Should I pay back my student loan?

cleanshaven

So this is an interesting one guys and I interested to hear your opinions. I'm just trying to work out if I can save money by paying off my student loan as due to a pay increase this month and coupled with the student loan interest rate increasing next month (from 1.5% to 6.3%) for the first time I'm actually considering it!

Here are the details:
My student finance balance: £13,552.07
My monthly repayments from current salary: £42

If I paid back £42 for 28 years (how long I expect to be working for) I'd pay a total of £14,112. We have a mortgage which we are currently overpaying by 20% and likely to keep it at that amount however if either of us come into some money we'll match a contribution and overpay it that little bit more. We are on similar salaries around 30-31k and 233k left on mortgage.

Am I just overthinking things? I never thought overpaying it would be an option. Maybe the 6.3% figure is just scaring me a bit when repayments will remain the same so long as my salary does (for now).

Thank you and welcome any questions!

cleanshaven

Just remembered it gets wiped after 30 years after the April you were first due to repay. I have a feeling that was when I was 24 or 25. so it gets wiped when I'm 54 or 55 so I think I've just answered my own question haha!

Merlin139

Have you checked the guides produced by Martin in the main part of the MSE website?

https://blog.moneysavingexpert.com/2019/11/should-i-overpay-my-student-loan-/

DrEskimo

Do you have a Plan 1 or Plan 2 student loan?

cleanshaven

@DrEskimo I have a plan 2. Thanks @Merlin139 for the link I will check that out now. I forgot Martin covers EVERYTHING that has or will ever exist. 

[Deleted User]

cleanshaven said:

Just remembered it gets wiped after 30 years after the April you were first due to repay. I have a feeling that was when I was 24 or 25. so it gets wiped when I'm 54 or 55 so I think I've just answered my own question haha!

Depends on the plan, mine is stuck with me to 65 and with the interest rates going up, chances are the slow (but reasonable) chunk going off each year will slow down again, may even go up again depending on interest and pay rises

anxiousnow

Deleted_User said:

cleanshaven said:

Just remembered it gets wiped after 30 years after the April you were first due to repay. I have a feeling that was when I was 24 or 25. so it gets wiped when I'm 54 or 55 so I think I've just answered my own question haha!

Depends on the plan, mine is stuck with me to 65 and with the interest rates going up, chances are the slow (but reasonable) chunk going off each year will slow down again, may even go up again depending on interest and pay rises

I'm on a Plan 1 as well, @cleanshaven and have in recent years opted not to pay extra off of the balance because I have been able to get a better rate keeping the money in savings. However, the rate is now up to 2.75% so I am looking at my options. Paying it back won't be my personal choice though, because I'd rather have the cash available should I ever need it.

prestonmike

anxiousnow said:

Deleted_User said:

cleanshaven said:

Just remembered it gets wiped after 30 years after the April you were first due to repay. I have a feeling that was when I was 24 or 25. so it gets wiped when I'm 54 or 55 so I think I've just answered my own question haha!

Depends on the plan, mine is stuck with me to 65 and with the interest rates going up, chances are the slow (but reasonable) chunk going off each year will slow down again, may even go up again depending on interest and pay rises

I'm on a Plan 1 as well, @cleanshaven and have in recent years opted not to pay extra off of the balance because I have been able to get a better rate keeping the money in savings. However, the rate is now up to 2.75% so I am looking at my options. Paying it back won't be my personal choice though, because I'd rather have the cash available should I ever need it.

im in a similar position, on plan1 and with the rate going up to 2.75%, im thinking of beginning to overpay it as my savings are nowhere near this amount, the only other debt i have is my mortgage which i have to pay an overpayment charge if i was to overpay it, i know Martin has always said not to overpay your student loan but i will clear it before it wipes so in my mind, overpaying the loan is going to work out best in the long run

[Deleted User]

anxiousnow said:

Deleted_User said:

cleanshaven said:

Just remembered it gets wiped after 30 years after the April you were first due to repay. I have a feeling that was when I was 24 or 25. so it gets wiped when I'm 54 or 55 so I think I've just answered my own question haha!

