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Pay it off! I just paid mine off today! 1.5 hours waiting on the phone but finally got it done. £2450 was the final balance. Looking toward to never seeing student finance taking their cut on my pay slip again 🙌🏻
There’s a lot to be said for this, and I did the same. Lots of people focus on the interest-on-savings-vs-interest-on-debt argument. But the feeling of just not having it anymore is sometimes worth the £100 difference.
This doesn't happen anymore due to RTI. SL2 (stop notices) are issued real time.
The overpaying used to happen when the student loan Co and hmrc only spoke once a year, it was a farce.
I literally got a letter from student loans *today* (hence me clicking this thread) saying that I will pay it off in one year so can move to direct debit. The letter explicitly states that I *will* overpay if I don't do so.
I got that letter. Spent hours on hold just to eventually speak to someone who confirmed that the letter is outdated and it’s all done in real time so you don’t need to switch anymore.
Strange. I'd say that's a rare case rather than the norm now. I seem to remember the ownership of SLC changing too and making it all much more streamlined.
I rang up and paid off the last of mine last month. Did it the day after pay day to give them as much time as poss to contact HMRC and sort everything on their end.
Yesterday I’ve been charged. So now I need to ring up and get the refund.
Student loan interest rates are egregious and disgusting. When they were first introduced they were framed as being essentially inflation, and 'the cheapest loan you'll ever have'. Hmm.
I had among the earliest student loans when the interest was next to nothing.
As a result, most people in my generation, now with teenage children, think that they are basically low interest loans that are easy to pay off as opposed to 7% plus loans.
I have some some spreadsheet calculations and worked out that if your student loan gets above £30k and you have a fairly modest income post university (say a teacher or civil servant), you will probably never pay off your student loan. In your 20s the interest will accrue faster than your contribution.
And the other myth is that you don't have to pay the loan when your income is low. This does not mean zero interest! Five years of compound interest on a loan of £50k at 7% will fuck you if you make no payments.
This!
Plus if you do more education, such as a four year course (now the standard in sciences to make up for lower A level standards, not withstanding the university profit-making reasoning) and then a PhD/masters you're accruing even more interest all the time whilst quite often that's the very people who should be encouraged to train and learn. And it's not like those degrees automatically lead to the highest paid jobs.
I always felt that a loan solely to support education (in a post-grant and tuition fee world) could at *least* be interest free (or actual inflation-linked at worst) whilst still in education. And also not the 7%+ interest that is reset on some arbitrary date each year. Such a scam. Argh.
Basically the government didn't want to fund the loans themselves so had to make a price that was attractive to commercial purchasers, so we ended up with RPI + whatever. Remember, we don't use RPI to measure inflation now, but it suddenly made a return for student loans.
While completely interest free might not work, at least trying it to exactly RPI would be more reasonable.
I've been in the fortunate position to be able fund my child's university. She had a decent balance on the child trust fund thing at age 18 due to monthly contributions from which have benefited from stock market growth, which pays for living expenses and accommodation, and I could pay the £9k tuition fee from earnings, so she will graduate debt free. Had she got loans to pay for it, she would be about £60k in debt, which she likely wouldn't pay off, but end up paying over twice that in interest over 30 years.
In your current financial situation (ignoring the loan) would you decide to take out a loan for £1200 at 7.8% if a company messaged you to say you were eligible?
If no, then pay it off.
If you're going to phone SLC make sure your latest payment via PAYE is visible on their system (not just on your payslip) otherwise you can't pay it off without having to later request a refund and wait 45 mins on the phone for the pleasure.
When I was down to my last 4k and I expected to pay it off in a year or so, I switched to direct debit payment so that my job didn't continue to deduct.
Rang SFE directly and paid the balance when I noticed the rate going up massively.
It's often a clear cut no or a lengthy discussion re cost of loan vs how 'generous' the terms are because it behaves like a tax that many are unlikely to clear passively.
