may as well just pay the minimum until I'm 65

lkmc01

I started univeristy in 2004 so I'm classed as an old system style student. I will graduate 2009 with about £16500 amount of debt, before interest and just before I'm 25. I'm I right in thinking that I might as well just pay the minimum repayments each month right up until I'm 65. The £16500 plus all its interest, just paying the minimum each month means that there will be some left when I reach 65 so it will just be cancelled then. If I was to start to pay more than just the minimum then I'd be paying back money that could just be cancelled when I became 65.

Has anyone else come up with this?

[Deleted User]

I thought you could only pay the minimum if you earned under a certain amount?

lkmc01

i meant the minimum for the amount I earnt. I'll nothing extra

lkmc01

sorry meant ie nothing extra

[Deleted User]

As long as the interest rate is lower than the amount you get in your savings account, it's pointless to pay back the loan at anymore than the minimum (standard taken by inland revinue)

lkmc01

i have not spent the student loan, but am currently saving it. in the next couple of years I will be using it for a house deposit. Should have between £14,000 and £16,000

Oldernotwiser

lkmc01 wrote: »

I started univeristy in 2004 so I'm classed as an old system style student. I will graduate 2009 with about £16500 amount of debt, before interest and just before I'm 25. I'm I right in thinking that I might as well just pay the minimum repayments each month right up until I'm 65. The £16500 plus all its interest, just paying the minimum each month means that there will be some left when I reach 65 so it will just be cancelled then. If I was to start to pay more than just the minimum then I'd be paying back money that could just be cancelled when I became 65.

Has anyone else come up with this?

Whilst I would agree that there's no point in paying off more of your loan than you need to it seems a bit defeatist to think that you won't have paid it off by the time you're 65. Unless your chosen area is very low paid you must surely expect to progress in your career and reach a level which would enable you to pay it off at some stage.

[Deleted User]

lkmc01 - so you've effectively borrowed money for a home deposit? Not the wisest of ideas.

It will take you a few years to save up enough for a home deposit (it took me 3 years to save 12k and pay off 4.5k in debts) but it will take you a lifetime to pay off your student loan. As your salary goes up, so will your repayments. You'll see them constantly on your payslips for your entire working life. Hmm fun

baby_fuzz

I'm in agreement with ONW. Whilst you should take advantage of the fact that it is 'cheap money' by not paying more than you have to, you would be unlikely to be left still paying it at 65 (besides, the government will probably ahve everyone wokring until they were 90 if they had their way!)

P.S. remember to keep an eye on it when you get near to paying it all off, as I ahve heard that they keep on taking your money even though the debt is settled!

lkmc01

my family have advised me that taking the student loan to pay for a house deposit is a good idea as the interest only rising with inflation. couldn't afford to save anything , so never reach a house deposit otherwise. I would imagine my starting income to be about 18000 to 20000. at todays income level I can't see me earning more than £25000 to £28000

lkmc01

i would expect to see the student loan on my wage slip my entire life anyway. thats what happens. its only a small amount anyway. £7 a month for £15000 income, £75 a month for £25000 income.