£35k student debt - need help

scott_2-2

Hi people,

I am £35,000 in debt from my studies.

£10,000 is from a student loan, £25,000 is from a HSBC professional studies loan (interest is about 1% above base rate)

With all things going to plan, I should be starting work this September.

What I would like to know is, are there any ways I can pay this loan off any quicker?

RE: HSBC loan - was thinking of taking out loads of credit on credit cards @ 0%, putting it in an ISA etc, then transferring the interest to HSBC and giving the money back to credit card co.

What are your suggestions?

I am 23yrs old. I am very concerned I have this huge debt which will take years to be repaid, then I have to save for a deposit on a house, then get a mortgage. By the time I can get a mortgage I'm going to be about 35 - which is years away. :-[

I really want to discharge this debt asap. I am good with money, and this debt is not incurred frivilously.

Thanking you in anticipation

Scott

Maddie

Hi Scott
I'm afraid I can't really offer any advice on the debt, but seen as you seem not to be getting much help on this board, I would recommend you re-posting the message on the Loans and Debts board. Hope that helps!
Maddie

System

Thanks Maddie,

Much appreciated

Scott

System

stop buying records and spending money on trips to nightclubs

trafalgar_2

stop buying records and spending money on trips to nightclubs

It might help if you read the posts fully ;D


"I really want to discharge this debt asap. I am good with money, and this debt is not incurred frivilously. "

Margaret_Millne

We once stayed at a University Halls of Residence out of term time - good cheap accomodation.

We got chatting to the barman in the Students Union Bar, and he told us how much they took a night in there.

I then asked my brother, who used to be a student, how students could afford to spend so much in the bar.

His answer "they can't afford it, they just don't know they can't afford it".

arbitrajeu

With all the cross-posting, etc, I don't know if you've already received advice, but I'll add my two penn'oth (without being judgemental).

Given your high level of existing debt, and relatively limited credit history, you are unlikely to get a high enough credit limit to dent your loan balance. Also, you need to have a plan for repaying the 0% balance too - could you pay off part of the loan to save interest, then borrow it back at the end of the 0% period to pay the card balance? To check your credit history, you might like to apply to Experian and Equifax for your Statutory Credit Report, to see if the HSBC loan is on there - we know from other threads that a lot of HSBC borrowing doesn't make it to the credit reports. If it's not, you may have a better chance of getting 0% cards, if your salary is high enough.

Another thing you could try is to ask the Student Loans Company if you can defer repayment of your loan, or repay over a longer period. This way you could focus your funds available on repaying the HSBC loan. The just might be willing to do this for you, if the risk is that you default (or disappear) otherwise. Worth a try.

Finally, and it's a long shot, you could ask your parents to remortgage their house for an extra £35k on a discounted rate and pay it back to them. Secured loan rates are usually much better than unsecured ones, even though your HSBC loan seems very competitive.

Margaret_Millne

I wasn't being judgemental - just retelling a story.  Anyway, I though part of the University ethos was "work hard, play hard".

Your debts are quite high, but with manageable interest rates, and you are unlikely to get better ones.

The 0% credit cards sound a good idea, provided you can be disciplined enough to use them for the purpose you intend, and not to build up more debt.

Only get as much from these as you can manage to pay back within the 0% time scale.

Getting low interest rates and using them in this way does really help.  Before finding this site we had 2 credit cards, both at high street interest rates, and we were struggling to meet the repayments.

We now, about 8 months later, have all our credit card debt at 4.9% or less, much of this at these rates for the life of the balances.  Now we are managing to make real inroads into the debts, instead of just holding our heads above water.

Hope this helps.

arbitrajeu

I wasn't being judgemental - just retelling a story.  Anyway, I though part of the University ethos was "work hard, play hard".

Sorry MM, I wasn't referring to you. It was John Smith's comment above...

Galstonian

You really are not in such a bad position and you seem to have come through studying and incurring debt with a haelthy attitude towards it. I assume you are working and that like John Smith suggests that you have prioritised your spending (assuming it was a serious suggestion). I suggest you look at exactly what your debt is costing (about 1% over base?) and if you are going to try and find other ways to pay you loko at exactly what they might cost. 0% credit cards may be a useful tool but, it is not a guaranteed long term rate since the best offers are usually only up to nine months -getting decent credit limits and multiple cards can be hard at the age of 23 when you have little history, often multiple addresses, you're not always on the electoral role and have no major assets (i.e. property). Like MM says, if you get a 0% card then work out how much per month you can pay towards it then take only that much over the term (e.g. you think you can pay an extra £200/month for 9 months so transfer £1800). The smaller interest rate does make a difference but so do the overpayments and I think that is what you should concentrate on until your financial credibility is established. You may even be better saving the money instead of paying of the debt - if you can secure a savings return (after tax) that is more than you pay on the debt then saving the money allows you the flexibility of building up a sum for emergencies while ebing able to pay off the debt if you so desire. You can put up to £3000 per year into a cash ISA and rates must be close to what you are paying in interest.

Consider where you might be. You could have failed or dropped out or you might, as so many people seem to have done, have become so accustomed to being in hock that you think this is a natural state of affairs. You could have joined the massed ranks of the population whose debts will always be more than their assets.

arbitrajeu

You may even be better saving the money instead of paying of the debt - if you can secure a savings return (after tax) that is more than you pay on the debt then saving the money allows you the flexibility of building up a sum for emergencies while ebing able to pay off the debt if you so desire.  You can put up to £3000 per year into a cash ISA and rates must be close to what you are paying in interest.

I think the best cash ISA is offering 4.6% at the moment. If 1% over base refers to BoE base, then that's at least 5% (soon to be 5.25%), but if it refers to HSBC. Do you think the 0.4% net cost is worth the emergency fund?