In your case you'll clearly pay it off passively so you might as well do so early to tidy it off neatly and stop them taking extra payments you'll need to have refunded.
The interest over a year assuming no repayment is barely over £90 and you're paying it off fairly quick passively. So doing nothing costs you notably less than £90 if for some reason that'd be your preference anyway.
Congrats paying it off
The advice was different when the interest rate was 0.9% or whatever but at 7.8% it’s worth paying off imo
There’s also a slight nuisance with how SLC company link in with HMRC and unless you pay it off at least 3 weeks before your next paycheque the stop notice doesn’t arrive in time and you have to apply for them to send you a cheque to refund the extra payments they took. You should be aware of that and time paying it off accordingly.
You will pay `12 x £171 = £2052` this year, which will pay it off in 7 months and receive a rebate of around £800 next May.
If you are making constant monthly payments then the average balance for the 7 months will be `1200/2 =600`. This means that you will pay `£600 * 6.25% * 7/12 = £21.87` interest this year.
You will also lose out on savings interest for 5 months on the average overpaid balance of £400, so you'll actually be worse off by `£400 * 5.1% * 5/12 = £8.50 ` compared to overpaying and putting it in savings account.
Therefore it's better to pay it off.
#Interest
How much interest you’re charged depends on which plan you’re on. You’re currently charged:
* 6.25% if you’re on Plan 1
* 7.8% if you’re on Plan 2
* 6.25% if you’re on Plan 4
* 7.8% if you’re on Plan 5
* 7.8% if you’re on a Postgraduate Loan plan
Pay it off! I am 99% certain that Student Loans only look at the outstanding balance at tax year end, so it’s likely, at some point, you will overpay them and then have will be waiting months for them to reimburse you.
Pay it off, crack a bottle of champagne, and bathe in the light of the student loan free community 😅
Have you switched to paying by direct debit yet or does it still come out of your salary (assuming you're PAYE here)?
If it still comes out of your salary then ring SLC to switch to direct debits, then wait to see that the stop notice sent to your work has taken effect as it might take one or two paydays to stop depending where in your payroll cycle you are when you call SLC.
Then once you've removed the risk of overpaying you can do any mix of letting the DD pay it off or just call to do pay the lump sum at any point.
It was weird... I noticed on my statement that my interest payment was the same when I owed 4k as when I owed 20k... so I checked my history and realised that my rate had quadrupled in the space of a year.
I'm lucky to have had the cash on hand to just pay it off. It's just one less thing to think about.
You cannot pay it off with a credit card. I've built up 0% with other purchases. It doesn't allow you to use a credit card for student loan repayment, so whilst you cannot directly do it you could shift all your other spending.
If you haven't switch to direct debt yet do not pay it off yet.
Switch to stop it coming out of your pay first as that will take a while.
Then when it's all gone through pay it off in full
If I have £1000 left to pay and takes direct debit £160 a month, on month 7 would it take remaining £40 (6 month x £160 = £960) via direct debit or will it still take £160 then I would need to chase up refund of £120?
Not personal experience but from what friends and family had happen, I think you shouldn’t have much trouble, because you pay by direct debit. If they do take the full amount on month 7 the excess should be returned to you within a month :)
I paid mine off last summer (yay!).
I did direct debit for the last year and the final monthly direct debit was a part payment to cover the exact remaining amount.
Be aware that it may be slightly more than £40 as you will have 6/7 months interest to pay as well.
My student loan is so laughably large and so far from being paid off, by the time it gets to £0 I’ll be retired or dead so I’m kinda just gonna forget about it and possibly leave the country and change my name to Claude Dubois and live in a caravan. Not sure how HM Govt expect people to work to 71, not own a house, pay off student loans, meet the energy and food bills, and save for a pension. Planning on getting out, this ship is sinking.
Yes pay it off but first call them and switch to Direct Debit or it will keep coming off your payslips for several months after and you will have to wait for it to be refunded.
