student loan

winkle1

I have deferred my student loan for the past 5 years and they have just written to me to ask me to start paying it agian. is it worth me doing this or saving the money and paying it in one lump sum or one-off over payments? i have accrued £1000 in interest which KILLS me to think off!

can you pay it off monthly and make big payments yearly as well?

ps i am on the old scheme where it doesnt come out of my wages.

CLAPTON

presumably by deferring your student loan you gained greater value than the 1000 in interest? otherwise why did you do it?

in general you can invest the equivalent money at a higher rate than 2.6% (the current rate of interest) so in financial terms its better to save the money in the highest interest rate saving a/c rather than pay it off.

winkle1

clapton i am ashamed to say i deferred my student loan for no other reason then to have more money to spend on myself *hangs head in shame*, before i discovered this site. although last year i put the extra money towards paying off my graduate loan.

i'm not sure what to do! what are others doing?

CLAPTON

i hope you enjoyed spending the money but regret nothing but learn from mistakes ..

if you are reasonably well disciplined then defer and pay off higher interest rate loans, or save the money in a high interest rate a/c (an ISA if you don't already have one) but if the money will be frittered away then don't defer and start paying it all back.

Jarlawuk

winkle1 wrote: »

I have deferred my student loan for the past 5 years and they have just written to me to ask me to start paying it agian. is it worth me doing this or saving the money and paying it in one lump sum or one-off over payments? i have accrued £1000 in interest which KILLS me to think off!

can you pay it off monthly and make big payments yearly as well?

ps i am on the old scheme where it doesnt come out of my wages.

Yes you can pay monthly as well as making extra payments. But the monthly payments get held by your employer till the end of the tax year before they pass it on. So that means they earn interest off you and the Student loans company earn more interest off you as the capital doesn't reduce.

In my case they only deducted £16 from my wage but were charging me £22 per month interest. :mad: Rip off merchants, need to pay mine back asap

winkle1

i think its best if i just pay it off

thanks for the advice

angeldeelite

well i'm currently being charged £50 a month interest on my student loan. Haven't paid any baack yet as never earned enough. the amount i earn now means i'll pay just £15 a month back - yet it will keep going up by £35.

so tell me, what's the point? I might aswell just defer and put that £15 to a debt that is actually going to decrease. I plan to just put it in my savings account each month then pay my overdraft off with it next year.

winkle1

hi angel

for you it would be best to pay off the other debts first as they will have a higher rate of intesrest.

fallenwiccan

im guessing this is the fun i have to come as im just building up my student loan now

unfortunately i'm being hit by the top up fees so although im lucky and it'll be linked to my income i'll come out of university with 2 student loans

one for £12,000 and then my maintainance loan which i estimate will be at least £15,000 probably more, i think i'm going to try and start saving what i can to pay it off when i leave but its hard enough having money to just live on!