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silvercar

journeyman2 said:

Hi there

just want people’s take on this old conundrum 

I have 16k left on my student loan at an interest rate of ~6 %. Is it worth paying off a large chunk of this or paying down the mortgage (currently at a much lower interest rate and no renewa for a few years) ?. 

Paying it down will give me more disposable income and quickly get rid of a high interest debt.  If I continue as it stands I’d probably pay this off within 5 years. 

Many thanks! 

If you are confident that you will end up clearing the loan, including the interest, in the next 5 years then it makes sense to clear it earlier if you can afford to do so. The other question is what would you do with the money if you didn’t spend it on clearing your loan? Would that be more beneficial to you?

You won’t have more disposable income until the loan is cleared, reducing it just means you will clear it earlier. Your monthly repayments are determined by your income and don’t change by any partial loan repayment you make. They are 9% of earning over the threshold, irrespective of any partial loan repayment.

tinsoldier

I have 3k left on my plan 1 student loan, currently costing 6.5% in interest. I'm 40 and will almost certainly have to pay off the full balance in due course (the only circumstance would be if my earnings reduced drastically, which is very unlikely). I could afford to pay it off now from savings, none of which are earning in excess of 6.5%. So am I right in saying it's a no brainer for me to pay it off now rather than let me salary deductions run their course? Or is there anything I need to consider that I've missed?

Tucosalamanca

I would pay it off and redirect the usual salary deductions to a regular saver account. You'll replenish the savings and benefit from a decent interest rate. It does seem like a no brainer to me.

StudentLoanQuery945

I have £~18,000 in student loans from plan 2 remaining. This is split between a year of a normal course when I was 18 and then an NHS Course before the fees were re-introduced (with a gap between the two stints at uni). Do I have two separate wipe dates? Or will my entire loan be wiped 30 years after the first year at uni, or after I finished my degree when I went back to do the NHS course?

Knowing this will allow me to decide whether I will pay it off before the wipe or not. 

Savvy_Sue

StudentLoanQuery945 said:

I have £~18,000 in student loans from plan 2 remaining. This is split between a year of a normal course when I was 18 and then an NHS Course before the fees were re-introduced (with a gap between the two stints at uni). Do I have two separate wipe dates? Or will my entire loan be wiped 30 years after the first year at uni, or after I finished my degree when I went back to do the NHS course?

Knowing this will allow me to decide whether I will pay it off before the wipe or not. 

I think you'd have to check with them, but do you get one statement, with one loan showing? Or do the two different elements show on your statement? 

If it's one statement, with one loan showing, logic tells me that it should all be wiped after 30 years. But logic isn't everything. And if you either have two statements, or two loans showing on one statement, then I'd expect you to have two wipe dates. 

Ed-1

StudentLoanQuery945 said:

I have £~18,000 in student loans from plan 2 remaining. This is split between a year of a normal course when I was 18 and then an NHS Course before the fees were re-introduced (with a gap between the two stints at uni). Do I have two separate wipe dates? Or will my entire loan be wiped 30 years after the first year at uni, or after I finished my degree when I went back to do the NHS course?

Knowing this will allow me to decide whether I will pay it off before the wipe or not. 

Loans for different courses have different statutory repayment due dates (SRDD).

Each loan is written off 30 years after its SRDD which is the April after leaving each course.

RosieAnn

Hi, 
I appreciate there are similar posts about this but would be grateful for people’s advice. I have around £11,000 left of my student loan and on Plan 1 with current interest at 6.25%. My SL repayments every month are £348 per month. My salary is likely to stay at this level for next 3 years. I have a cash ISA (£10,000) that is maturing in October 2024. I am considering repaying my SL with the cash ISA. The best fixed rate I can get at the moment is around 5% (fixed rate cash ISA). My reasoning for paying it off earlier is i would use the extra disposable income (£400 pm) to drip feed into my S&S ISA for next 1-2 years. Then likely would use the extra in once for nursery bills. Otherwise if I don’t use the cash ISA, I will just re open another cash ISA for a year. I have an emergency fund and other savings, so I do not need access to the money.

Do you think this makes sense? As over time I am likely to accrue more interest if I continue to pay regular instalments, compared to paying it off earlier and reinvesting into S&S ISA (appreciate there is a risk of S&S and how I may not get over 6% interest). I can’t see the interest for SL dropping below 6% any time soon. I imagine there isn’t much in it, either option.  

silvercar

RosieAnn said:

Hi, 
I appreciate there are similar posts about this but would be grateful for people’s advice. I have around £11,000 left of my student loan and on Plan 1 with current interest at 6.25%. My SL repayments every month are £348 per month. My salary is likely to stay at this level for next 3 years. I have a cash ISA (£10,000) that is maturing in October 2024. I am considering repaying my SL with the cash ISA. The best fixed rate I can get at the moment is around 5% (fixed rate cash ISA). My reasoning for paying it off earlier is i would use the extra disposable income (£400 pm) to drip feed into my S&S ISA for next 1-2 years. Then likely would use the extra in once for nursery bills. Otherwise if I don’t use the cash ISA, I will just re open another cash ISA for a year. I have an emergency fund and other savings, so I do not need access to the money.

Do you think this makes sense? As over time I am likely to accrue more interest if I continue to pay regular instalments, compared to paying it off earlier and reinvesting into S&S ISA (appreciate there is a risk of S&S and how I may not get over 6% interest). I can’t see the interest for SL dropping below 6% any time soon. I imagine there isn’t much in it, either option.  

It’s all crystal ball territory.

How many years before the loan is written off? Is there any chance you will reduce your working hours/ take a sabbatical/ any other reason why your income may drop? Are you likely to take out a pension or take advantage of nursery vouchers? I don’t know how the latter work, but both vouchers and pension contributions are salary sacrifice and so reduce the income considered for student loans.

If you are confident on future income and happy to assume student loan thresholds and interest rates are the same as now, then it is a case of which has the higher interest rate. Always remembering that any overpayment cannot be returned to you. Also remember that ISAs are tax free interest that you could chose to take (or consider) as part of your monthly income.

dadrafiqy

I'm about to start in January and am wanting to apply for a loan now.

My query is can I decide the amount so if my parents want to pay part of the tuition then I only need to apply for the remainder. And can I apply before each term for a loan amount for that term or is it just once per year?

I shouldn't need a loan this year for accommodation but in the future I might as my parents are moving abroad in about 18 months. I can apply for that before each year/term?

Thanks for all your advice.

silvercar

dadrafiqy said:

I'm about to start in January and am wanting to apply for a loan now.

My query is can I decide the amount so if my parents want to pay part of the tuition then I only need to apply for the remainder. And can I apply before each term for a loan amount for that term or is it just once per year?

I shouldn't need a loan this year for accommodation but in the future I might as my parents are moving abroad in about 18 months. I can apply for that before each year/term?

Thanks for all your advice.

You could take the loan and repay what you don't need. Loan applications are made once per academic year.

You can change what you apply for each year. 

I would read up on whether you are likely to repay all the loan, if not it may make more sense to take as much as you can.