Student Loans payment dilemma

kb42

Hello

Apologies if this query is already answered elsewhere in the forum - I've had a good look but can't find any relevant info.

I have a student loan (I started uni in 1999), the balance of which is now £18 000. I'm quite happy to not make any payments on this (except what comes out of my wages), as I'm now 28 & the calculator on this website tells me that I'm not going to pay it all off before I turn 65.

However, a relative has offered to make extra payments on my behalf, on the condition that I match their payments AND pay them back (at a later date) the exact amount that they pay for me but completely interest-free (i.e., not even the inflation-rate interest that's accruing on my student loan). I've tried to explain to this (very kind!) relative that it's not necessary, a student loan doesn't affect credit ratings, the interest is the base rate, etc, etc... However, the offer is still there.

I'm not sure if it's better to refuse & keep paying the minimum on my student loan until it gets cancelled at age 65, or to accept & pay both the SLC & (in a few years) my relative but at an interest-free rate.

Any advice would be much appreciated! I'm not sure which would be the most economic option. I'm inclined to refuse & put the extra cash in a high-interest savings account, but I'm not sure that it wouldn't be better to accept & start changing part of my student loan into a guaranteed-zero-interest loan that I can pay back in my own time...

Opinions?

Thanks very much in advance!

CLAPTON

however did some-one starting uni in 1999 build up a 18,000 student loan?

kb42

I know, it's quite a bit - my course was 4 years not 3, plus I've been doing a Masters & working on various volunteer/very low-paid research posts for 4-5 years after I graduated.

olly300

Use your relations money for other things.

Pay your student loan off as and when you can afford it. At the moment the interest rate is 0%.

CLAPTON

you say he will make extra payments and you will match them... can you afford to match them

you will repay him later
-what happens if he dies... will the loan become immediately repayable or what
-what hppens if your financial circumstances worsen and you can't afford to make any repayments

and as its not casuing you any problems now, so if its not broken don't fix it

olly300

OP I'm sure you have read this so read it again:
http://www.moneysavingexpert.com/loans/student-loans-repay

Especially the part on "Should I pay my loan off early?"

greamjohn

Hello All.
This is John new here. I am in 4th year of IT engineering and I have planned to do Masters in Computer Science. The fees for Master's degree are very high and My papa can not effort me for such a high amount. I would like to know about bank loan and repayment of it.

Poolie

CLAPTON wrote: »

however did some-one starting uni in 1999 build up a 18,000 student loan?

Fairly easily. 3 years of maintenance loans at £3k+. It could have been a 4 year course like mine was. Obviously interest from first payment would be about right.

kb42

Hi guys

Thanks for the replies. Yes, I had read the relevant section on the website. However, as my situation would only partly being extra repayments, & partly changing the student loan to a long-term zero-interest set-up, I felt in need of additional advice. Thanks all!

oscar_the_grouch_2

I'm currently living overseas and even though my salary provides a nice standard of living it is below the GBP threshold to require paying my loan back. So I agree that defering it if you don't have to pay it back is sensible.

olly300 wrote: »

OP I'm sure you have read this so read it again:
[the link from the post above]

Especially the part on "Should I pay my loan off early?"

Is this still true even though loans have been sold on to a third party (can't remember the name of the company off the top of my head)?

Poolie

The Sales of Student Loans Act was made law and they are looking at the possabilities of selling more parts of the Student Loan book.