Student Finance: Should I pay more? | Plan 1 & Plan 2 | SF Explained
Channel: Financial Madness
Date: 19/10/2020

Student Finance loans are a common thing for any graduate or aspiring graduate to have when paying for higher education. 
It is common knowledge that we only start paying back the loan once we graduate but also, when we earn a certain amount of income. But should we also make additional repayments, to pay off the loan faster? This is a common question among many graduates and is a question I asked myself many times.

We will be focusing on the two most common student finance loans:
▶Plan 1 Student Finance: England and Wales = Sep 1998 to Sep 2011 | Scotland and Northern Ireland = Sep 2012 to Present

▶Plan 2 Student Finance: England and Wales= Sep 2012 to Present

To understand whether or not we should make additional repayments to our loans, we first need to understand.
- Which loan is applicable to you? (Plan 1 or Plan 2)
- When do you start paying back the Student Finance Loan?
- How much do we pay back ('automatically')?
- How the interest on the loan is calculated?
- When do we stop paying the Student Finance Loan back?

Once we have understood these, the factors we will use to consider whether or not we should make extra/additional repayments to Student Finance are:
- Will I pay back the loan if I just pay through the automatic system?
- Do I have any other types of debt?
- What happens if I earn less income?
- What is the opportunity cost of overpaying Student Finance?

Based on these understanding and asking these types of questions, I came to the conclusion that I will not over pay my student finance loan and for the majority of us, this is likely to be true to.

Chapter Information (Student Finance UK):
0:00 Introduction
0:49 Two types of Student Finance (Plan 1 & Plan 2)
1:48 When do you pay back the loan?
2:47 How much do we pay back automatically?
3:47 How much Interest do we pay?
5:40 When do we stop paying Student Finance?
6:40 Should we pay more?
10:31 Am I overpaying or not?

▶Financial Madness - Pick the BEST Savings Account UK:
https://www.youtube.com/watch?v=UvG8K5rSMI0&t=3s

▶Financial Madness - Investing in Index Funds for Beginners:
https://www.youtube.com/watch?v=g_zNleL3mIc
▶MoneySavingExpert - Plan 2 repayment calculator:
https://www.moneysavingexpert.com/students/student-finance-calculator/ 

▶Resource Material:
- Plan 1 Interest Rate History: https://www.gov.uk/guidance/how-interest-is-calculated-plan-1
- Plan 2 Interest Rate History: https://www.gov.uk/guidance/how-interest-is-calculated-plan-2
DISCLAIMER - Any advice or (statements perceived to be advice) given in this video and any other videos on my channel are for information purposes only, and does not act as financial advice.  Your  are fully responsible for your financial decisions. If you are in need of Financial Advice, please seek out a professional advisor. If your are unsure on how to do this, feel free to reach out to me and I am more than happy to guide you.

#StudentFinance #StudentLoan  #StudentDebt