Should high earners pay off student loans??

Hybrice · 14 February 2018 at 9:36PM

Hi guys,

I need a bit of help and advice please.

I left uni in 2011 with 24k of student debts, however I've been very lucky and landed multiple jobs (50k+) since graduation, so I'm on my way to paying it off (16k remaining), so judging by the past 5 years I'll easily repay my loan within 30 years, the question is - I'm due to receive a bonus of 20k, is it smart to simply use this to wipe out the debt, or am i more sensible saving it? Currently my student loan is about £450/month due to my salary being as high as it is.

Pixie5740 · 14 February 2018 at 9:40PM

I have my bonuses paid straight to my pension to avoid paying tax on it...at least until I retire and hopefully that should be at the basic rate.

Hybrice · 14 February 2018 at 9:42PM

Unfortunately that isn't an option as I work abroad (Ireland)

Shakin_Steve · 14 February 2018 at 9:59PM

Hybrice wrote: »

Hi guys,

I need a bit of help and advice please.

I left uni in 2011 with 24k of student debts, however I've been very lucky and landed multiple jobs (50k+) since graduation, so I'm on my way to paying it off (16k remaining), so judging by the past 5 years I'll easily repay my loan within 30 years, the question is - I'm due to receive a bonus of 20k, is it smart to simply use this to wipe out the debt, or am i more sensible saving it? Currently my student loan is about £450/month due to my salary being as high as it is.

Are you on Plan 1?

Hybrice · 14 February 2018 at 10:15PM

I'm not sure, I'm on the 9% tarrif, however as I'm Ireland based my threshold is £14k not 21k, my interest is only 1.5%, I have no other debt or finance to pay

Hybrice · 14 February 2018 at 10:24PM

I'm not sure, I'm on the 9% tarrif, however as I'm Ireland based my threshold is £14k not 21k, my interest is only 1.5%, I have no other debt or finance to pay

boo_star · 14 February 2018 at 10:51PM

Hybrice wrote: »

I'm not sure, I'm on the 9% tarrif, however as I'm Ireland based my threshold is £14k not 21k, my interest is only 1.5%, I have no other debt or finance to pay

If the interest you can earn on the 20k is more than the student loan, save it.

If it isn!!!8217;t, pay it off.

Edit: Presumably by Ireland you mean Northern Ireland?

Hybrice · 14 February 2018 at 10:55PM

No, southern Ireland, republic of Ireland.

My logic is, either I keep paying £450 a month for the next four years, or I use this one time windfall to blast what's owed and be £450 better off each month.

boo_star · 14 February 2018 at 11:03PM

Hybrice wrote: »

No, southern Ireland, republic of Ireland.

My logic is, either I keep paying £450 a month for the next four years, or I use this one time windfall to blast what's owed and be £450 better off each month.

Well the maximum interest rate for savings I can find in Ireland is 1.5% for a 10 year bond (which is ludicrously low but anyway)

Unless you foresee a significant increase in the interest rates being offered in the next 3 years or so it’d be better to just pay it off and have the peace of mind that your entire salary is now yours (minus whatever the taxman helps himself to of course.)

Shakin_Steve · 15 February 2018 at 7:48AM

It's a toss of the coin one to me, but I don't know your personal circumstances. If you job is rock solid, pay it off. But if there's even the slightest chance that you could have a period of less/no income in the next couple of years, then you may need some cash behind you.

Should high earners pay off student loans??

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