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Martin Lewis VIDEO: Should you pay off your Plan 1 student loan?

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  • silvercar
    silvercar Posts: 49,492 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    I would like a calculation based on the total debt being at the level it is at the time it goes into repayment. In my mind there is less value in saying it won’t all be cleared so you shouldn’t pay it off if a proportion of that debt is only accrued by the interest charged while it is in repayment.

    Compare instead the amount it is after graduating with the total repayment amount you will have to pay over the following years.

    Example. If the total loan is £20k after graduation, but with interest charged it becomes £30k by the end of the term, you should be comparing clearing the £20k with the total repayments, rather than saying some of the £30k will be written off at the end.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • fdrumm
    fdrumm Posts: 1 Newbie
    Martin talks about comparing student loans with saving accounts. If i paid £100 in student loans per month and cleared the debt. Would paying that £100 into a pension not gain me more money long term than the difference between base rate and savings rate.
  • phillw
    phillw Posts: 5,664 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    fdrumm said:
    Would paying that £100 into a pension not gain me more money long term than the difference between base rate and savings rate.
    You're comparing cash and investments, different risk profile. Nobody knows what it will be worth.
  • freesitenews
    freesitenews Posts: 2 Newbie
    First Post
    ain me more money long term than the difference between base rate and savings rate.
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