Old student loan settlement offer - is this right?

scamander

Hi all,

I have an old-school student loan where the loan is written off 25 years after the first payment of the last loan is made. I graduated in 2000 therefore the first payment of that loan was 1999 and thus 2024 is the write off date. I started qualifying for repayment three years ago and have received a letter this week offering me the chance to settle. I would normally treat this sort of thing with a raised eyebrow at best, however, I'm trying to work out what the catch might be.

The letter states that my remanining debt is £2,659 (with interest) and their offer is a settlement of £2,309. With my current payment instalments I will have paid the debt off in two years, so it's not as if this deadline will affect me. Initially I thought that they were making the offer on this basis and it's something I remember hearing about (where the company offers a figure which is actually higher than would be paid back).

 I'm tempted to write back and counter (offer £2,000, perhaps lower) or pay it (as I am fortunate enough to be able to do so and thus remove the debt). But wondered what I was missing.

Advice appreciated!

[Deleted User]

You're missing that the settlement figure means that you don't pay the remaining interest, hence the discrepancy in the figures.

scamander

Deleted_User said:

You're missing that the settlement figure means that you don't pay the remaining interest, hence the discrepancy in the figures.

Thanks for the reply - I realised the difference was to do with the interest. I'm more curious as to why they'd make this offer though. Perhaps I am a tad cynical, but I cannot see what advantage it gives them. I've been paying in instalments for 3 years and not missed a payment, so why are they suddenly keen to offer a settlement?

sourcrates

In the same way a debt collection agency likes to clear its books occasionally to allow for new stock, the student loans company may want to do something similar.

Basically they are tidying up their accounts.

scamander

thanks! Appreciate the insight - will have a think about accepting.

DrEskimo

Can this be considered an 'offer'?

You have the choice to settle the loan any time you want, and of course by doing so you will save in interest that you would otherwise have incurred had you left it to run the full course.

scamander

DrEskimo said:

Can this be considered an 'offer'?

You have the choice to settle the loan any time you want, and of course by doing so you will save in interest that you would otherwise have incurred had you left it to run the full course.

excellent point.