Student loan repayment

Suitsyousir21

I have been trying to find some info on this, but not found much so I am throwing this out to see if anyone has any ideas!

I am a mature student and took student finance of £12,000 for tuition fees on plan 2, which I started to re-pay in April 2020, after graduating the year before. Due to my earnings I was paying £60pm but now due to salary increases, this is now £100pm. I have never not paid repayments.

I do not anticipate any significant pay increases in the near to mid future, unless I move jobs, which may or may not happen.

We are moving home soon and will have some money left over. I am wondering whether to clear the student finance or not. My outstanding balance of student loan is £12,694 after 4 years of repayments. Online calculators put my repayment period at anywhere between 9-15 years, and they all assume pay rises that may not happen.

I know the general advice is not to repay it, as it not like "normal" debt, but that £100 a month I am paying could go into my public sector pension, or savings (we currently have one at 4.6%) or just extra money to enjoy ourselves with. Apart from a mortgage (we are not repaying it yet as we are locked in to a low interest rate, and the money left over from the house sale will be used for needed renovations and saving to repay some mortgage after the lock in ends) we have no other debt.

We will have enough to do some renovations with the money left over, not all of it is urgent and we are happy to wait for some of the work if we need to.

I know I won't need to repay it if I lose my job, or drop salary, but it seems such a shame paying £100 or so a month for years that I could use now. As it stands, either by paying off now or whenever it happens from my monthly payments, I will have repaid more than the loan, which I am of course happy to do.

Suitsyousir21

I have no issue repaying the loan. I have already paid £4,500 back on the 12, and if I repaid now, I would pay back £16,500 in all. I am not trying to get out of re-paying it. Just querying whether its better to repay it all if I can, and do something better with the £100 a month I am paying. Plus I was working a full time job while studying (distance learning) so was funding everything else. I was going to get a bank loan for the fees, but my bank advised me that the student loan was the best way to go!

silvercar

"I know the general advice is not to repay it, as it not like "normal" debt, but that £100 a month I am paying could go into my public sector pension, or savings (we currently have one at 4.6%) or just extra money to enjoy ourselves with."

The lump sum you would use to pay off your loan could just as easily go into your pension or savings.

" I have already paid £4,500 back on the 12,"

Not sure I would have done that. If you never repay the loan, that 4,500 is a gift to the government.

"Online calculators put my repayment period at anywhere between 9-15 years, and they all assume pay rises that may not happen."

It is reasonable to assume inflation pay rises to wages, even if you don't expect any career advancement increases.

Suitsyousir21

silvercar said:

"I know the general advice is not to repay it, as it not like "normal" debt, but that £100 a month I am paying could go into my public sector pension, or savings (we currently have one at 4.6%) or just extra money to enjoy ourselves with."

The lump sum you would use to pay off your loan could just as easily go into your pension or savings.

" I have already paid £4,500 back on the 12,"

Not sure I would have done that. If you never repay the loan, that 4,500 is a gift to the government.

"Online calculators put my repayment period at anywhere between 9-15 years, and they all assume pay rises that may not happen."

It is reasonable to assume inflation pay rises to wages, even if you don't expect any career advancement increases.

Yes the £12,000 could back into savings or pension. That is what I am trying to weigh up.

Sorry, to be clear, the £4,500 I have paid back so far, is through the usual salary deductions, not as a lump sum overpayment by me.

I agree about the inflation pay rises, but the calculators seem to me to be going above that, and appears to me to be assuming pay rises that are above inflation. I could be wrong tho.

saajan_12

Suitsyousir21 said:

I have been trying to find some info on this, but not found much so I am throwing this out to see if anyone has any ideas!

I am a mature student and took student finance of £12,000 for tuition fees on plan 2, which I started to re-pay in April 2020, after graduating the year before. Due to my earnings I was paying £60pm but now due to salary increases, this is now £100pm. I have never not paid repayments.

I do not anticipate any significant pay increases in the near to mid future, unless I move jobs, which may or may not happen.

We are moving home soon and will have some money left over. I am wondering whether to clear the student finance or not. My outstanding balance of student loan is £12,694 after 4 years of repayments. Online calculators put my repayment period at anywhere between 9-15 years, and they all assume pay rises that may not happen.

I know the general advice is not to repay it, as it not like "normal" debt, but that £100 a month I am paying could go into my public sector pension, or savings (we currently have one at 4.6%) or just extra money to enjoy ourselves with. Apart from a mortgage (we are not repaying it yet as we are locked in to a low interest rate, and the money left over from the house sale will be used for needed renovations and saving to repay some mortgage after the lock in ends) we have no other debt.

We will have enough to do some renovations with the money left over, not all of it is urgent and we are happy to wait for some of the work if we need to.

I know I won't need to repay it if I lose my job, or drop salary, but it seems such a shame paying £100 or so a month for years that I could use now. As it stands, either by paying off now or whenever it happens from my monthly payments, I will have repaid more than the loan, which I am of course happy to do.

Re the bold bit - well equally the lump sum you have now could go into your pension / savings / enjoyment now and have more time to grow compared to £100 a month over time. 

Ultimately it depends on 
1) what the interest rate is - if you have other more expensive debt then certainly better to pay fhat down
2) whether you're likely to pay off before it times out 25/30 years later. 

Suitsyousir21

saajan_12 said:

Suitsyousir21 said:

I have been trying to find some info on this, but not found much so I am throwing this out to see if anyone has any ideas!

I am a mature student and took student finance of £12,000 for tuition fees on plan 2, which I started to re-pay in April 2020, after graduating the year before. Due to my earnings I was paying £60pm but now due to salary increases, this is now £100pm. I have never not paid repayments.

I do not anticipate any significant pay increases in the near to mid future, unless I move jobs, which may or may not happen.

We are moving home soon and will have some money left over. I am wondering whether to clear the student finance or not. My outstanding balance of student loan is £12,694 after 4 years of repayments. Online calculators put my repayment period at anywhere between 9-15 years, and they all assume pay rises that may not happen.

I know the general advice is not to repay it, as it not like "normal" debt, but that £100 a month I am paying could go into my public sector pension, or savings (we currently have one at 4.6%) or just extra money to enjoy ourselves with. Apart from a mortgage (we are not repaying it yet as we are locked in to a low interest rate, and the money left over from the house sale will be used for needed renovations and saving to repay some mortgage after the lock in ends) we have no other debt.

We will have enough to do some renovations with the money left over, not all of it is urgent and we are happy to wait for some of the work if we need to.

I know I won't need to repay it if I lose my job, or drop salary, but it seems such a shame paying £100 or so a month for years that I could use now. As it stands, either by paying off now or whenever it happens from my monthly payments, I will have repaid more than the loan, which I am of course happy to do.

Re the bold bit - well equally the lump sum you have now could go into your pension / savings / enjoyment now and have more time to grow compared to £100 a month over time. 

Ultimately it depends on 
1) what the interest rate is - if you have other more expensive debt then certainly better to pay fhat down
2) whether you're likely to pay off before it times out 25/30 years later. 

The interest rate is currently 4.3% and apart from the mortgage we have no other debt

Student loan calculators suggest 19 years to pay it off at the current rate