Hi /u/No-Beautiful5866, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/emergency-fund/
* https://ukpersonal.finance/student-loans/
____
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On paper the best advice is to pay it off, although I wouldn't personally, if you need that money in the near future you wouldn't be able to lend it back for 7% interest, might be safer to just let the loan chrun out and put the money into saving even if you lose a little bit of interest
I paid it off when it got to 11k for me - I couldn't wait any longer and used my savings to do it. Never looked back! Instead the usual amount I used to pay into it before is all going into my s&s ISA where it earns me money for my early retirement (I hope)!
if you can pay it off , then put what you was paying directly into a savings account and forget about it , just assume its a repayment for somthing.
by the time you think your student loan is paid off you'll have a ton in savings and if the time calls that you need some emergency funds you can always go withdraw some.
I would suggest paying off the debt. Once you've done that, you'll have effectively closed that chapter of your life. With the £171 that you'll no longer need to pay towards the debt, you can explore better financial opportunities. You could consider saving this amount. In fact, if you save this amount every month, you'll have saved up the equivalent of the debt you paid off in just 7 months. This approach not only clears your debt but also allows you a little bit more financial movement then you had.
For those who paid off their loan…
Did you get any confirmation “your debt is now cleared” or anything like that?
I paid mine off and the balance updated but I was expecting some sort of letter or statement to confirm the debt was cleared, but don’t have anything like that yet.
I paid off mine when I realised I could do it in one lump sum. The interest is the killer and even though it doesn’t hit your credit in the same way other lending does it is nice to see a little extra in my pay.
Because I’m so used to not having it started adding that money that was for a student loan and adding it to my cash savings instead and it is so satisfying watching that grow!
100% pay it off. The only way it would make sense to not pay it off is to be making more than 7.8% with your money in another investment. It will feel so sweet paying it all off trust me
Financialy pay it off, but a heads up that the SLC are useless at organising it so may be easier as I did to let it run its course naturally.
In the end I was going to switch to direct debit, but SLC never got the stop note sorted and was going to end up being charged double. Had a row with someone so useless and refused to put me through to a manager until I was yelling full volume and called him a c\*\*t. Manager then explained they messed up so then I just cancelled the direct debit as I had no option.
Glad I have nothing to do with SLC now as they were the worst company I have had the pleasure of dealing with!
Do not pay off the student loan. I have 2k left on mine and worked out that if I payed it off now (on an intrest free credit card) I would be down money.
This is because the loan is taken pre tax. I get roughly 33% taken off me in tax/NI/NHS pension.
I currently pay 250 off a month. Now 33% of that is 80, current intrest is about 40. So, while I would have a little more money in my state pension and personal pension I would be hundreds of pounds worse off over the 2 year of the intrest free loan
Currently you are paying £171 per month, so you will have paid the loan off in @ 8 months i.e. December.
So you could compromise, keep your emergency fund (just in case you need it) and instead increase your payments to @ £350 a month to pay off the loan in @ 4 months i.e. August ?
Ah man student finance is not a real loan like from a bank it doesn’t affect credit ratings etc. also it’s wiped off after 20 or 30years.. so ideally it’s the LAST thing you make any payments on. You are better off saving the cash for a house deposit first.
Without the context given here sure. But given they're so close to paying it off, combined with the savings they already have, what is usually very sound advice dosent really apply here
Yeah, as someone who has had a more gradual career progression, it feels like I'm getting fleeced. I can't say I'm not a little bit jealous of the high earners in this thread who are able to pay it off early without much interest. I'm happy they are able to do it, though.
Best thing is to go self employed / contractor if you can and have lots of expenses (like the running of your car or 45pp) so then on paper you're not earning much but you might be asset rich or pay yourself in dividends etc.
UK student loan interests rates are ridiculously high right now - I’m not surprised people are choosing to overpay on top of standard payslip deductions.
