Student Loan

Larchard

My sons student loan interest is 6% how can I help him reduce that?

[Deleted User]

It depends.

Why does he want to? Is he currently paying it off? How much? Is he likely to pay it off in full?

He needs to look at the wider picture. Student loans aren't like other loans.

DrEskimo

You can’t reduce the interest rate.

Unless he is set to earn above the higher rate threshold, it’s unlikely he will pay it all back. In which case overpaying on the loan is not going to be wise (economically speaking).

Arguably if he is going to be paying HRT, he can probably afford to pay it back himself...!

Think of it as additional graduate tax, not a loan. The amount he repays each month is entirely dependent on his earnings. The interest rate and amount only affects how long it’s paid back for. It’s not a debt he has to worry about if he suddenly loses his job, so really there is no risk to this debt.

If he is earning more becuase of his degree, and that amount is greater than the amount he pays back each month (9% on anything he earns above £25k), then it can be seen as a useful investment, economically speaking.

Of course there is also the arguement that education has many other merits too.