Pay Student Loans or Save?

Socajam

DrEskimo wrote: »

Student loan debt is very very different to other types of consumer debt.

You would not need to pay a single penny if you earn under £25,725. Regardless of the amount owed, you will only ever repay 9% of anything you earn over £25,725. It will be written off after 30yrs, or if you become disabled/unable to work, or if you die. It does not factor in as part of your total debts when looking at things like mortgages (although it's impact on your monthly wage would obviously affect affordability metrics).

Please take the time to research the issue before providing potentially misleading advice..

What is misleading in telling someone who repay a a loan that helped them educationally. Even if one have 30 years to repay a loan, morally it's unacceptable to use that time frame to do so.
It's only a matter of time before the credit card companies begin to take this attitude into account and start looking seriously at those with outstanding student loan debt from years past and give this a negative score.
And yes, they can do this. Every question on that credit application form carries a score.
The OP can do whatever he/she wants, like others I was giving my opinion, I am mortgage/debt free, sleep well at night and have no problem getting credit.

DrEskimo

Socajam wrote: »

What is misleading in telling someone who repay a a loan that helped them educationally. Even if one have 30 years to repay a loan, morally it's unacceptable to use that time frame to do so.
It's only a matter of time before the credit card companies begin to take this attitude into account and start looking seriously at those with outstanding student loan debt from years past and give this a negative score.
And yes, they can do this. Every question on that credit application form carries a score.
The OP can do whatever he/she wants, like others I was giving my opinion, I am mortgage/debt free, sleep well at night and have no problem getting credit.

No one is suggesting they don't pay it back. The fact is it makes little sense to overpay it now when there are greater priorities, such as getting on the housing ladder, or potentially clearing other debt which is a financial risk. This is because the terms of a student loan render it almost risk free borrowing.

Your predictions about not getting jobs or that credit cards will reject them because of this student loan are purely speculative and unfounded, and it is misleading to suggest they should overpay them purely on this unfounded speculation.

I applaud you general advice and would generally agree with it. It's advice I follow myself. But you need to recognise that student loan debt is different, and thus a different approach is sometimes warranted.

TrustyOven

DrEskimo wrote: »

It will be written off after 30yrs, or if you become disabled/unable to work, or if you die.

Mine is Plan 1 and will be written off when I am 65 years old. (but I am paying it off later this year as I have completed the PAYE -> DD conversion).



So the advice above is not always correct (although will be correct for a lot of people on Plan 1). The best thing is to take stock of one's own situation and plan accordingly.


A lot of opponents of paying it off early, will say that it is effectively an education tax. So with that in mind, it's still nice to have it paid off because it's therefore a reduction of your effective tax.