September 1st saw the new student loan interest rates of up to 4.4% come into play. If you applied for your loan before 1998 than you now face an interest rate of 4.4% and if you got your loan after 1998 then the interest rate will now be 1.5%.
If you are wondering whether it will be beneficial for you to pay off more than the minimum repayment, then the answer is probably not, unless you have a lot of spare cash. As student loans are the most inexpensive long term method of borrowing money then it makes sense to save the money that you would use to pay off your student loan to reduce future borrowing at a higher rate of interest. By paying your student loan off early you risk having to borrow in the future at a much higher rate. If you have higher rate interest debts elsewhere including an outstanding mortgage, overdraft, loans and credit cards then make sure you pay these off first before even considering your student loan.Even after all other outstanding debt is cleared, if you have the money to repay your student loan, consider saving this money in an ISA or savings account. The interest that will accrue will be more than your student loan is costing you so it makes sense to earn money from doing this.In short, don't pay off your student loan quicker than required, in the near future you may need to borrow again which means replacing your student debt with a much more expensive one..Of course, if you feel that you will definitely never need to borrow in the future, or if you have the money to pay if off and you are worried you might spend it on something less important then it would be a sensible move to overpay your student loan. Another notable fact is that student debt is wiped depending on when you took it out, there is no point in overpaying if you will not clear the debt in time before it is removed.To find out how long it will take for you to pay off your student loan, visit the Money saving expert website to use the Student loan Calculator and for more information on student loans and interest rates.
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