Student loan rate increase - your opinions on my idea please!

captainlongtoes

I have a student loan balance of just over £7K, around £100 per month is debited from my monthly pay. To avoid the interest rate hike to 12% in September, I am considering taking out a personal loan to pay off the settlement amount, then pay off as much as I can afford (will calculate this soon) to settle the personal loan over time. My credit history is good and I have no other debts. Is this a good idea? 

[Deleted User]

Probably not. 

The 12% rate is very short-lived. And most student loans are not repaid in full. 

Converting it to a student loan means you'll be committed to repaying it in full, with no ability to suspend it if you stop earning.

[Deleted User]

I'd rather pay £100 a month for a debt that will expire after 25 years or whatever then take out a commercial loan that you must pay back just because interest is lower

captainlongtoes

Thanks for your reply. I admit I hadn't heard the 12% rate was not long term. How long is it expected to remain so, and would monthly repayments remain the same?

Van_Girl

It looks like the increase will be to 7.3%, not the 12% previously suggested

Probably worth looking at Martin's advice on whether to pay off student loan early, as for many people, it is not the best option

captainlongtoes

Thanks everyone, I was mostly worried that:

1) I'd be paying more each month (I see from MSE home page that's not the case and
2) That it would take longer for my student loan to clear (I mean, it's £7K+ and I hoped that it would be paid off within 10 years or so, I could do with that 100 or so per month!)

At least I won't be paying more each month, so definitely won't be taking out a loan. Glad I asked!