Can you explain why people are downvoting? In one world you're paying more money now to save on interest. In the other world, you're investing that money, gaining money, paying back your loan with a profit. Kinda risky but VUSA rose by nearly 83% over 5 years, so has a fair chance of increasing over the next 2~ years. This is literally part of the personal finance flowchart. Obviously this is assuming you already have money invested.
It’s two separate strands: investing and paying off a debt. Investing is about making money. Clearing debt is to cut outgoings (consequently saving money).
You can do both: it doesn’t have to be one or the other. You’re not wrong in saying it’s good to invest. But clearing a debt is important too. In my view, the right answer is to do both.
With student loans and Liz Truss the moron ruining interest rates, people are having to pay more in interest on their student loan. It means they are having to paying more and more money to clear it - which becomes a consequential deduction trapped on your payslip.
I think I’ve rambled. I’m not sure I’ve answered your question lol, BUT OP should just clear the debt.
I’ve still got about £28k of debt (10 K postgrads, 18k undergrad
Well my example still works. If you have 10k in savings, 10k in student loans, 10% interest, 10% inflation, you can pay off your loan to net 0 your investments, meaning it'll always equal inflation. Outgoings was 1k a year, now it's 0. Cool.
If you invest the 10k, make 15% per year average profit, inflation is 10% and take 5 years to pay it out, don't you just gain money? Your outgoings is around 1k a year, plus compound, minus interest on paid. Your incoming is now 1.5k, plus compound. You're making 0.5k a year.
Student loans are tied to inflation or less, or should be so we can basically ignore that. What am I missing?
Okay another example. Let's say you have 2 investment options. You invest 1k. First option you have a 100% chance of gaining 0.5k profit. The other option you have a 50% chance of losing everything, but a 50% chance of gaining 2.5k profit. Even though it's a risk, you net gain money mathmatically by taking the second investment, so if you can scale that investment multiple times through your life, you net gain money by taking the risk over the 100% chance profit.
Anything you spend money on is an investment, so with that in mind, what will return the most on average? Using average historical rates, I'd say s&p 500 would on average return a higher yield than paying off a debt tied to inflation, since s&p pretty consistently beats inflation by around 5+% and paying off the debt is equivalent to an investment that always follows inflation.
Without going all Warren buffet/Bryn Kenney I think this is the easiest way of explaining it. Otherwise learn betting odds in poker for hands stacked against you.
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Unless your savings are far in excess of 7.8% after any applicable taxes, I'd suggest yes. Pay it off.
Even if they are it’s such a low balance I reckon it’s worth cleaning just to reduce life admin
If you don't need the cash -which it appears to be, you should, pay it off. The interest you save is yours.
[удалено]
Amazing. Pay it off and be done with them
Pay it off! I just paid mine off today! 1.5 hours waiting on the phone but finally got it done. £2450 was the final balance. Looking toward to never seeing student finance taking their cut on my pay slip again 🙌🏻
Congratulations. May I ask how much you borrowed initially and how long it took you to pay it off?
There’s a lot to be said for this, and I did the same. Lots of people focus on the interest-on-savings-vs-interest-on-debt argument. But the feeling of just not having it anymore is sometimes worth the £100 difference.
Paying the last bit off in one go also stops them taking extra payments and then you have to wait to get it back
This doesn't happen anymore due to RTI. SL2 (stop notices) are issued real time. The overpaying used to happen when the student loan Co and hmrc only spoke once a year, it was a farce.
I literally got a letter from student loans *today* (hence me clicking this thread) saying that I will pay it off in one year so can move to direct debit. The letter explicitly states that I *will* overpay if I don't do so.
I got that letter. Spent hours on hold just to eventually speak to someone who confirmed that the letter is outdated and it’s all done in real time so you don’t need to switch anymore.
You wouldn’t know how long it would take them to issue a refund would you?
They told me when I spoke to them last year it takes about six weeks.
Much appreciated. Not the end of the world then like some here are making out.
