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Should I pay off my student loans? watch

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    Hi guys!

    So i've finally saved up enough to clear my student loans. Question is, should I pay it all off now (and avoid the 1.5% interest i'm incurring every year), or should I just hang on to the cash and work towards trying to get on the property ladder, or take a much needed holiday? :eek:

    the interest rates in the flexible savings etc seem rubbish at the moment so i've got half a mind to clear my debts because the interest rates are so crap i'd be accruing more interest on the debt than i'll be earning on interest. Yes i'm making the most of these regular savings accounts and will keep enough money aside to fund them for the whole year, but with the rest of the money I feel I should put towards the debt as it sitting around making 0.5% or whatever is just pointless! :/

    What are your thoughts?
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    tough one. don't pay it
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    Dont waste your money on paying off student debts.
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    General advice is to not pay it off if you have or are likely to have a mortgage.
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    Don't pay it. What if you end up out of work for whatever reason in the future. You'll end up regretting having paid it off instead of saving (more). Even with it mounting up, at 1.5% a year it's really not worth it imho...
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    Really tough call! Get poorer, or start with a clean slate and have to start from scratch when saving for a deposit on a flat/house! :eek:
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    Do you know if having student loans affects you getting a mortgage? Just wondering as it's something I've been thinking about as I'd like to get a mortgage next year and my I'm unsure if they take into account a lot of student debt as something counting against me. If that's true, that's more reason to pay it off. If you're in a position to, it sounds like a good idea. The interest rate may be low but it's still there and adding to what you owe and the repayments could become a financial burden if you do get mortgages and bills and stuff to pay in the future.
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    What loan system are you on? 1.5% is usually about the same as inflation, so your debt isn't actually growing.
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    (Original post by Keyhofi)
    What loan system are you on? 1.5% is usually about the same as inflation, so your debt isn't actually growing.
    the 3k a year fees. it may be the same as inflation, but it's growing at a faster rate than most of my savings are! I mean i could put my savings into a 2% save to buy tax free ISA. That is a better solution I think.
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    (Original post by rock_climber86)
    the 3k a year fees. it may be the same as inflation, but it's growing at a faster rate than most of my savings are! I mean i could put my savings into a 2% save to buy tax free ISA. That is a better solution I think.
    Yeah, interest rates are awful right now. But when you factor in wage growth and the rising price of everything, your debt is not increasing by much if by anything at all.

    Investing in a house would save you more money in the long term. Have you seen the interest they charge on mortgages?
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    (Original post by Keyhofi)
    Yeah, interest rates are awful right now. But when you factor in wage growth and the rising price of everything, your debt is not increasing by much if by anything at all.

    Investing in a house would save you more money in the long term. Have you seen the interest they charge on mortgages?
    Not as bad as it was in 2005/6 if I recall correctly, but yes it's much higher than my uni debt
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    (Original post by rock_climber86)
    Yes i'm making the most of these regular savings accounts and will keep enough money aside to fund them for the whole year, but with the rest of the money I feel I should put towards the debt as it sitting around making 0.5% or whatever is just pointless! :/
    Get a new bank account? Santander 123 offer 3% up to £20k.
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    (Original post by estel)
    Get a new bank account? Santander 123 offer 3% up to £20k.
    funnily enough I have just closed their account and done a switch to first direct because the fees for santander are going up from £2 a month to £5 a month. It totally wipes out the interest and is not worth it at £5/month.
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    I was just going to say that I get 1.6% interest in my Nationwide ISA.

    I wouldn't bother personally. It gets written off after 25 years. (it might be 30 years - will check that for you!)

    I'd just use it for a holiday or a deposit on a house.
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    (Original post by OU Student)
    I was just going to say that I get 1.6% interest in my Nationwide ISA.

    I wouldn't bother personally. It gets written off after 25 years. (it might be 30 years - will check that for you!)

    I'd just use it for a holiday or a deposit on a house.
    That's what I was thinking. Will just go on a much overdue holiday in late Jan/Feb. Nationwide have a save to buy ISA too. I opened one a year ago and it's 2% gross. Check if you are eligible for it. beats the 1.6% one you are using.
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    Of all the different types of debt you can have, student loans is one of the least expensive and you won't get bailiffs coming after you if you're struggling to repay.

    Just pay it off at the slowest rate possible and use your savings for everything else in life.
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    (Original post by Veggiechic6)
    Do you know if having student loans affects you getting a mortgage? Just wondering as it's something I've been thinking about as I'd like to get a mortgage next year and my I'm unsure if they take into account a lot of student debt as something counting against me. If that's true, that's more reason to pay it off. If you're in a position to, it sounds like a good idea. The interest rate may be low but it's still there and adding to what you owe and the repayments could become a financial burden if you do get mortgages and bills and stuff to pay in the future.
    Student loans don't affect your credit rating (so no it doesn't affect getting a mortgage)
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    (Original post by Zerforax)
    Of all the different types of debt you can have, student loans is one of the least expensive and you won't get bailiffs coming after you if you're struggling to repay.

    Just pay it off at the slowest rate possible and use your savings for everything else in life.
    A lot of people say (and I agree) to think of it as a graduate tax rather than debt / a loan.
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    (Original post by OU Student)
    A lot of people say (and I agree) to think of it as a graduate tax rather than debt / a loan.
    Yes I'd agree with that. Effectively someone on a high paying salary will pay it off and quickly. I know someone who's paid off their entire £20k student loan within 6.5 years of graduating without making any early payments. Got other friends who haven't even made a dent in it.
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    I would get on the property ladder. That's much harder than paying a bit off your student loan every month and if you ever lose your job or end up earning less for whatever reason, the student loan is adjusted so it will never be too hard to pay off. Student loan is apparently the 'best' debt you'll ever have. I would much rather have a house!
 
 
 
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