Using Student Loan to pay off credit card

moneymagic223

Hi guys. My first post so please be gentle.

I have £10,000 in credit card debt, 1 has £8,000 (with the 0% offer coming to an end soon) and 1 has £2,000. I am just getting to the end of university and haven't needed a student loan because my work funded me. I randomly looked into a student loan and I am eligible for £10,000.



It would be a plan 2 student loan. Where you pay back 3% + RPI interest (currently 3.1%). With they repayments been 9% of everything you earn over £25k



Should I get the student loan to pay off my credit card dept and get rid of all credit cards?


Thank you in advance.

[Deleted User]

No.

Have a look at other options such as a BT card and calculate how long it will take you to clear the debt. Then make an informed decision.

DCFC79

moneymagic223 wrote: »

Hi guys. My first post so please be gentle.

I have £10,000 in credit card debt, 1 has £8,000 (with the 0% offer coming to an end soon) and 1 has £2,000. I am just getting to the end of university and haven't needed a student loan because my work funded me. I randomly looked into a student loan and I am eligible for £10,000.



It would be a plan 2 student loan. Where you pay back 3% + RPI interest (currently 3.1%). With they repayments been 9% of everything you earn over £25k



Should I get the student loan to pay off my credit card dept and get rid of all credit cards?


Thank you in advance.

Morally no you shouldn't as a student loan is for students to pay for tuition, books etc.

How would student finance find out you have used it to pay off the cards, well I dont think they would, how would you explain it if they did find out ?

Sncjw

If I was student loan company I would be asking why your applying for the loan right st the end of your course.

Mrs_Ryan

Hmmm I have a different view. I have a student loan for my Masters course and I have used it to pay off debts. I plan to use a large chunk of my final payment in a few weeks to pay off my Aqua card. Most students get a separate maintenance/tuition fee loan so actually technically the maintenance loan is not intended to pay for tuition. And frankly the amount of students I have seen abusing their loan by using it to get horribly drunk on a regular basis to me is immoral- I dont see what is wrong with using it for debts. I am struggling to understand why it is okay for students to use their loan to drink until they throw up on a regular basis but not okay to pay off a debt with it?!
After all, I am sure that there is probably a fair few students with overdrafts (me included although mine is on the small side for a student overdraft) so are the banks immoral for allowing students to pay off their overdrafts with their loans?
It is not really immoral I dont think- I have never been asked what I spend my student loan on (although where my Masters loan is concerned it is mostly my dam fees- Masters students do not get tuition loans) I am fairly sure that as long it is not illegal you are okay.
There are from what I have been made aware of a surprising number who have to apply late on- self funders who lose their jobs; or mummy and daddy can no longer fund because they have lost their jobs etc etc.

adamh87

As above post points out, many many people 'misspend' (and that's putting it mildly!) a student loan, and what you're doing seems fairly logical/sensible assuming you can't roll your debts over onto another 0% card and repay within that period.

Be aware repayments come out of your PAYE for a very, very long time which can be demoralising to say the least. Also Plan 2 repayments have a 'real' interest cost unlike Plan 1 (though they're written off after 25 years, no repayments when you can't afford them etc etc).

Incidentally, if you were debt free it'd probably be worth taking the money for a HTB ISA/LISA/pension contributions in any case.