Student loan. No debts Should I make lump sum payment?

EdRob

I've read martin's comments about NOT paying back the loan being the best option for most people. I think i understand it!
However - this situation:
Pre2012 loan. UK citizen but not tax payer. No loans or mortgages. Lump sum available.
Is it better to pay off a chunk of the loan than have the money earning about 1% in a bank?
My logic says yes, best to make extra payment off the loan, but there may be something I'm missing!

DrEskimo

Depends if you are going to use the money for anything else in the immediate future? House deposit/stamp duty, replacement car, renovations, holiday, etc etc.

If you pay down the loan and then end up needing to borrow money at a higher rate (and importantly without the relaxed terms of a student loan that means you only pay when you are earning enough to), then overpaying makes little sense.

ARH_2

Given that the interest is 1.1% , better to earn 1.2% on it (see MSE 1 yr fix best buys), than pay it off. This gives you a negligible advantage, but more importantly gives you a safety net should you need it in future. Once a student loan is overpaid, there is no backing out or allowance of future underpayment.

EdRob

Thanks for the replies. That all makes sense.

DCFC79

RichardBiga said:

I think most of the answer is good. 

So what answer did you like the most Richard ?