£5700 student loan, should I pay it off?

Jmgasparin

Hi, I have an outstanding amount of £5700 on my student loan (plan 2, so current interest 7.6%).

Based on my current salary I’m paying £245/month, so for a year I pay £2940 - £440 interest (approx) that applies to it.

I also have around £10,000 in savings at 5.08% monthly interest. Would it make sense to pay the student loan asap?

Does anyone know how the settlement figure is calculated?

Thanks!

amanda1024

Up to you whether you prefer having the cash available in case of emergencies, or the satisfaction of having paid off the loan. Also on how certain you feel that you’ll carry on earning the same amount and so will definitely pay the loan back eventually. Based on the numbers you might save a couple of hundred quid by paying the loan back. You’d need to ask the student loans company for a settlement figure; it’s calculated based on the outstanding balance plus interest (calculated daily).

sparks_2023

I wouldn't if it were me.

The only great thing about student loans is if your income drops you don't have to make payments. So if you get made redundant it is one debt with no worrying about the payment 

powerspowers

I have similar loan amount and savings amount. My job is quite secure but partners isn’t. I’d rather keep savings in cash for now in case we End up living off my wage. 

I might pay it off when there’s £2-3k left, you can move onto self managed repayment to avoid overpaying. It’s nice to be near the tipping point of getting rid of it! 

thriftychick

Well done on getting a savings pot together, you obviously have good financial sense.

Normally, I would say never pay off student loans and always regard them as a graduate tax.  However, because your loan is so small and you have the means to free yourself from it, if I were in your shoes, I would pay it off for two reasons.  One is that you will pay less interest obviously but two, you will then free up £245 a month of your income.  My experience has been that the more of your income you can free up instead of having other people decide where it goes, the more control you have over your own money.  

You will still have a sizeable savings fund and will be able to recoup the money very quickly.

I think it is criminal that graduates pay such interest rates on their loans in the first place!!

MFWannabe

I have to agree with Thriftychick 👍
Pay it off and be debt free 👌