Student loans- pay off quick or take the 30 years?

DANSIM17

I've recently graduated from a UK university in 2017. My tuition fees of £9000/ year and maintenance loans of £4/5000/year has lead me to having one degree and over £45,000 in student loan debt. As I started after September 2012, I am on the 9% repayment scheme. I also earn just above the £21,000 per year cut off and so will start paying off instantly. Where should I put my savings? Into the student loan, to pay off faster; or invest it and pay off the student loan after 30 years?

Thanks

JSCB

Whatever you do, don't bother paying off early.

I have a taxable income of 36k and had a student loan of 15k and even I partly regret beginning to pay it off early... with your 45k of debt, providing rules from the government stay the same (and they're more likely to change to benefit the borrower than not), you would need to be earning around 42k a year every year for the next 30 years just to pay back what you've borrowed...

You'll likely never do this anyway, so would be throwing any voluntary repayments you made down the drain, and even if you did, all it will mean is you might in 30 years have paid some extra interest accrued (which might only be 9% of your income for the last few of the 30 years!) and so what, you've also been gaining interest (or saving it if put towards a mortgage instead) on the money you could of voluntarily given to SLC.

You also can't get back any voluntary contributions you make, so simply for flexibility it's best keeping the cash to yourself anyway and risking the bit of interest you'll probably never pay!

Also, your post mentioned being over the 21k a year threshold, that's goinng up to 25k a year from April 6th this year.

Hope it helps :beer: