Debt

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Do you consider it a bad thing to be in debt?

According to this BBC report if you're young then probably not
http://news.bbc.co.uk/1/hi/business/7128607.stm

Personally, I can't understand this attitude. I've always been brought up to consider that debt is bad.
Except for a mortgage which, unless I can come up with quarter of a million in cash, is a necessity to buy a house I don't ever want to owe anyone anything and plan not to.

 

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Becuase the spare money can be better used for other things. The interest rate on the student loan is such that even if you have the money to pay it off, it's better financial sense to instead invest that money into something rather than use it to pay off the student loan.

Not necessarily.
I've recently paid off my student loan as it made no financial sense to keep it anymore.

The interest rate went up to 4.8% in September.
I'd already put £3K in a mini ISA this tax year
I'm a 40% tax payer.

Those things meant that I was paying more on interest for the loan that I was making by not paying it off, so it became advisable to pay it off as quickly as I could.

 

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Are you honestly telling me you could find nothing to invest £10k in which would pay you more than 4.8% after tax?

You didnt try hard enough, clearly.

Not guaranteed (and instant access), no.

To be honest a large part of paying it off was the fact that I would have been coming to the end by around March/April time and I knew the SLC wouldn't let the Inland Revenue know in time for the end of the tax year and I'd have to carry on paying it next year as well before claiming it back!

 

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Well then thats slightly different to paying the whole thing off in one go isnt it

I suppose

4.8% after tax is still 8% gross if you're a 40% tax payer though and I really don't think you'll find a risk free, instant access way to get those sort of returns.

 

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Even that is only claimed to be 4.2%...0.6% adds up when its £1000s over months and years.

The rate for Sep 07 - Aug 08 is taken from Mar 07's inflation figures.
In March RPI was indeed 4.8%, they're not doing it deliberately, it just so happens that this year we had high inflation figures in March.

 

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Probably didn't bother passing it on to the SLC in order for them to deduct the amount...

Yeah, that happened to me when I contacted them to pay it off.
I had to fax copies of my P60s for the last few years as well as copies of the current tax year's payslips.

Even then it took them over a month to get things sorted out.