So, this student loan, right...

[Kenai]

Ultimately it comes down to the fact that financially, you won't be in a hugely different position either way, in the respect that you aren't going to make or lose fortunes whichever way you go.

However one option means you have no money in savings because you gave it all to the government, the other means you have however many thousand you want in savings to call on whenever you please/need.

You'd have to braindead to pay it off any earlier than the mandatory payments in my opinion.

 

[[TW]Fox]

The odd £10K? How much do you think the interest difference to be gained is?

Irrelevent.

The gain here is having a balance of £10k in your savings account and a student loan of £10k, rather than a balance of £0k in your savings account and a student loan of £0k.

If you pay the loan off, you no longer have the funds you used to pay it off.

If you don't pay the loan off, you keep the money you'd have used to pay the loan off and can use it for other things. All whilst actually profiting slightly from retaining the money.

It's a complete no brainer, why you continue to argue otherwise I really dont know.

10 years down the line you've got no student loan and no savings. You lose your job and think sod it, I'll travel the world. No you dont, you've got no money.

Whereas had you not paid the student loan off, you'd have a big savings account balance...

 

[The Halk]

I'm not arguing otherwise. You quoted half my post. The other half said what you're saying.

The're two key differences in what we are saying.

1) You say hold on to 20K. I say that's too much, hold on to less.
2) You say it's worth it to faff about with savings accounts switching between banks for the best interest rates. I know from expereince that it is not worth it, if it can be avoided.

 

[[TW]Fox]

1) You say hold on to 20K. I say that's too much, hold on to less.

There is no benefit to holding onto less. If you are going to invest £5k and pay off £15k it's no harder to simply invest the £20k!

2) You say it's worth it to faff about with savings accounts switching between banks for the best interest rates. I know from expereince that it is not worth it, if it can be avoided.

And I know from experience that it's absolutely no faff at all. Seriously, I cannot imagine a situation where running savings accounts is a faff. It takes what, 15 minutes a year of monitoring the situation once a year and moving it somewhere else if required. Even if you dont do that you are still barely out of pocket compared to paying off the loan AND you retain the use of the cash!

Stick it in a fixed term bond or something and you can forget about it for years if it really is too much hassle for you

Plus EVERYONE should have a savings account! The amount you save doesnt really change it much. She'd likely retain a savings account even if she paid the loan off, only a fool would go through life without a penny in savings?! Therefore keeping the student loan money in it is hardly any more bother!

 

[physichull]

From my understanding, I echo many on here and say don't pay if off early, just let the monthly payments take their bite.

I do understand it though when every month you look at your payslip and see another chunk out of your monthly pay going towards loan repayments. I can't wait till mine gets repaid, it will be like getting a pay rise! Sadly, I think that day is a long way off at the moment

 

[Kenai]

Why is it too much? How can you ever have too much money?

What kind of thought process leads you to the idea 'I have too much money, I think I will voluntarily give half of it to the government at absolutely no benefit to myself' ?

 

[Kemik]

I still think while inflation > savings rate you should spend rather than save. Your £1 is worth more today than in a years time otherwise.

 

[Simon]

Your advice is the rubbish advice.

Do not muck about with savings accounts trying to gain a little bit of money. It's a lot of hassle and it's not worth it.

Hang on to the money if you think there's a chance you might need it, even a remote chance. If there's no reason to hang on to it, pay it back.

An ISA is more than the interest ? Why on earth would you pay it off. You can't get the money back from a student loan either.

 

[Dinomania]

OK, I am decided.

Thank you guys - I needed the OcUK hive mind to help convince me that I needn't worry about the loan. I was basically there anyway - but now I've actually got cash to put away, there's always that "But... I'm in debt" niggle.

It seems it truly isn't worth my while paying it off, unless I at some point have more money than I think I'll reasonably need - and can chuck the 'excess' at the loan. I'll think about that after I've collected enough at least to buy me a new car (don't need to any time soon - but will do eventually) plus comfortably fund at least 6 months without a job.

Gathering all that won't come any time soon - so basically, the loan can go hang. Hooray!

Cheers

 

[[TW]Fox]

I was basically there anyway - but now I've actually got cash to put away, there's always that "But... I'm in debt" niggle.

The best way to get around this is remember it isnt conventional debt. You won't ever fail to make a payment - you can't. The payments scale up and down with your income. If you get fired, you stop paying. And nobody cares. The debt collector wont come to your door, ever. You won't get a county court judgement. If you drop down to 15k a year you'll stop paying, etc etc.

This is all completely different to conventional debt which becomes a millstone around your neck and prevents you from doing things until it's paid off.

All debt is different.