Student Loan - repaying quicker

TrustyOven

Student loan Plan 1 is costing me a lot of money per month from my payslip (which could instead be going to HTB ISA or another regular saver, or into S&S ISA).

Thinking of paying it off quicker. I could be debt free in 6 months time.

I havn't calculated it, but I think 6 months of interest I would get in all the current accounts I have would be less money than one month's SLC payment.

I have 6 months emergency fund saved up earning interest.

Should I do it? (with current repayment, it would take another 2.5 ish years to pay off)
False economy or sensible strategy?

CLAPTON

TrustyOven wrote: »

Student loan Plan 1 is costing me a lot of money per month from my payslip (which could instead be going to HTB ISA or another regular saver, or into S&S ISA).

Thinking of paying it off quicker. I could be debt free in 6 months time.

I havn't calculated it, but I think 6 months of interest I would get in all the current accounts I have would be less money than one month's SLC payment.

I have 6 months emergency fund saved up earning interest.

Should I do it? (with current repayment, it would take another 2.5 ish years to pay off)
False economy or sensible strategy?

if the interest rates on the savings/investment is greater than that you are paying on the student loan then save/invest and don't repay early

if on the other hand the interest rate on the savings/investment is less than student loan rate then pay off the student loan

Masomnia

The interest rate on plan 1 is 0.9% currently, so if you can get a better return than that elsewhere then personally I would do that rather than pay the loan off.

Ed-1

Masomnia wrote: »

The interest rate on plan 1 is 0.9% currently

Actually it's 1.25% .

Masomnia

Ed-1 wrote: »

Actually it's 1.25% .

Hm I logged in very recently and it said 0.9%. Odd.

ETA it still says 0.9% on my account, I've always thought they're a bunch of jokers with an omnishambles of a system and nothing seems to persuade me otherwise!

Ed-1

Masomnia wrote: »

Hm I logged in very recently and it said 0.9%. Odd.

ETA it still says 0.9% on my account, I've always thought they're a bunch of jokers with an omnishambles of a system and nothing seems to persuade me otherwise!

In the top right corner it should state an 'interest calculated to' date. If you have any loans in repayment this date should be 31/03/16 as interest is frozen on loans until after the end of the following tax year when repayments are known. Interest is then applied at the correct rate as if repayments had been received monthly. For plan 2 student loans, freezing interest is also necessary to determine what interest rate to apply (as this depends on income). The interest rate should be updated when any repayments for 2015/16 tax year have been applied.

EDIT: Does your interest calculated to date show as 31/03/16? As the rate is showing as 0.9% it means interest has been frozen after 1st September 2015 when this was the rate. It also means any repayments for 2015/16 have been allocated to your balance.