Struggling to understand why i would not pay off student loan early?

ChrisCostCutter

Hi All,


I have been through a long battle to clear debts over the past few years (cc/od's/loans) and I am now near the end of my journey.


I have now no outstanding debt apart from my mortgage and my student loan.


I am seriously considering trying to clear my student loan which only has about £550 left on it, however the clear consensus from this forum is to let it run its course as its a cheap debt.


I don't understand the logic behind this as a 0% interest credit card is a cheap debt yet its viewed differently.


Is it daft of me to push myself to get it cleared in next two months as it would essentially add another £100 a month to my wage?


Just looking for different opinions on this


Thanks in advance

rugbychick81

It won't make a lot of difference to interest either way given that it's nearly paid off anyway. Just pay it and put the payments on your mortgage. That will make a difference. Assuming you can make overpayments that is!

Pixie5740

If this is your final year of repaying your student loan and you're still repaying through PAYE rather than switching to direct debit, then even if you make overpayments, the £100 will still be taken until SLC catch up. This means that you could continue to overpay by £100 for months and then face having to clas it back. It's up to you though.

maria3104

Congratulations. You have done amazing.

I would overpay mortgage if I could, as the hassle with student loan company getting refund etc is such a pain, I would just let it run.

ChrisCostCutter

Thanks all. Yes you are all 100% correct, I need to actually call the student loan company and stop the PAYE method of payment.


I think I will try and get rid of the student loan debt before defo starting to pay more to the mortgage!!