Should I pay off Plan 1 student loan?

rustyboy

Hi all

After some advice really 

I’ve got a Plan 1 undergraduate student loan 

Balance is £3550 and I’m currently paying £104 a month from my salary. 

The interest rate is 5% and is likely to rise again in September, presuming interest rates rise by that time. 

With interest I’m likely to pay it off by June 2025. 

I’m coming into some savings that mature in November and my question is do I pay my student loan off. 

Currently earning 4.5% on the savings. 

Question is, do I  pay it off early and then be better off by approx £100? 

If anyone has paid it off recently, do the SLC do ‘deals’ if you offer to pay it off in a lump sum? 

Thanks 

silvercar

They won't do deals.

If the interest rate on the loan is higher than the interest rate on savings AND you will definitely pay off the loan before it gets written off AND you can afford the money (as you won't get it back if circumstances change) then it make sense to clear it now.

silvercar

This should really be on the student board, rather than loans. I'll ask the forum team to move it over. There have been other discussions on clearing loans that you may want to browse.

The student board can be found here: https://forums.moneysavingexpert.com/categories/student-money-saving

rustyboy

Thank you Silvercar couldn’t make my mind up where it should go. 

Im 42 so got another 23 years before it would get written off. 

I’ll look at interest rates in November and make a decision there. 

DrEskimo

I paid mine off a few months ago, but I switched to Direct Debit first, then paid off the lump sum when it was <£2,000.
I think you are certainly approaching the point where you should switch to direct debit to avoid any overpayments.

You could also do what I did, which was increase the amount taken from direct debit to pay it off quicker, rather than just a large lump sum? They will accept any monthly amount above the salary threshold.

canarydan

DrEskimo said:

I paid mine off a few months ago, but I switched to Direct Debit first, then paid off the lump sum when it was <£2,000.
I think you are certainly approaching the point where you should switch to direct debit to avoid any overpayments.

You could also do what I did, which was increase the amount taken from direct debit to pay it off quicker, rather than just a large lump sum? They will accept any monthly amount above the salary threshold.

I'm massively regretting not switching to Direct Debit. These clowns are absolutely ridiculous. I paid off the last of my student loan on 1st April, after the payment from my March pay packet had hit my SLC account. I thought that would be plenty of time to sort out the stop notice so that I wouldn't overpay in April (which included a bonus, so I was especially keen). Lo and behold, payroll hadn't received the stop notice so nearly £300 gets taken from my salary + bonus. No problem, I'll ring them up and get a refund requested. Nope. Despite the fact that the clone at SLC could see that the overpayment came directly from my salaried pay packet, they couldn't refund it because there were Self Assessment files on my account so it would need to be "investigated" to make sure the overpayment wasn't the result of an incorrect Self Assessment.

And payroll got in touch today to tell me they STILL don't have the stop notice. If it continues, I'll be issuing them an invoice for the interest at what they're charging.