Student Finance Myth Buster #1
Welcome to the student finance section of the financial guidance! Every fortnight we will be providing facts, figures and key information, and myth busting some of the most common preconceptions about student finance.
This week we kick off with three common myths about student finance!
- Do you have to take a student loan? No
- If you are in a position at any point of your education where you no longer need a loan, you don’t have to take it!
- You also don’t have to take the full amount, so if you are able to subsidise your finance through a scholarship, bursary or from other personal means, you can apply for just the amount you need.
- Will you be paying off your student debt till you die? No
- No matter how big your debt is or how much interest you accrue, if you get your loan from the government, under current rules, it will be wiped after 30 years!
- This means you will not be paying it off until you die.
- Repayments start the April after you graduate so if you graduate at 21 in June (and your birthday is not between April and June), your repayments will stop when you’re 52, even if you have repaid very little or none of your loan back to the government.
- Should you make overpayments for your loan and pay off your student loan as soon as possible? No (but this is a personal choice)
- It is actually strongly advised to avoid paying off your loans early!
- Repaying early does reduce the amount of interest, but in most cases it’s unlikely you’ll pay off even just the interest that has built up before the 30 years are over.
- In this sense, if you pay off your loan quickly, you could end up paying money back that you wouldn’t have otherwise paid back.
- If you’re planning on earning some serious money, enough to pay off your whole loan in cash, it may be worth looking into investing your money as you could easy get a good return on your spare cash, rather than paying off your loan.
- This is, of course, a completely personal choice and you should do whatever you feel is best for you.
This information is not linked to and does not reflect the views of any companies with which Laura Dench or Elliott MacCallum are associated.
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