Lower repayments on student loans

waterbaby

The amount you can earn before you have to make repayments is going up on 6 April, from £10k to £15k. That means that my payments reduce (as they are based on 5K instead of 10k), and I will keep an extra £30-£40 a month.

If I carry on repaying at the minumum possible, it will add another 3 years (estimate) until it's gone. As the interest rate and outstanding balance are higher on the mortgage, it seems to be sensible to accept these 3 years, and channel the 'extra' money into the mortgage instead.

I know I can pay more off my student loan voluntarily, but it doesn't seem to make sense to do that when the loan is cheaper and smaller than my mortgage.

Also, the loan gets cancelled if I die or become disabled. If these were to happen, money I had paid into the loan voluntarily would be 'wasted', whereas my partner would have the benefit of the reduced mortgage debt if I paid it into the mortgage.

Does anybody have any thoughts on this?

moggins

Personally I'd pay them as little as you possibly can, but then I am biased as they are forcing us to pay £65 a month and would not accept any less! This is on a £4K student loan.

We willingly offered £50 as this was the maximum we could afford but they wouldn't accept it. I'd say definitely pay the extra off something else.

Robert_Sterling_3

Waterbaby. You are right.

ey_up

Yes - always pay the least you can.

Credit ratings are not significantly effected an its the cheapest loan option. Anyone who doesnt take out the full loan available to them when they get given the option is crazy. Even if its only to be put into savings acounts and risk "free" investments, the benefits far outweigh the problems.

Keeping your payslips as a precaution against these payments that are going missing and your sitting pretty!

Walletwatch

waterbaby wrote:

The amount you can earn before you have to make repayments is going up on 6 April, from £10k to £15k. That means that my payments reduce (as they are based on 5K instead of 10k), and I will keep an extra £30-£40 a month.

If I carry on repaying at the minumum possible, it will add another 3 years (estimate) until it's gone. As the interest rate and outstanding balance are higher on the mortgage, it seems to be sensible to accept these 3 years, and channel the 'extra' money into the mortgage instead.

I know I can pay more off my student loan voluntarily, but it doesn't seem to make sense to do that when the loan is cheaper and smaller than my mortgage.

Also, the loan gets cancelled if I die or become disabled. If these were to happen, money I had paid into the loan voluntarily would be 'wasted', whereas my partner would have the benefit of the reduced mortgage debt if I paid it into the mortgage.

Does anybody have any thoughts on this?

You are right for the first reason itself, but the second one is a killer (forgive the pun ;-)

Good thinking though - hadn't even thought of the benefit from the "death or disability" point of view !!!