We’ve discussed the decision to leave or pay off your student loans before, and although the answer generally used to be “it’s the cheapest debt you’ll ever get into, don’t repay it until you’re forced to”, things have changed recently.
The interest rate on student loans, which used to be a measly 2.4%, has recently risen to a more noticeable 4.8%.
This means that decision whether to pay off or defer has become more difficult.
There’s a useful article at the Motley Fool which discusses everything you must take into account when making this decision – such as the interest rate of any other debts you may have, such as personal loans or credit cards, which are still likely to be higher than 4.8%, and therefore should be paid off first. The article also looks at saving in ISAs and the differences in a repayment strategy for high rate tax payers. Interesting stuff.
- Experian Launches Free Credit Score Service (September 7, 2016)
- Saving App PiggyPot Goes Public (June 20, 2016)
- Plum, AI Facebook Chatbot For Saving & Investment (February 22, 2017)
- HSBC Launches “Connected Money” App (May 9, 2018)
- Loot Banking App Launches (December 11, 2016)