Student Loans - Early payments?

PoorDave

Hi all,

My wife has around 7k in student loans which we're thinking of paying off in chunks rather than in monthly payments of over 5 years.

She has not reached the salary level where they can automatically take payments, and is now a stay at home mother with no job.

Is there any penalty to making "early" payments in this way? For instance, do they think "she can obviously afford to pay, so we'll start taking monthly payments"?

We're looking to pay it all off in 3 separate payments (say 1 a year).

I have had a quick search, and can't find the answer elsewhere on MSE, so hopefully someone can help!

CLAPTON

yes you can repay early if you wish and no there are no penalties

many people feel that the loan is a very cheap loan. Historically it has been possible to simply save the money in a saving a/c and make a small profit.

if one has other debts then its probably best to repay these first.

PoorDave

CLAPTON wrote: »

yes you can repay early if you wish and no there are no penalties

many people feel that the loan is a very cheap loan. Historically it has been possible to simply save the money in a saving a/c and make a small profit.

if one has other debts then its probably best to repay these first.

We have no other non-mortgage debt (apart from my stoozing, but obviously those debts are matched by savings).

I thought student loans interest was linked to the rate of inflation, so even if someone was to earn interest on the cash (effectively a stooz), they would be no better off in "real terms". I might be wrong.

Thanks for the reply

CLAPTON

the interest rate is the RPI for March which is then applied from the following september

if that amount is less that you can earn in a saving a/c then you can make a small profit if not then you dont

in the year september 2006-7 the relevant RPI was 2.4%
in the year september 2007-8 the relevant RPI was 4.8%
we dont yet know the relevant RPI for the coming period.

mrsplinter

The RPI for this month was announced last week it was 4.1%, so this will probably be the interest rate for student loans from September.

CLAPTON

mrsplinter wrote: »

The RPI for this month was announced last week it was 4.1%, so this will probably be the interest rate for student loans from September.

i believe that rate is for february

mrsplinter

Yes my mistake. They would annouce March's rate in April. Fingers crossed it goes down.