Paying off the Student Loan

Everynamestaken

Hi all, I am in the third and final year at university, but discussing at the moment whether to pay the loan I owe off straight away or just to leave it.

I owe just over £7,600 (was just over £7,400 before interest), and that is just from the first year as I decided to pay the 2nd and 3rd year tuition fees off myself, and live at home reducing the size of the loan when I have graduated.

Now, I had a brief read through it the other day and my understanding was that I can pay off 'large chucks' of the debt if I wanted. Would it be beneficial for me I reduce the money I owe (to say half) or just pay the whole thing off?
Although it is an exceptionally low interest (and I wouldn't find interest as low as this on any other loan), I am just not keen on having debt tied to me for a long period of time. Having said that though, If I payed the 7 and half thousand off, and despesperatly needed cash (can't think of anything I would need, but the situation could change), I would have to borrow, and then in turn, the interest would be alot higher than the student loan, consequently leaving me worse off than I was before.

What are other peoples opinions regarding this?
Am I best off leaving it as just a little debt that 'makes the odd noise' and 'niggle' from time to time, and keep that money I could pay off the debt to put in high interest saving rates, or Should I just pay it off and "start from scratch" as a debt free graduate?

Thanks for your advice in advance
Rich

olly300

If you are in your final year wait until you get a job before deciding.

Mr_Warren_2

On this site Martin has commented that student loan could be kept for life, paying the minimum amount at each time. At age 65 the loan would be cancelled.

Taiko

Don't pay off extra, especially as the interest rate is currently 0%.

vaporate

Mr_Warren wrote: »

On this site Martin has commented that student loan could be kept for life, paying the minimum amount at each time. At age 65 the loan would be cancelled.

Which is why I will never pay it off.

All going to bonds, savings account etc in the future.

paulfei

I would not pay the loan off, as previously mentioned the interest rate is 0% at the moment, and if you can invest the money in a high interest account you'll be better off in the long run (in theory). It's best to let it pay itself off, chances are with such a small debt it won't take long compared to most other people anyway.

whitfreak

Keep them, and save them if you dont need the cash for anything else. It should be quite easy to find a savings account paying more interest than the government is charging you.

Another thing to consider is that student loans repayment is purely income based.

If you pay it all off, then take out a loan for a car to get to work (for example) its going to cost you more, and put you in a riskier position. Lose that job and the bank will still want its money back, SLC will just wait and not charge you anything as you're earning less that £15k.

So say you're living at home (with your parents I presume), I was in the same position and when I moved out as I got a job the other side of the country I was glad to have a couple of grand saved up (slc cash really) to ease the move. Sounds alot, but 6week deposit + 1 month rent in advance, £100 letting fees, and then generally living for a month as I get paid a month in arears, and so on.

And as you are just graduating your loans will get written off in 25 years anyway (damn new-new scheme students), so you dont have to wait until you are 65.

Stubert

whitfreak wrote: »

And as you are just graduating your loans will get written off in 25 years anyway (damn new-new scheme students), so you dont have to wait until you are 65.

That's ridiculous! Students starting in 2006/7 i.e top up fees only have 25 years to pay it all back despite having much larger fees than those starting before top up.

I guess I probably got the best deal out of the system though as I started year before top ups, but was then able to take advantage of tuition fee loan when that was introduced in 2006 (for 3 years of my 4 year degree).

Masomnia

Stubert wrote: »

That's ridiculous! Students starting in 2006/7 i.e top up fees only have 25 years to pay it all back despite having much larger fees than those starting before top up.

Not quite. The loan is written off after 25 years, so a bit nicer

Stubert

That's what I meant, just worded poorly!

My point was generally they will have more to pay back, but in a lot less time. Thus meaning the Gov. loses out on a lot more cash.

Masomnia

Stubert wrote: »

That's what I meant, just worded poorly!

My point was generally they will have more to pay back, but in a lot less time. Thus meaning the Gov. loses out on a lot more cash.

Oh right, sorry. Yes it does, more fool them I suppose.