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Voluntary repayments for student loans - penalty charge? watch

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    I was reading at the bottom of the page here that;
    http://www.slc.co.uk/about%20student...re_repaid.html

    Account holders may repay some or all of their balances voluntarily at any time. Such repayments are applied to the loan balance to reduce it. A customer who repays some of the balance voluntarily continues to have repayments collected at the statutory rate; the effect is to bring forward the date at which the loan is fully repaid and repayments cease.
    If someone did pay off their student loans early is there a penalty charge for paying it all off early?
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    None whatsoever.
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    Thanks very much!
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    (Original post by little pixie)
    I was reading at the bottom of the page here that;
    http://www.slc.co.uk/about%20student...re_repaid.html



    If someone did pay off their student loans early is there a penalty charge for paying it all off early?
    In general, I would advise against repaying your student loan any faster than is required. There is no penalty charge for paying it off early but no incentive to do either. The interest rate is such that the cost in real terms is pretty much nil. If you have some cash burning a hole in your pocket then you'd be better depositing it in a savings account. The interest you'll get will exceed any interest on the student loan. The other advantage of that is if you suddenly find yourself needing cash, you'll have that available, making it less likely that you'll have to use other, much more expensive sources of credit.

    Repaying some or all of the loan earlier also has the potential to complicate matters, making it more likely that you'll end up overpaying via PAYE and having to get the SLC to refund it.

    Of course, everyone is in different situations so for some it may make sense to repay earlier but I don't think there will be many people for which it is appropriate.
 
 
 
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