Student Loan Settlement Figure

gjs6385

Hi,

I've been repaying my 'Plan 1' student loan since I started earning over the threshold in 2010 (I graduated in 2006).

My current balance is £5,437.53 with monthly repayments of £81 being deducted from my salary.

The current interest rate is 3.25% and as it's creeping up at the moment, I've been thinking ahead and roughly worked out that even assuming modest pay rises it will take me around 4-5 years to pay off.

I may be getting some early inheritance shortly and as I'm fortunate enough not to have any other debt, I'm thinking of requesting a settlement figure.  I appreciate in my case they may consider the fact that I would naturally pay it off just via my salary anyway so may not offer me much, if any, reduction.

I just wondered if anyone has done this and if so, how much lower was the settlement figure compared to the full outstanding balance?

Thanks.

DrEskimo

gjs6385 said:

Hi,

I've been repaying my 'Plan 1' student loan since I started earning over the threshold in 2010 (I graduated in 2006).

My current balance is £5,437.53 with monthly repayments of £81 being deducted from my salary.

The current interest rate is 3.25% and as it's creeping up at the moment, I've been thinking ahead and roughly worked out that even assuming modest pay rises it will take me around 4-5 years to pay off.

I may be getting some early inheritance shortly and as I'm fortunate enough not to have any other debt, I'm thinking of requesting a settlement figure.  I appreciate in my case they may consider the fact that I would naturally pay it off just via my salary anyway so may not offer me much, if any, reduction.

I just wondered if anyone has done this and if so, how much lower was the settlement figure compared to the full outstanding balance?

Thanks.

You don't get a discount. You just settle the outstanding balance as it stands (£5,437.53).

The savings come from not accruing interest on the balance for the next 4-5 years had you opted to just keep paying £81 monthly through PAYE.

noclaf

Hope OP doesn't mind if I jump on this thread.

I have a similar Plan 1 Student loan and the balance is around £5k, rough back of a fag packet calculations will see this repaid in 12-18 months....the repayments fluctuate depending on my pension sal sac contributions.

Sadly over the period of repayment I've probably paid over £5k in interest as my loan was taken out in 1999, but that's done and the past now.so no point dwelling.

The interest has jumped up to 3.5% as of last week, I don't currently receive that on any savings or investments so is there any value in repaying the whole lot early or just let it run its course and continue to repay via my gross pay deductions?

I noticed the SLC now shows a message on my account offering for me to switch to dd repayment to avoid overpayment but how do they determine the repayment amount if I have been varying my monthly sal sac pension contributions which in turn impacts the repayment amount for that month? I was thinking that if I stick to the standard salary repayments, will wait till balance is closer to say £2k then switch to dd.

silvercar

If you have the option to switch to do, the slc just work out what you need to repay the loan over the agreed period. It may differ slightly from what you would pay on salary deduction, but that doesn’t really matter.