Should I pay more on my SLC loan?

Vickytoriabug91

Hi all,

I'm 30 years old in a fairly good job. Assuming a 5% payrise each year, my student loan with SLC from a 4 year undergrad course will be paid off in 10 years 

By making additional voluntary monthly payments at an initial £50, then also rising by 5% each year, it'll be paid off in 8 years. 

By doing the same with an additional initial £100 monthly payment, it'll be paid off in 6 years.

The interest is 1.1% but I'm worried that this will rise as SLC loans are not as protected as they once were. This is the only reason I'm considering paying voluntary as I know SLC loans don't even affect your credit rating.

Is it worth making extra payments to pay the loan off any earlier?

[Deleted User]

At 1.1%, I wouldn't be making overpayments, as it shouldn't really be costing you anything when you account for your savings, and your circumstances may change in the next few years.

DrEskimo

Vickytoriabug91 said:

Hi all,

I'm 30 years old in a fairly good job. Assuming a 5% payrise each year, my student loan with SLC from a 4 year undergrad course will be paid off in 10 years 

By making additional voluntary monthly payments at an initial £50, then also rising by 5% each year, it'll be paid off in 8 years. 

By doing the same with an additional initial £100 monthly payment, it'll be paid off in 6 years.

The interest is 1.1% but I'm worried that this will rise as SLC loans are not as protected as they once were. This is the only reason I'm considering paying voluntary as I know SLC loans don't even affect your credit rating.

Is it worth making extra payments to pay the loan off any earlier?

The interest rate for a plan 1 student loan is capped at either 1% + BoE rate, or inflation, the LOWEST of the two.

Your concerns about them rising due to them being 'unprotected' is unfounded in my opinion.

It's ultimately up to you, but I would suggest you could use the overpayments much more effectively than paying down this extremely cheap and low risk loan, such as towards house deposit if not on the ladder, extra contributions to your pension, savings or even starting a S&S ISA.

draiggoch

I would agree with Dr Eskimo, stick the money somewhere like a S&S ISA. If your fears ever did come true regarding the interest rates take your savings out and pay off the remaining student loan. 

[Deleted User]

It's 1.1 but will likely be 1.5 soon - the site says usually updated in September but can be done in the year. Longer they stay at 1.1% the bette!