Depends on the plan, mine is stuck with me to 65 and with the interest rates going up, chances are the slow (but reasonable) chunk going off each year will slow down again, may even go up again depending on interest and pay rises

I'm on a Plan 1 as well, @cleanshaven and have in recent years opted not to pay extra off of the balance because I have been able to get a better rate keeping the money in savings. However, the rate is now up to 2.75% so I am looking at my options. Paying it back won't be my personal choice though, because I'd rather have the cash available should I ever need it.

I don't see any point in paying it back, the £32 a month I think that is going out of my pay is a minor inconvenience and paying off more of it to reduce the interest charged just gives them more money and me less and gains nothing. If it runs out at 65 and I still owe something, so be it, if I get bigger pay rises / bonuses over the years and it is cleared down then so be it. I think with the 2.75% my payment will still be more than interest but by maybe £5 rather than £15

These ones aren't treated as debts for the purposes of getting credit so better we have the money than the government.

anxiousnow

Deleted_User said:

anxiousnow said:

Deleted_User said:

cleanshaven said:

Just remembered it gets wiped after 30 years after the April you were first due to repay. I have a feeling that was when I was 24 or 25. so it gets wiped when I'm 54 or 55 so I think I've just answered my own question haha!

Depends on the plan, mine is stuck with me to 65 and with the interest rates going up, chances are the slow (but reasonable) chunk going off each year will slow down again, may even go up again depending on interest and pay rises

I'm on a Plan 1 as well, @cleanshaven and have in recent years opted not to pay extra off of the balance because I have been able to get a better rate keeping the money in savings. However, the rate is now up to 2.75% so I am looking at my options. Paying it back won't be my personal choice though, because I'd rather have the cash available should I ever need it.

I don't see any point in paying it back, the £32 a month I think that is going out of my pay is a minor inconvenience and paying off more of it to reduce the interest charged just gives them more money and me less and gains nothing. If it runs out at 65 and I still owe something, so be it, if I get bigger pay rises / bonuses over the years and it is cleared down then so be it. I think with the 2.75% my payment will still be more than interest but by maybe £5 rather than £15

These ones aren't treated as debts for the purposes of getting credit so better we have the money than the government.

I agree completely, absolutely would rather overpay mortgage than pay the government back early. @prestonmike are you not able to pay 10% of your mortgage as overpayments without incurring an early repayment charge?

prestonmike

anxiousnow said:

Deleted_User said:

anxiousnow said:

Deleted_User said:

cleanshaven said:

Just remembered it gets wiped after 30 years after the April you were first due to repay. I have a feeling that was when I was 24 or 25. so it gets wiped when I'm 54 or 55 so I think I've just answered my own question haha!

Depends on the plan, mine is stuck with me to 65 and with the interest rates going up, chances are the slow (but reasonable) chunk going off each year will slow down again, may even go up again depending on interest and pay rises

I'm on a Plan 1 as well, @cleanshaven and have in recent years opted not to pay extra off of the balance because I have been able to get a better rate keeping the money in savings. However, the rate is now up to 2.75% so I am looking at my options. Paying it back won't be my personal choice though, because I'd rather have the cash available should I ever need it.

I don't see any point in paying it back, the £32 a month I think that is going out of my pay is a minor inconvenience and paying off more of it to reduce the interest charged just gives them more money and me less and gains nothing. If it runs out at 65 and I still owe something, so be it, if I get bigger pay rises / bonuses over the years and it is cleared down then so be it. I think with the 2.75% my payment will still be more than interest but by maybe £5 rather than £15

These ones aren't treated as debts for the purposes of getting credit so better we have the money than the government.

I agree completely, absolutely would rather overpay mortgage than pay the government back early. @prestonmike are you not able to pay 10% of your mortgage as overpayments without incurring an early repayment charge?

Ive already paid my 10% mortgage overpayment for this year, i have about £2500 left on my student loan, will pay it off in about 2 or 3 years with the current repayment amounts, think i'll pay about £1000 in the next couple of months then pay the next 10% off my mortgage again early next year