy day' or house deposit as I already have both.

Unless you have enough of a deposit to buy a house outright (ie 100%), this money will work a lot harder for you attached to that than it would if you paid off your loan.

deloina

Yes, you can pay it back in a lump sum.

Yes, it is ALWAYS a good time to pay it all back!

If you can pay it off, do it! By doing so, you have eliminated your student loan debt, and possibly improved your credit score! Win-win!

Rafter

deloina wrote: »

Yes, it is ALWAYS a good time to pay it all back!

WRONG WRONG WRONG

How can not paying 1% on a student loan (expected inflation for the next 3 years according to the Bank of England) and missing out on 3%+ on savings be a smart decision?

Even if the Bank of England are wrong and rates are much higher, the savings rate will rise too!

R.