Advice on pre-'98 Student loan

Jabba_flabba

I'm wondering whether I should pay off some of my pre-1998 mortgage-style student loan - currently totaling £6257 - given the current interest rate of 3.8%. As I understand it, the rate won't change till Sept. 2009. The £6257 is broken down into three loans over the three years I was at university, roundabout £2000 per loan, and I was thinking about paying one of the loans off in full, with money from my poor-interest-rate Nationwide e-savings account.

I've recently deferred payment of my student loan, as I have been doing ever since I left university in 2001 - my income has always been slightly under the threshold for payment.

Does anyone know whether paying off part of the loan will affect my ability to carry on deferring in future years (should I remain under the payment threshold)? Anyone else in a similar situation got a plan?

Thanks.

andromache_2

The interest rate *should* drop quite a lot in September, though... quite apart from any other considerations relating to it being useful to have the money in your savings easily accessible, the fact that your loan will be written off if you keep deferring, etc, which I'm sure other people will give you advice on, why not at least wait to see what the RPI will be in March so that you know what the September interest rate will be? You could get a better savings account, as well.

ETA: RPI was 0.1% in January so it looks like the rate could well be nice and low from September

Jabba_flabba

@andromache: Thanks for your reply - what you suggest does sound sensible. I think I'll hang on till March and investigate alternative savings accounts in the meantime.:beer: