Student Loan Plan 2 Repayments Plan Help

dancampion22

Student Loan Repayment – Advice Needed

• Age: 24, graduated in 2022
• Loan balance: £49,000
• Current Interest rate on student loan: 3.2%
• Interest added so far: £886
• Salary repayments made thus far: £1,600
• Current income: ~£50,000/year (likely to increase annually over the next 20+ years)
• Sector: Account Management/Tech Sales
• Estimated annual repayment: ~£2,043
• Based on rough calculations:
• At current pace, loan would be repaid in ~24 years
• Estimated total interest over that time: ~£37,600
• Total repayment cost: ~£86,600
• With 4% annual salary growth, loan could be repaid in ~18 years
• Total interest paid in that case: ~£19,200
• Considering voluntary overpayments to reduce interest
• Want to know if early repayment is worth it and how to do it strategically or at all?
• for context looking to buy my first house to move into start of next year so will be taking on a mortgage of 200-250k

silvercar

@dancampion, I’ll move this to the student board. There are a few discussions on there about the value of repaying your loan early.

A big consideration is whether the money can be better used for something else eg a house deposit or pension. 

dancampion22

silvercar said:

@dancampion, I’ll move this to the student board. There are a few discussions on there about the value of repaying your loan early.

A big consideration is whether the money can be better used for something else eg a house deposit or pension. 

Thank you so that’s moved over to appropriate thread? 

silvercar

Your thread is now on the student board, where hopefully it will be seen by those with an interest in student issues.

amanda1024

I think the three considerations for me would be:
- this is your one chance to borrow a significant sum at (currently) below market rates - if you overpay then end up needing the money you can’t get it back
- there are a number of saving accounts paying more than 3.2%, so putting the amount you’d overpay into e.g. an ISA would mean you’re making more interest than paying to SLC
- nobody can know what the future holds - you might not end up working/earning as much as you expect and thus might not end up paying back the full amount in the end.
So personally, I didn’t overpay my student loan, and for me that meant being able to buy a house, but everybody is different!