How to pay loan back?

stinky101

hi everyone.

I have just started my 3rd year and by the time i graduate i wish to pay all of my student loan off. I have come into a bit of money and i am going to sell my car when i finish uni, which should cover it. I want to get rid of this debt as soon as possible.

I have only read on many websites of paying back the loan once you have a job over a certain amount of money. But is it possible just to pay it off all at once?!

Thanks

HannaB

Hi Stinky,

You should contact the SLC, they should be able to tell you how to pay the loan off in a single bound. Contact numbers can be found on https://www.slc.co.uk.

However, I was reading Martin's article (http://www.moneysavingexpert.com/loans/student-loans-repay). I recommend it to you. Paying the loan off early in one lump sum may not be the best way for you. The money may gain more interest in a high-interest account than is accrued on the loan. Have a read and see what you think.

I hope this helps.

HannaB

pinkshoes

stinky101 wrote: »

hi everyone.

I have just started my 3rd year and by the time i graduate i wish to pay all of my student loan off. I have come into a bit of money and i am going to sell my car when i finish uni, which should cover it. I want to get rid of this debt as soon as possible.

I have only read on many websites of paying back the loan once you have a job over a certain amount of money. But is it possible just to pay it off all at once?!

Thanks

You can earn far more money in an ISA or savings account than you will get in interest added to your student loan, so in a way it's foolish to pay it off! By all means pay it off if you want, but financially it's better to invest any spare money you have.

It automatically comes out of most people's pay at work, so as your pay rises, you'll pay off more.

JoeA81

Do you mind if I ask why you "want to get rid of this debt as soon as possible"?

Student loan debt is not like other debt. Its not a black mark against you, and as I understand it, has virtually no effect on your credit rating. Financially it would be much more advantageous to let this "bit of money you have come in to" work hard for you now (in whatever way you want) rather than pay off a debt which will gain you no financial advantage.

Iamthesmartestmanalive

Also if your in scotland under no circumstances pay it off until after the SNP announce which ones will be written off

They are in a consultation at the moment and may even write off all balances, heres hoping:D

beambeam

Iamthesmartestmanalive wrote: »

Also if your in scotland under no circumstances pay it off until after the SNP announce which ones will be written off

They are in a consultation at the moment and may even write off all balances, heres hoping:D

I'm hoping mate, I'm hoping!:D

ooooooh

I'm always puzzled by the 'don't pay it off' people and will watch with interest.

Lots of people are quite ignorant when it comes to student loans (me included it's a whole new world to me) I've only recently learned that the interest (sorry inflation aka interest ) accumulates from the very beginning. There seems to be a misconception by a lot of would-be students that the inflation rate is only applied at the end of study. Wrong!

As the inflation rate is currently 4.8 % this year - there could be a fair amount of "interest" added within a couple of years if someone should take out the max loan

Please tell me I'm wrong in thinking this

CrispyUK

ooooooh wrote: »

I've only recently learned that the interest (sorry inflation aka interest ) accumulates from the very beginning. There seems to be a misconception by a lot of would-be students that the inflation rate is only applied at the end of study. Wrong!

As the inflation rate is currently 4.8 % this year - there could be a fair amount of "interest" added within a couple of years if someone should take out the max loan

Please tell me I'm wrong in thinking this

Nope - you're absolutely correct there.

However if you received the maximum loan and placed it in a suitable savings account (let's take 6.4% current best buy) then you'll be earning more interest each month on the loan than the interest that SLC are adding to your account.

The 4.8% is the highest the rate has been for a while so this reduces the difference, but it's still worth doing. Of course last year the interest rate was 2.4% so there was a considerably bigger difference

However most students need to use their loan so it's going to cost them in interest to some degree, however with repayments - again the money you might use to make an optional extra repayment on the loan could earn more interest in a good savings account than the interest it would save you by paying that amount of the loan off.

Of course it all depends on whether you can be disciplined to leave the money alone

Infidel

RUN AWAY!