Help/Advice Re paying off student loan please!!!

talliedebtbuster

Hi there everyone

I have been doing 50 50 on debt clearing and getting there with help on the board. I am thinking about clearing my student loan but not sure. What does everyone else think? See the interest rate is 4.8% and this is still quite high, basically means 500 pounds of interest each year is going on so my repayments are jsut clearing the interest!

The rate looks to stay the same this september too, it really is not that low.

Is anyone else in the same boat? Im not sure whether to save up and jsut pay through my wages for years the loan, or use the savings for a mortgage.

Decisions!!

Tallie

poorandindenial

Hi Tallie

[STRIKE] What other debts do you have? [/STRIKE]What are the APRs on all of them??

Have you looked at the snowball calculator? It is at www.whatsthecost.com and it helps you to see the difference paying debts of in order of highest interest or highest balance is.

EDIT - just saw your siggy, what is the APR on the credit card??

CLAPTON

the rate for the year september 2008-2009 will be the RPI for March 2008 which was 3.8%.

talliedebtbuster

Oh thanks for the rate on the student loan, where did you get that from?!
Well the credit card is interest free until june, i should have paid it off by then. Im just thinking that the student loan is a worry, i want to buy but not for 2-3 years yet, as i want to see what happens with the market and will of course need a deposit!

poorandindenial

One option would be to put the money that you want to pay off of the loan into an ISA if you don't already have one.

Do a bit of research and you will be able to find one that pays over 6%. Because the interest is tax free this means that you will earn more than you will pay on the same amount on the loan. You can then use the cash to pay off a lump sum of the loan in the future, you can then throw cash at the loan after you have used up your £3600 ISA allowance for the year.

Of course if your sanity will be boosted by getting rid of the loan then you should go with that, the added bonus of the ISA plan is that you end up with more in the long run and it is a healthy boost to the deposit for when you buy a property.

Are you currently repaying the loan or are you below the earning threshold?

k_l7x

A student loan is (or at least should be) the cheapest loan that you will ever get! I've made a plan of my debt and when I would like to have it paid off by and my student loan is towards the bottom because the rate a lot lower than most of my other debt!

talliedebtbuster

Im paying about 82 pounds a month on average for the loan out of my wages. But the student loans company said if i make extra small repayments they will still charge interest on the full amount untill the end of the tax year. It sounds really complicated. I think i will go with that ISA idea untill ive saved enough to pay it off outright. Once its gone ill have more wages so i guess its the best thing to do. I think it will take me at least 12months depending how good i save!

The loan rate is low but not that low at the moment! I cant wait till the interest lowers! And i need a statement through they are slow on that!

poorandindenial

Here is Martin's 'find a good isa' page

http://www.moneysavingexpert.com/savings/best-cash-isa

I meant to say earlier - well done on clearing so much of your debt - you have done really well.