Student Loan Debt

gazfocus

Hi all,

I went to university for 4 years and as a result have a student loan debt (all through the student loans company) of around £20,000. When I'm trying to pay debt off, should I include this or should I just continue paying this through my wages, safe in the knowledge that if I lose my job, etc, I don't have to pay it?

Tixy

Focus on repaying any other debts first.

If you get to the point where you have repaid all other debts and built up some emergency savings you then need to think whether its worth considering repaying the student loan debt quicker or building up more savings.

I think it rarely makes sense to overpay a student loan.

dreamdreamer

Martin has a good guide on this here. I'm in a similar dilemma myself. I only have about £2k left to pay and I really want to pay it off so it's just gone (I have the savings sat there) but I know it makes no financial sense. Still it feels weird to be repaying debt each month with savings sat there that could pay it off. It makes my DFW head hurt!

jackieblack

Stop thinking of it as a debt and try and think of it as a salary deduction (albeit it one with an end date).
Would you be so keen to pay a lump sum off your NI or Income tax in advance?

Newyorkdreams

Does the student loan not have an interest rate attached to it though? I know it's low (when I paid mine it was about 4%) but more than what your savings would be getting in a savings account.

jackieblack

Even if it's attracting 4% interest, that's a better rate than you're likely to get on any other loan. If the money can be 'better' utilised elsewhere (deposit for a flat/house, for car to enable you to get to work, rainy day fund in case of redundancy etc) , then it makes little sense to pay it off early.
If the amount is so small that you could pay it off from savings and still have a decent 'contingency' fund then that's a different matter.

BristolBob

Depending on when this loan was acquired the interest is only likely to be 1.5% and I think all payments for the year are taken off before the interest is calculated. So my interest (on about £13k) is about £200 a year.