Should I pay back my student loan?

penners324

Or put that in your pension where it do a lot more for you

anxiousnow

Hi again. I'm looking at the new interest rates for Plan 1 student loans and just read this bit on gov.uk site. Where it says "if the low interest rate cap no longer applies", would that be if the base rate plus 1 per cent becomes higher than RPI, or is there some other variable involved? 

I've mostly ignored my student loan, and only repay the obligatory amount through payroll, based on the fact I'd rather save or pay extra into my pension, but 9 per cent sounds like a different story.

Income Contingent Student Loans for pre-2012 (Plan 1) loans

The interest rate on pre-2012 income-contingent repayment student loans is RPI or the Bank Base Rate + 1%, whichever is lower. The low interest rate cap is in effect, and therefore the rate to be charged from 1 September 2022 will be the Bank Base Rate (1.75%) +1%, that is, 2.75%. This rate may be adjusted during the year, if and when the Bank Base Rate changes.

If the low interest rate cap no longer applies during the year the interest rate on Plan 1 Income Contingent Repayment Loans during the period 1 September 2022 until 31 August 2023 will be 9%, the applicable rate of RPI for the period 1 September 2022 to 31 August 2023.

[Deleted User]

I am on 3.25% (loans started 1999, ended 2003/4 term), hilariously, going from paying it down nicely at the low interest rate, my debt is currently going down on monthly salary by... drum roll.... 19p a month!

Not sure if the NI reduction will make any difference and any bonus I get normally gets a chunk out that month but with rates going up, my loan will be going up again unless I get a significant pay rise next year, will be another one now being wiped out at 65 rather than repaid.

anxiousnow

Deleted_User said:

I am on 3.25% (loans started 1999, ended 2003/4 term), hilariously, going from paying it down nicely at the low interest rate, my debt is currently going down on monthly salary by... drum roll.... 19p a month!

Not sure if the NI reduction will make any difference and any bonus I get normally gets a chunk out that month but with rates going up, my loan will be going up again unless I get a significant pay rise next year, will be another one now being wiped out at 65 rather than repaid.

Snap @Deleted_User same uni dates. I've only got a couple of grand of the loan left but like you say it may now take a while. I purposely put extra into my pension to avoid paying back the SL. 

[Deleted User]

I don't earn a massive amount so have about 15k, has been going down about 300-400 a year until now, be going up again soon enough, wonder if what I pay back will ever be close to the initial bits