Student Loan

hbl_2

I was speaking to a friend of mine at the weekend who is a banking advisor and he said that repaying my student loan ahead of time wasn't a good idea.

His argument was, say I repay the £10,000 or so which is accruing interest at 2.33%, and then what if I need £10,000 further down the line - and the only loans are at 5-7%? His advice to me was to just save what I would otherwise repay, and not pay anything more than what gets taken out of my paycheck each month. The reason being is, invested properly, the same money can offset the interest.

I get all my best financial advice at parties...

AddieH

It's the strategy I'm taking, I could pay my student loan off now, but it doesn't make sense to, I'm saving for a deposit for a house at the moment and making the money work better for me by keeping it in a high interest account.

As long as you are paying enough a month to be paying some of the principal, I'd say carry on doing that because as your friend says you'll never get a loan with as generous a rate as a student loan again unless you're borrowing from very kind family or friends!

Sillychuckie

Agreed.
It isn't rocket science. I'll be paying mine off as slowly as humanly possible, even though I didn't even need one in the first place and could pay it back right now.
Student loans are great.

regularsaver1

same as me

lightspeed

I took out the full amount over a four year period and blew approx 5K out of 12K on going out, a new car and many smaller treats. Some of it was used to finance running my car and some was saved.

All in all, i left uni with about 2 - 3K of my 12K loan. I got my first full time job almost immediatly and forgot about it. Since then, i managed to save enough to pay off the loan in full, however, i decided to buy a house this year and that 12K that i had saved went a very long way to securing a house that i wanted opposed to one that i could afford using just my salary.

Yes, i am about 11K in debt now, but at a rate of £50pm which comes straight out of my wages (so really i never had it) i am glad that i used it to pay a deposit on my house.

I believe that there are only 2 loans you should have in your lifetime, a mortgage (because the average person will never realistically be that cash rich) and a student loan (because its the cheapest and most flexible loan you will ever get and if used wisely, it can become very useful).