Jackal15
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If I my parents have the money, when is the best time to pay off the student loan in full without paying any interest on the loan also taking into account my parents want to hold on to the money as much as possible in case its needed for a rainy day
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macpatgh-Sheldon
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Hi there young man!

I shall provide my opinion as below:-
1. With the interest rates [including LIBOR - inter-bank rate] being at their lowest in history r n, this is the time to borrow money even in terms of mortgages and ordinary loans. This may not apply at all to the likes of Beckham or Cliff R, but for the average family cash flow is important, especially in this crisis!
2. A rainy day has already arrived, in the form of COVID-19!:mad:
3. With the student loan, the interest rate is even lower than those of the most competitive normal bank loans, so:

In my view, don't repay unless your mum or dad is related to a "loaded" celebrity.

The final decision, is oc NOT mine!

Be safe!
M.
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Jackal15
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(Original post by macpatgh-Sheldon)
Hi there young man!

I shall provide my opinion as below:-
1. With the interest rates [including LIBOR - inter-bank rate] being at their lowest in history r n, this is the time to borrow money even in terms of mortgages and ordinary loans. This may not apply at all to the likes of Beckham or Cliff R, but for the average family cash flow is important, especially in this crisis!
2. A rainy day has already arrived, in the form of COVID-19!:mad:
3. With the student loan, the interest rate is even lower than those of the most competitive normal bank loans, so:

In my view, don't repay unless your mum or dad is related to a "loaded" celebrity.

The final decision, is oc NOT mine!

Be safe!
M.
thx
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mnot
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(Original post by Jackal15)
If I my parents have the money, when is the best time to pay off the student loan in full without paying any interest on the loan also taking into account my parents want to hold on to the money as much as possible in case its needed for a rainy day
Just dont take the loan. Interest is accumulated as soon as you take the loan I believe.
Student finance loans accumulate interest at 3%+RPI
RPI in 2020 was low like 1.2% but in 2021 will be about 2.5%
meaning on the initial £9.25K + maintenance loan you will have to pay +5.5% extra year 1 & this will only compound year on year if you take it.

If you plan on wiping it just do it from day 1 imo.
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macpatgh-Sheldon
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(Original post by mnot)
Just dont take the loan. Interest is accumulated as soon as you take the loan I believe.
Student finance loans accumulate interest at 3%+RPI
RPI in 2020 was low like 1.2% but in 2021 will be about 2.5%
meaning on the initial £9.25K + maintenance loan you will have to pay +5.5% extra year 1 & this will only compound year on year if you take it.

If you plan on wiping it just do it from day 1 imo.
Hi helper!
Thanks for your input! - I think you are mistaken on the effect of the RPI as well as the maths.

RPI leads to escalation of the price of anything by that percentage [you don't just add up two unconnected figures] - if the interest rate is 3% currently [I will take your word for it], then that will increase by 2.5% [RPI as you quote, i.e. it will become 3% plus an increase of 2.5% OF ITS OLD VALUE = 3 + 2.5/100 = 3.025% after whatever period you are quoting the RPI in [usually a year], so that after 10 years [if the RPI remains steady], the interest rate would be 3.25% {NOT 5.5% otherwise NOT A SINGLE student would take a loan}.

If you were to add 2.5% directly to the 3%, the interest rate charged after only 10 years would be 3% + 25% = 28% - even most credit cards [which are aimed at poor men-in-the-street who are not at all numerate] don't charge that much - in fact, if SLC were that blatant crooks, I would personally make a petition on TSR and elsewhere to commence legal action against them on behalf of ALL students in UK.

Sorry OP, I know this divergent pair of views will confuse you, but thought I would clarify the maths.

CALLING ANY MATHS NERDS TO VERIFY MY CALC!
Last edited by macpatgh-Sheldon; 6 months ago
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mnot
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(Original post by macpatgh-Sheldon)
Hi helper!
Thanks for your input! - I think you are mistaken on the effect of the RPI as well as the maths.

RPI leads to escalation of the price of anything by that percentage [you don't just add up two unconnected figures] - if the interest rate is 3% currently , then that will increase by 2.5% [RPI as you quote, i.e. it will become 3% plus an increase of 2.5% OF ITS OLD VALUE = 3 + 2.5/100 = 3.025% after whatever period you are quoting the RPI in [usually a year], so that after 10 years [if the RPI remains steady], the interest rate would be 3.25% {NOT 5.5% otherwise NOT A SINGLE student would take a loan}.

If you were to add 2.5% directly to the 3%, the interest rate charged after only 10 years would be 3% + 25% = 28% - even most credit cards [which are aimed at poor men-in-the-street who are not at all numerate] don't charge that much - in fact, if SLC were that blatant crooks, I would personally make a petition on TSR and elsewhere to commence legal action against them on behalf of ALL students in UK.

Sorry OP, I know this divergent pair of views will confuse you, but thought I would clarify the maths.

CALLING ANY MATHS NERDS TO VERIFY MY CALC!
This is the quote from gov.uk (plan 2 refers to all SFE loans post 2012 I believe)
"
Interest on Plan 2

While you’re studying, interest is 5.6%.

This is made up of the Retail Price Index (RPI) plus 3%. RPI is currently set at 2.6%.

This rate applies until the 5 April after you finish or leave your course, or for the first 4 years of your course if you’re studying part-time, unless the RPI changes.
"

https://www.gov.uk/repaying-your-stu...n/what-you-pay

--
Its quite high interest its literally 3% + whatever the bank of England sets RPI at.
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macpatgh-Sheldon
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Ok in that case the government needs to

EITHER:
send their members to nursery school for revision of babyhood numeracy [they are illiterate]
OR:
speak to their QC urgently! [they are inviting SFO to sue them].
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Jlingz22
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https://petition.parliament.uk/petitions/550079

sign
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