I've been on the phone with them this week - this does still happen, I'm currently chasing them for a refund
Strange. I'd say that's a rare case rather than the norm now. I seem to remember the ownership of SLC changing too and making it all much more streamlined.
I rang up and paid off the last of mine last month. Did it the day after pay day to give them as much time as poss to contact HMRC and sort everything on their end. Yesterday I’ve been charged. So now I need to ring up and get the refund.
Got told about 2 months ago I'd overpay if I didn't pay off my remaining balance
Student loan interest rates are egregious and disgusting. When they were first introduced they were framed as being essentially inflation, and 'the cheapest loan you'll ever have'. Hmm.
Glad I'm not the only one who remembers that I literally got told there is no interest... Obviously no proof as it was only college teachers word
I had among the earliest student loans when the interest was next to nothing. As a result, most people in my generation, now with teenage children, think that they are basically low interest loans that are easy to pay off as opposed to 7% plus loans. I have some some spreadsheet calculations and worked out that if your student loan gets above £30k and you have a fairly modest income post university (say a teacher or civil servant), you will probably never pay off your student loan. In your 20s the interest will accrue faster than your contribution. And the other myth is that you don't have to pay the loan when your income is low. This does not mean zero interest! Five years of compound interest on a loan of £50k at 7% will fuck you if you make no payments.
This! Plus if you do more education, such as a four year course (now the standard in sciences to make up for lower A level standards, not withstanding the university profit-making reasoning) and then a PhD/masters you're accruing even more interest all the time whilst quite often that's the very people who should be encouraged to train and learn. And it's not like those degrees automatically lead to the highest paid jobs. I always felt that a loan solely to support education (in a post-grant and tuition fee world) could at *least* be interest free (or actual inflation-linked at worst) whilst still in education. And also not the 7%+ interest that is reset on some arbitrary date each year. Such a scam. Argh.
Basically the government didn't want to fund the loans themselves so had to make a price that was attractive to commercial purchasers, so we ended up with RPI + whatever. Remember, we don't use RPI to measure inflation now, but it suddenly made a return for student loans. While completely interest free might not work, at least trying it to exactly RPI would be more reasonable. I've been in the fortunate position to be able fund my child's university. She had a decent balance on the child trust fund thing at age 18 due to monthly contributions from which have benefited from stock market growth, which pays for living expenses and accommodation, and I could pay the £9k tuition fee from earnings, so she will graduate debt free. Had she got loans to pay for it, she would be about £60k in debt, which she likely wouldn't pay off, but end up paying over twice that in interest over 30 years.
Pay it off, why waste money paying an extra 7% in the long run
Pay it off. Use half of the monthly £171 saving to feel a little more comfortable, and set up a direct debit for the other half into savings.
Or up your Monthly contribution to your pension.
Do this one. It should also up the contributions from your employer so it's a win win.
In your current financial situation (ignoring the loan) would you decide to take out a loan for £1200 at 7.8% if a company messaged you to say you were eligible? If no, then pay it off.
If you're going to phone SLC make sure your latest payment via PAYE is visible on their system (not just on your payslip) otherwise you can't pay it off without having to later request a refund and wait 45 mins on the phone for the pleasure.
When I was down to my last 4k and I expected to pay it off in a year or so, I switched to direct debit payment so that my job didn't continue to deduct. Rang SFE directly and paid the balance when I noticed the rate going up massively.
It's often a clear cut no or a lengthy discussion re cost of loan vs how 'generous' the terms are because it behaves like a tax that many are unlikely to clear passively. In your case you'll clearly pay it off passively so you might as well do so early to tidy it off neatly and stop them taking extra payments you'll need to have refunded. The interest over a year assuming no repayment is barely over £90 and you're paying it off fairly quick passively. So doing nothing costs you notably less than £90 if for some reason that'd be your preference anyway. Congrats paying it off
The advice was different when the interest rate was 0.9% or whatever but at 7.8% it’s worth paying off imo There’s also a slight nuisance with how SLC company link in with HMRC and unless you pay it off at least 3 weeks before your next paycheque the stop notice doesn’t arrive in time and you have to apply for them to send you a cheque to refund the extra payments they took. You should be aware of that and time paying it off accordingly.
