Paying off Student Loan

[Hopeislost]

Has anyone paid it off early? My interest rate is 1.1% which is now higher than any of my savings. I am also due a small inheritance soon so considering putting that towards paying it off. If I don't overpay, it'll take me 7 years to clear the balance. I have no other debts.

Yes just call them for a balance and make payment was very straightforward

Yes. it was a bit of pain to overpay as they changed the system just as i was doing it and they misquoted how much i owed (it turned out it was an extra £2k!). but i think that was just bad timing.

It depends on how you feel and what the likelyhood of needing the spare cash e.g. if you lost your job you won't have to pay back the loan but you may need the inheritance

Nope, no point - I very much doubt mine will be paid off before I hit the age where it will be written off, so it would be a waste of money for me. I view my monthly payments more as a graduate tax than paying off a loan.

Yes I paid mine off early, not one lump sum but my overpaying each month. If you're going to pay it off anyway (as I was) then no point paying interest each month above what you'd get for having that money in savings. It was really easy to do, I did most online via debit card then phoned up for the last one to make sure it was right amount.

Yes I did, it was very easy but only paid it off when it was my only debt (I didn't have a mortgage at that point) and was confident that I wouldn't need to get a loan for any other purpose. I did put the money in to a high interest rate savings account so was essentially earning more than it was costing but the rates dropped so decided to pay off the loan

It's going to take me about 7 years to pay mine off too, I have a mortgage though so any extra money I have I will focus on that, my student loan will be paid off far sooner than the mortgage either way! Interest is relatively minimal so it would be my last priority, but if no mortgage or any other imminent plans I'd very much enjoy seeing the back of it!

Nope, no point - I very much doubt mine will be paid off before I hit the age where it will be written off, so it would be a waste of money for me. I view my monthly payments more as a graduate tax than paying off a loan

Are you on plan 2? Plan 1 graduates pay off more (though less debt) so less likely for it to be written off. I agree with the graduate tax thought process though.

I could have paid my first lot off in full when I graduated because of an inheritance. I used the money as a house deposit instead. Now its all gone online I don't even get an annual statement, but I think one lot is cancelled in about 15 years, earlier lot not until I retire. When you say no other debts, do you include that to mean no mortgage? As I would overpay the mortgage rather than pay off a student loan. If no mortgage and you are genuinely going to repay it all, yes I would pay if off to avoid the problems of potential overpayment.

@name674398 Plan 1. Mine will be written off 25 years after I graduated. I was a PhD student for some time, then spent five years in foreign climes earning below the repayment threshold. Unless my salary unexpectedly rockets, it's very unlikely I'll pay it back before it gets cancelled.

Do you own property? If not I would concentrate on getting a deposit together first
I would also suggest speaking to a financial advisor. I’m currently getting 28% interest on my ISA, which my IFA invested for me and does all the donkey work regarding that. So if you want to make your money work for you, and particularly if you’re getting an inheritance soon, speak with an IFA

I am Plan 1 so it doesn't get written off until I'm 65. I've worked out that with my current repayments I will pay it off in 6/7 years.

No debts and no mortgage. Hence thinking about paying it off.

Thanks for all the comments. It will also help when I do go to get a mortgage as my outgoings will be lower.

@Iheartbed No I don't currently own property. I have a house deposit already, but not planning to buy for a few years due to other factors. The inheritance will be relatively small, but enough to put a dent in my remaining student loan.

Do you all have student loans and fees? 40/50k debt?
If so, how much do you pay off a month?
My DC are starting university this year.

@Hopeislost yes improving your mortgage affordability is definitely a good way of looking at it, if you're happy with your deposit and you won't be buying yet it definitely sounds like it makes sense to get it paid off.

@SpringtimeSummertime I believe it's 9% of whatever is earned above £25k (ish) for plan 2, so plan 2 students actually pay off less a month than plan 1 despite having much larger debts so it takes much longer to pay off, if at all. As a pp says it's best to just look at it as a graduate tax rather than a debt.

Thank you name. So if they earn 29K, they pay 9% of 4K?

graduate tax is a good way of looking at it!

I paid mine off a bit early as once I had bought a house, mortgage interest rate was slightly higher than student loan but I found myself turning down work because the take home was too low to be worth it once all deductions were accounted for. Getting rid of the student loan made a substantial improvement in take home on additional work and helped find a bit more enthusiasm for work.

Bear I mind your circumstances could change in the next 6/7 years and mean you would never end up having to pay it off. For example, you could be some to unwell to work.

@SpringtimeSummertime yes that's how it works, so it's not too high and if he isn't earning over the threshold, he won't pay any at all so not anything to worry about, when I'm calculating my pay I use salary calculator and don't look at the amount until pension, student loan, tax etc is out so I'm just used to it that way!

[quote name674398]@SpringtimeSummertime yes that's how it works, so it's not too high and if he isn't earning over the threshold, he won't pay any at all so not anything to worry about, when I'm calculating my pay I use salary calculator and don't look at the amount until pension, student loan, tax etc is out so I'm just used to it that way![/quote]
That’s reassuring! I have been having nightmares about 40/50K loans for both of them! I had such a tiny loan myself many years ago and we had to pay it on low earnings. Thanks for your comments!

@SpringtimeSummertime I know it sounds so scary, I really recommend reading/watching/listening to anything by Martin Lewis on the topic, he explains it all much better and is very reassuring, he stresses that it's more like a tax than a debt.

You have to look at your expected earnings over the relevant years. The interest rate is stupidly high, so if you're going to earn well over the £25k threshold for most of the 30 years, you could end up having paid a shed load of interest on top of the loan itself.

Obviously, if you're only going to earn £25k or slightly more, then you'll never pay off the capital, let alone the interest, so the interest doesn't matter.

[quote name674398]@SpringtimeSummertime I know it sounds so scary, I really recommend reading/watching/listening to anything by Martin Lewis on the topic, he explains it all much better and is very reassuring, he stresses that it's more like a tax than a debt.[/quote]
I will have a look! Thank you! I was even wondering whether it was worth them going at one point!

@RavingAnnie That is a good point but hopefully v unlikely!

I have no qualms with paying it back. I have two degrees from a good university which have led to a solid career doing something that I enjoy.