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  • FIRST POST
    • MoneySaver409
    • By MoneySaver409 10th Jul 17, 9:54 PM
    • 1Posts
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    MoneySaver409
    65,000 worth of student debt: Pay it off early as a high earner?
    • #1
    • 10th Jul 17, 9:54 PM
    65,000 worth of student debt: Pay it off early as a high earner? 10th Jul 17 at 9:54 PM
    I currently have 65,000 worth of student debt. I am due to start employment in London in September. My salary will be as follows:

    Yr 1: 40,000
    Yr 2: 45,000
    Yr 3: 80,000
    Yr 4: 90,000
    Yr 5: 100k++

    In years 1+2 I can save 1,000 per month - saving up for a deposit for a house which would ideally be purchased in year 3 or 4.

    I know I will pay off my student debt (without contributions) within around 15 years (or less) - paying 20,000+ in interest.

    If I pay around 600 per month in contributions, the interest I'd pay would only be 6,000 - paying it all off within 6 years. Would this be advisable, as it would reduce my deposit for a house considerably.

    Alternatively, save for a deposit within my first two years, then make large voluntary payments in years 3+?

    In any case, I am assuming making voluntary payments will definitely be applicable to me as the interest alone will cost over 20,000.
Page 1
    • agrinnall
    • By agrinnall 11th Jul 17, 8:30 AM
    • 18,188 Posts
    • 13,877 Thanks
    agrinnall
    • #2
    • 11th Jul 17, 8:30 AM
    • #2
    • 11th Jul 17, 8:30 AM
    I'd suggest that you start off by reviewing the many, many other threads asking the same thing to see if your questions have already been answered.
    • silvercar
    • By silvercar 11th Jul 17, 9:35 AM
    • 35,690 Posts
    • 150,394 Thanks
    silvercar
    • #3
    • 11th Jul 17, 9:35 AM
    • #3
    • 11th Jul 17, 9:35 AM
    Welcome to the forum Moneysaver409.

    MSE have recently updated their article on this topic. Student Loans Mythbusting

    It would be useful for you to put some numbers in the student loan calculator. This will calculate for your circumstances whether it is better to repay early or not.

    The guide on paying fees upfront may also be a useful read.
    I'm a Board Guide on the Debate House Prices & the Economy, House Buying, Renting & Selling, Mortgages and Endowments, In My Home incl DIY, Overseas Holidays & Student boards.
    I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of moneysavingexpert.com.
    • IAmWales
    • By IAmWales 11th Jul 17, 10:13 AM
    • 1,008 Posts
    • 2,171 Thanks
    IAmWales
    • #4
    • 11th Jul 17, 10:13 AM
    • #4
    • 11th Jul 17, 10:13 AM
    Your salary *may* increase in future years, equally it may decrease. No one knows what the future holds, so spend the first few years getting a decent amount of savings in case of job loss, illness etc.
    • agarnett
    • By agarnett 11th Jul 17, 11:28 AM
    • 1,282 Posts
    • 534 Thanks
    agarnett
    • #5
    • 11th Jul 17, 11:28 AM
    • #5
    • 11th Jul 17, 11:28 AM
    I currently have 65,000 worth of student debt. I am due to start employment in London in September. My salary will be as follows:

    Yr 1: 40,000
    Yr 2: 45,000
    Yr 3: 80,000
    Yr 4: 90,000
    Yr 5: 100k++
    Originally posted by MoneySaver409
    How can you be so sure? What kind of job comes with such firm salary prospects in 2017?

    If you are correct however, then good luck, and especially so if it doesn't pan out that way. If I were you and feeling sensibly optimistic, since the money looks like it might come easier your way than to most STEM graduates from good universities, then I'd consider whether it might be worth killing the debt and becoming a free agent again, which is what all graduates your age should have been able to expect from your country. Unusually I think, you have the means to knuckle down and shake off the shackles quite fast. Like the unreal nature of the debt itself which is urged on you as just part of the game b many, you must surely in some ways view salary prospects like yours as like commanding "monopoly money" from Park Lane and Mayfair, compared to your days as an undergraduate in the brown streets just past Go?

    However, when I left university donkeys years ago, there were some high paid jobs which came at an immediate price - extremely long hours and a need to spend at a much greater rate than first jobbers in other jobs, just to keep up with the habits of your peers. Is that a danger for you too? If so, how much truly might you be able to save each month, and fast before you hit the wall or burn out or suddenly get made redundant like those who carried out their lives in bankers boxes from Lemans in Canary Wharf in 2008? Yes I know its JPMorgan in that building now, and its buzzing ... but my guess is you are entering that sort of world and it changes you and it is a snakes and ladders existence where very little is predictable in the longer term unless you are some fantastic chameleon character!

    Who knows what sort of Erudioed situation you might find yourself in in 5 years time when your debt has grown at 6%pa plus and rules have been rewritten again?

    Last question, if I may - what would you say the average starting salary for a good Bachelors degree in a STEM subject from a good university should be in 2017? How many standard deviations above the mean do you think your prospects reside in comparison?
    Last edited by agarnett; 11-07-2017 at 11:38 AM.
    • lika_86
    • By lika_86 11th Jul 17, 2:37 PM
    • 1,114 Posts
    • 4,043 Thanks
    lika_86
    • #6
    • 11th Jul 17, 2:37 PM
    • #6
    • 11th Jul 17, 2:37 PM
    Sounds like a city law firm to me. If so, don't necessarily assume you will be kept on post-training contract or that you will want to stay there, many people aren't and don't.
    • phillw
    • By phillw 12th Jul 17, 12:48 AM
    • 674 Posts
    • 340 Thanks
    phillw
    • #7
    • 12th Jul 17, 12:48 AM
    • #7
    • 12th Jul 17, 12:48 AM
    If I pay around 600 per month in contributions, the interest I'd pay would only be 6,000 - paying it all off within 6 years. Would this be advisable, as it would reduce my deposit for a house considerably.
    Originally posted by MoneySaver409
    It depends on how much house prices, mortgage interest rates & rent increase/decrease over the next 20 years.

    I don't think anyone can accurately predict how things will go post brexit.

    You can only make assumptions that you're happy with and do the maths. Don't include capital repayment part of a mortgage in the calculations though as you get that back if you sell the property (+/- any profit or losses).
    Last edited by phillw; 12-07-2017 at 1:00 AM.
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