Pay off all student loans in one go? If not, the interest will keep building up.

maz_student

Please can someone help me.

I have about £10,000 saved up.
Regardless, I still took out a student loan so that I can pay my tuition fees and accommodation at university.

Whenever I get the statements from the Student Loans Company, from what I can remember, I think about £10 interest is being added every month (so basically the amount is building up).

What would you do if you were me?
Is it a good idea to pay everything off in full right now?
Ive never been in debt. This is the only debt I owe.
If I leave it and pay the debt when I start working, then the monthly £10 is still going to accumulate....id much rather get it over and done with I dont see any point in putting it off: I have money saved up anyway.

HOWEVER, this is why I cant decide:
I have about £10,000 saved up. Im saving up as much money as possible (for the deposit of a house).
So should I :
a. Pay back the £3000 and be done with it
b. let the £10 montly interest accumulate. And instead continue saving for the deposit of a house.
c. (same as option 'b' - "continue saving for a deposit"). Then, when ive eventually bought my house and am in a better financial position, then I can pay off all my debts in full
**Are there any other options which I can do?**?

My main concern: If I pay off my university debts in full, then instead of having £10,000 saved up, I will have about £7000 (which is hardly anything). The reason im desperately saving money for a house right now is because the house prices have come down and i want to get onto the property ladder ASAP

I would like as much advice as possible
I'm sure that others will also benefit after reading this thread (I doubt im the only person in this position).

Thanks.

wantabetterlife

If u check the Student loans co website you will see that the interest on all loans is now 1.5 % which is pretty low. i would keep saving

urg123

Hi

I understand your dilemma. As this is the cheapest lending you'll ever get (and it doesn't go on your credit record) I would overpay by a little every month to reduce the interest and the overall amount.

I had been overpaying my studnet loan but had other debts so I went back to paying the minimum (I've got the old style of loan which has to be paid back within 60 months).

This means that if you can use your savings for things that you need without having to take out other credit.

Hope this helps.

Gemmzie

Keep your student loans and your savings, just pay the minimum out of your salary. It's good debt.

theoretica

I would advise you not to pay off the student loan, but to make sure that your savings are earning as much interest as possible (and you have signed for tax free interest). It should be possible to actually earn money through having a student loan by earning more interest on the savings than you are paying the loans company, and you keep your options open for house buying. This is a form of what is know on this site as 'stoozing', you might want to look it up!