Student Loans - repayment strategy?

Worble

Hi,

First time on the forum but I have used the site and forum for a long time for advice.

I've read the guide for student loans and calculated my predicted repayment over 25 years based on my pre-2012 Loan.

It suggested I would be repaying £28k (roughly) and I currently owe £22k. I would appreciate any advice on whether it is worth paying back bigger chunks or all of it or no additional repayment in such a situation to reduce the predicted £6k difference in repayment.

Is it really worth it considering the low rate of interest and the fact it means I have more money saved whilst I am young and perhaps saving for a housing deposit? The article on the site suggests this is the view to take but I have been told elseware that paying off chunks can benefit me. How and why?

I appreciate any feedback you can give and also appreciate additional articles you may suggest I read as a source for your thinking.

Thanks,
Ben

Worble

Follow Up: So what am I actually paying per month?

thesalarycalculator suggests the amount is tiny per month even on a £23k a year wage (I'm not currently).

I thought it was 0.9% of the difference to £17495 per month? Or is that per year?

I'm so confused.

rtho782

9% of whatever you earn over the threshold, you're plan 1 so it's over £17495 as you state.

Listentotaxman calculates it for you. You should be paying £41 a month.

https://listentotaxman.com/23000?plan=1

CLAPTON

Worble wrote: »

Follow Up: So what am I actually paying per month?

thesalarycalculator suggests the amount is tiny per month even on a £23k a year wage (I'm not currently).

I thought it was 0.9% of the difference to £17495 per month? Or is that per year?

I'm so confused.

you pay 9% of the amount over 1,457 per month (which is £17,495 per year)

currently the interest rate is only 0.9% per annum
so if you can get a better savings rate than 0.9% per annum then save
if not then repay
however, if you are saving for a house deposit then you may wish to do that to build a deposit more quickly

personally I would definitely save rather than pay off; make sure you find a good savings a/c to maximise the interest earned

Worble

Thank you for the feedback and I will certainly follow the saving strategy.

One important thing I noticed is that my repayments are taken yearly and not monthly and are very low. I've found a few sources suggesting I would be debited yearly and that it would be low but can someone confirm if this is correct?

I think I am due to pay £90.45 in December this year which is what the sources I checked say.

However the reply above suggested monthly and a lot higher.

Maybe it could be that I am on the old style loan from pre 2012 and monthly is post £9k student fees? I only paid the £4k a year fees.

Ed-1

Worble wrote: »

Thank you for the feedback and I will certainly follow the saving strategy.

One important thing I noticed is that my repayments are taken yearly and not monthly and are very low. I've found a few sources suggesting I would be debited yearly and that it would be low but can someone confirm if this is correct?

I think I am due to pay £90.45 in December this year which is what the sources I checked say.

However the reply above suggested monthly and a lot higher.

Maybe it could be that I am on the old style loan from pre 2012 and monthly is post £9k student fees? I only paid the £4k a year fees.

If you are paid monthly, your employer deducts 9% of your wage over the monthly threshold of £1457.92. So earn £1600 in a month and your employer will deduct 9% of £142.08, so £12 (as student loan repayments are always rounded down to the nearest whole pound).

CLAPTON

Worble wrote: »

Thank you for the feedback and I will certainly follow the saving strategy.

One important thing I noticed is that my repayments are taken yearly and not monthly and are very low. I've found a few sources suggesting I would be debited yearly and that it would be low but can someone confirm if this is correct?

I think I am due to pay £90.45 in December this year which is what the sources I checked say.

However the reply above suggested monthly and a lot higher.

Maybe it could be that I am on the old style loan from pre 2012 and monthly is post £9k student fees? I only paid the £4k a year fees.

are you self employed or PAYE?