Student Loans Company

sarah3891

Hi there,

I was just wondering if anyone had any advice on repaying student loans. I have a loan with the SLC from university at a balance of approx £9200. I currently make the minimum repayment each month from my salary at about £80, but taking into account the interest, i'm paying off very little pver the course of a year.

This is one of those things that as a student, you can 'ignore' because 'everybody has them' but now i'm working and living in the real world i'm quite keen to repay the debt asap.

I can only afford to save (after graduate loan repayment/mortgage etc) about £200 each month, but in setting myself a 4-year plan to be 'debt-free', I calculate I can have the money repaid in that time if I make additional repayments of £100 each month, leaving me £100 to save.

The thing is, a lot of people I have discussed this with seem to think the money would be better 'saved' as the interest on the SLC is lower than that of an ISA (not sure if this is correct?) so I just wondered if anyone had any experiences/thoughts about this etc? I just hate having the debt hanging over my head?

Thanks guys x

Iriahm

Hi, my student loans are my lowest priority in my list of creditors. I realise that it is accruing interest but i've got other debts higher up priority list. Also in a perverse turn I tried to pay back the loans when I got my first job and was told that they couldn't accept payment as the "new computer system" wasn't working! LOL!

i'd sit down and work out your most expensive debts.....use the snowball spreadsheet to do this....hopefully someone will post the link for you! and then it calculates a debt-reducing programme. genius!

sarah3891

Ooh that's very sneaky of them!!! 'Computer problems' eh?! Naughty naughty.....

Thanks Iriahm, I shall try and get hold of this snowball link!! :-D

Kal

http://www.whatsthecost.co.uk/snowball.aspx

raw

Hi Sarah,

Im also in the same situation completely debt free dapart from my student loan and saw an article in the Daily Mail a couple of days ago saying you should clear this debt as soon as possible.
I was always under the impression you were better off letting them take the minimum payments and if you use Martin's concept of the 'savings fountain' you should be getting maximum interest on your savings.

Can anyone clear this up?

jonnydoe

Yes that is true, if you have a mortgage or other loans pay them off first and leave the student loan at minimum payments. It's all numbers at the end of the day, Also savings are a good idea, 5% ISA is more than the 3.2% you pay on the student loan

lady_fuschia

I didn't see that DM article- anyone know whether its online somewhere? Might be a good one for a lot of us to read.

sarah3891

Yes, i'd also like to have a read!

angela110660

Here is a link to the article:

http://www.thisismoney.co.uk/saving-and-banking/student-finance/article.html?in_article_id=410559&in_page_id=52

raw

The article I was referring to was in Wednesday's DM under the Money Mail section called 'Clear that college debt', (I havent found this on https://www.thisismoney.co.uk) it was saying how to become debt free within their 5 year plan, describing the average graduate with a student loan, overdraft, credit card and personal loans.
When talking about the student loan it says that 9pc is taken from your pay cheque each month when earning over 15k, it describes that you should set up standing orders to the student loans company to pay off as much as you can possibly afford.
Is this what everybody recommends?

My understanding is that the interest on the student loan is the same as the inflation rate
Should we stick to Martin's Money Fountain and earn as much as we can on our savings?

Everest

The DM article that I read (on Factiva - I am NOT a DM reader!) suggested that Student Loans could soon be disclosed to Equifax (credit rating agency) as part of the calculation of a person's credit rating. At the moment this debt is not included as it is a loan from the taxpayer rather than from a company. Were they to be included in your score, that you have a student debt and the amount of that debt, it would have an effect on your ability to secure other credit. This however should not change the way you pay down your student loan. The only time you should pay this off is when you can't help it (ie it comes out of your pay cheque each month as a deduction), or when you can't get a higher interest rate from a savings account with the money you keep back rather than use to pay the loan off or indeed you are paying interest on higher interest debt. In the circumstances where you can save more, or make more money by not paying more towards your student debt then thats what you should do.

Admittedly if having debt bothers you a great deal - I know people who are well off, and yet still get terribly worried by their student loans - then if it makes you happier to be rid of them by all means. There is a trade off between higher returns and happiness. But if you can live with it, keep the student debt as long as possible, invest that money which you would have paid it off with or get rid of other debt (credit cards, bank loans etc).