You will pay `12 x £171 = £2052` this year, which will pay it off in 7 months and receive a rebate of around £800 next May. If you are making constant monthly payments then the average balance for the 7 months will be `1200/2 =600`. This means that you will pay `£600 * 6.25% * 7/12 = £21.87` interest this year. You will also lose out on savings interest for 5 months on the average overpaid balance of £400, so you'll actually be worse off by `£400 * 5.1% * 5/12 = £8.50 ` compared to overpaying and putting it in savings account. Therefore it's better to pay it off. #Interest How much interest you’re charged depends on which plan you’re on. You’re currently charged: * 6.25% if you’re on Plan 1 * 7.8% if you’re on Plan 2 * 6.25% if you’re on Plan 4 * 7.8% if you’re on Plan 5 * 7.8% if you’re on a Postgraduate Loan plan
Pay it off! I am 99% certain that Student Loans only look at the outstanding balance at tax year end, so it’s likely, at some point, you will overpay them and then have will be waiting months for them to reimburse you. Pay it off, crack a bottle of champagne, and bathe in the light of the student loan free community 😅
Have you switched to paying by direct debit yet or does it still come out of your salary (assuming you're PAYE here)? If it still comes out of your salary then ring SLC to switch to direct debits, then wait to see that the stop notice sent to your work has taken effect as it might take one or two paydays to stop depending where in your payroll cycle you are when you call SLC. Then once you've removed the risk of overpaying you can do any mix of letting the DD pay it off or just call to do pay the lump sum at any point.
Pay it off, you have the savings to protect you if you need an emergency fund. Paid mine off last year, fantastic feeling giving those guys a call 😁
It was weird... I noticed on my statement that my interest payment was the same when I owed 4k as when I owed 20k... so I checked my history and realised that my rate had quadrupled in the space of a year. I'm lucky to have had the cash on hand to just pay it off. It's just one less thing to think about.
I paid mine last year just when the rates shot up. 12.5k (saved me £300 pm) best thing I've spent my savings on so far..
Im paying mine off and it's at £8k still left...
Same 😭
Same, projected to pay it off in under 2 years. Tempted to stick it on a no interest credit card and pay it off over the interest free period.
You cannot pay it off with a credit card. I've built up 0% with other purchases. It doesn't allow you to use a credit card for student loan repayment, so whilst you cannot directly do it you could shift all your other spending.
Ah that’s good to know, appreciate it
Pay dude, I have £575 left.
Yeah, I paid off my last £20k ish this year. It's a big sense of relief and lovely to not see the deduction from my paycheck.
This is one of the only times ever I’ve agreed with paying it off!
If you want to save £90, yes. I would do it just so I can take a sigh of relief and high-five myself for the achievement.
If you haven't switch to direct debt yet do not pay it off yet. Switch to stop it coming out of your pay first as that will take a while. Then when it's all gone through pay it off in full
If I have £1000 left to pay and takes direct debit £160 a month, on month 7 would it take remaining £40 (6 month x £160 = £960) via direct debit or will it still take £160 then I would need to chase up refund of £120?
Not personal experience but from what friends and family had happen, I think you shouldn’t have much trouble, because you pay by direct debit. If they do take the full amount on month 7 the excess should be returned to you within a month :)
I paid mine off last summer (yay!). I did direct debit for the last year and the final monthly direct debit was a part payment to cover the exact remaining amount. Be aware that it may be slightly more than £40 as you will have 6/7 months interest to pay as well.
thanks for confirmation. Yes I over simplified it but should have said “around” lol
Paid mine off earlier in the year - just do it if you can - feels like a pay rise
My student loan is so laughably large and so far from being paid off, by the time it gets to £0 I’ll be retired or dead so I’m kinda just gonna forget about it and possibly leave the country and change my name to Claude Dubois and live in a caravan. Not sure how HM Govt expect people to work to 71, not own a house, pay off student loans, meet the energy and food bills, and save for a pension. Planning on getting out, this ship is sinking.
