Resolved Question

Student Loan - is it worth make additional payments?

I have a student loan of just over £10,000. Is it best to make additional payments on top of those that automatically come out of my wages? At the moment the amount that comes out of my wages is slightly less than the interest added to the loan each month, so I'm thinking I should make additional payments to clear it quicker.

But then again, I don't know whether I am better off just putting that money into my ISA account where I can gain greater interest. I currently have £12,000 in my ISA so I get quite nice returns on my savings.

Additional Details

I have no other debts - no credit cards, no mortgage, no car, etc.

3 days ago

Best Answer - Chosen by Asker

Pay more on the loan. Interest rates may be low now (which gives you a great opportunity to get the total debt down faster) but if they change, they will only go up, and perhaps skyrocket. When that day comes, you will be very relieved that you had paid upfront and your loan will be smaller (or gone altogether).

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Other Answers (3)

• It really just depends on the interest rate you pay and your overall financial situation. If you have higher-interest debts, it's better to pay those first. For example, my student loan APR is less than three percent, so it makes more sense for me to put additional payments towards my house or credit cards.
• The interest rate on your loan is probably better than that on your bank account. Pay down the loan.
• try money expert.com.. he has a comprehensive info on when it's best to make additional payments etc. I heard this on the radio, i think he said not to, as they are the cheapest loans around