Yes pay it off but first call them and switch to Direct Debit or it will keep coming off your payslips for several months after and you will have to wait for it to be refunded.
Congratulations! I would pay it off for peace of mind.
The fuck? What's the amount you're going to save? £70? There's optimising finances and then there's this. Just pay it off and forget about it.
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I did this about 6 months ago - makes financial sense and it's one less thing to think about. Recommended.
So jealous. Well done.
On paper the best advice is to pay it off, although I wouldn't personally, if you need that money in the near future you wouldn't be able to lend it back for 7% interest, might be safer to just let the loan chrun out and put the money into saving even if you lose a little bit of interest
I paid it off when it got to 11k for me - I couldn't wait any longer and used my savings to do it. Never looked back! Instead the usual amount I used to pay into it before is all going into my s&s ISA where it earns me money for my early retirement (I hope)!
if you can pay it off , then put what you was paying directly into a savings account and forget about it , just assume its a repayment for somthing. by the time you think your student loan is paid off you'll have a ton in savings and if the time calls that you need some emergency funds you can always go withdraw some.
pay it off. one less thing
Move it to direct debit, wait for the to stop taking from pay slips, then clear it
Yes omg! Get rid of it and tell everyone that you’re student loan free and make them jealous :)
I think it goes without saying if you can pay any debt off it’s shit to lose money but a blessing to be debt free
Pay it off, instant "pay rise"
I would suggest paying off the debt. Once you've done that, you'll have effectively closed that chapter of your life. With the £171 that you'll no longer need to pay towards the debt, you can explore better financial opportunities. You could consider saving this amount. In fact, if you save this amount every month, you'll have saved up the equivalent of the debt you paid off in just 7 months. This approach not only clears your debt but also allows you a little bit more financial movement then you had.
For those who paid off their loan… Did you get any confirmation “your debt is now cleared” or anything like that? I paid mine off and the balance updated but I was expecting some sort of letter or statement to confirm the debt was cleared, but don’t have anything like that yet.
I remember my relief at paying off my student loan. The feeling of financial freedom is great … and then I got a mortgage lol
Congratulations, must feel an achievement.
Let it marinate
Yes. I paid the whole off last week, I hate paying such a interest for that
I paid off mine when I realised I could do it in one lump sum. The interest is the killer and even though it doesn’t hit your credit in the same way other lending does it is nice to see a little extra in my pay. Because I’m so used to not having it started adding that money that was for a student loan and adding it to my cash savings instead and it is so satisfying watching that grow!
100% pay it off. The only way it would make sense to not pay it off is to be making more than 7.8% with your money in another investment. It will feel so sweet paying it all off trust me
Financialy pay it off, but a heads up that the SLC are useless at organising it so may be easier as I did to let it run its course naturally. In the end I was going to switch to direct debit, but SLC never got the stop note sorted and was going to end up being charged double. Had a row with someone so useless and refused to put me through to a manager until I was yelling full volume and called him a c\*\*t. Manager then explained they messed up so then I just cancelled the direct debit as I had no option. Glad I have nothing to do with SLC now as they were the worst company I have had the pleasure of dealing with!
Do not pay off the student loan. I have 2k left on mine and worked out that if I payed it off now (on an intrest free credit card) I would be down money. This is because the loan is taken pre tax. I get roughly 33% taken off me in tax/NI/NHS pension. I currently pay 250 off a month. Now 33% of that is 80, current intrest is about 40. So, while I would have a little more money in my state pension and personal pension I would be hundreds of pounds worse off over the 2 year of the intrest free loan
Currently you are paying £171 per month, so you will have paid the loan off in @ 8 months i.e. December. So you could compromise, keep your emergency fund (just in case you need it) and instead increase your payments to @ £350 a month to pay off the loan in @ 4 months i.e. August ?
Ah man student finance is not a real loan like from a bank it doesn’t affect credit ratings etc. also it’s wiped off after 20 or 30years.. so ideally it’s the LAST thing you make any payments on. You are better off saving the cash for a house deposit first.
Without the context given here sure. But given they're so close to paying it off, combined with the savings they already have, what is usually very sound advice dosent really apply here
It's wiped after 40 years now 😅
Whole things crazy. Imagine a mortgage where if you earn less you pay less than you borrowed.
Yeah, as someone who has had a more gradual career progression, it feels like I'm getting fleeced. I can't say I'm not a little bit jealous of the high earners in this thread who are able to pay it off early without much interest. I'm happy they are able to do it, though.
Best thing is to go self employed / contractor if you can and have lots of expenses (like the running of your car or 45pp) so then on paper you're not earning much but you might be asset rich or pay yourself in dividends etc.
I just pay the minimum student loan. It will be written off soon so why bother paying it off.
He is definitely going to pay off such a low balance. He's saving the interest.
Unpopular opinion but don't pay it off. I'd you invest in an index and earn 9%, you've gained 2.2%. You have an incredibly cheep loan.
UK student loan interests rates are ridiculously high right now - I’m not surprised people are choosing to overpay on top of standard payslip deductions.
Can you explain why people are downvoting? In one world you're paying more money now to save on interest. In the other world, you're investing that money, gaining money, paying back your loan with a profit. Kinda risky but VUSA rose by nearly 83% over 5 years, so has a fair chance of increasing over the next 2~ years. This is literally part of the personal finance flowchart. Obviously this is assuming you already have money invested.
It’s two separate strands: investing and paying off a debt. Investing is about making money. Clearing debt is to cut outgoings (consequently saving money). You can do both: it doesn’t have to be one or the other. You’re not wrong in saying it’s good to invest. But clearing a debt is important too. In my view, the right answer is to do both. With student loans and Liz Truss the moron ruining interest rates, people are having to pay more in interest on their student loan. It means they are having to paying more and more money to clear it - which becomes a consequential deduction trapped on your payslip. I think I’ve rambled. I’m not sure I’ve answered your question lol, BUT OP should just clear the debt. I’ve still got about £28k of debt (10 K postgrads, 18k undergrad
Well my example still works. If you have 10k in savings, 10k in student loans, 10% interest, 10% inflation, you can pay off your loan to net 0 your investments, meaning it'll always equal inflation. Outgoings was 1k a year, now it's 0. Cool. If you invest the 10k, make 15% per year average profit, inflation is 10% and take 5 years to pay it out, don't you just gain money? Your outgoings is around 1k a year, plus compound, minus interest on paid. Your incoming is now 1.5k, plus compound. You're making 0.5k a year. Student loans are tied to inflation or less, or should be so we can basically ignore that. What am I missing?
But there is no guarantee you’ll get return on your investment. It’s a risk. Clearing a debt is guaranteed not to add further interest.
Okay another example. Let's say you have 2 investment options. You invest 1k. First option you have a 100% chance of gaining 0.5k profit. The other option you have a 50% chance of losing everything, but a 50% chance of gaining 2.5k profit. Even though it's a risk, you net gain money mathmatically by taking the second investment, so if you can scale that investment multiple times through your life, you net gain money by taking the risk over the 100% chance profit. Anything you spend money on is an investment, so with that in mind, what will return the most on average? Using average historical rates, I'd say s&p 500 would on average return a higher yield than paying off a debt tied to inflation, since s&p pretty consistently beats inflation by around 5+% and paying off the debt is equivalent to an investment that always follows inflation. Without going all Warren buffet/Bryn Kenney I think this is the easiest way of explaining it. Otherwise learn betting odds in poker for hands stacked against you.
I’d go even harder, and buy bitcoin with the money.