Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It only takes a minute to sign up.
Sign up to join this community
I have £33K in savings and my student debt is £31k - the interest is 6.3%. I'm 23 and currently earning £40K but it's an industry with big salary jumps, and plan to go contracting so I could be on 70-100K in 5 years time.
Should I just pay off my student debt now and stop it accruing interest?
It looks like you already earn too much to benefit from loan cancellation regardless of which plan you're on, so assuming you continue earning at your current or higher income you'll save a considerable amount of interest paying them off sooner.
Assuming you are currently living modestly enough to save some money each month I would reserve about 6 months of living expenses and put the rest toward wiping out the student loans with the intent of paying the remaining loan balance off quickly thereafter.
Note that if you're already in repayment and make an early payment for less than the total remaining balance, the amount your employer deducts won't change (fewer payments will be made, but still at 9%), so factor that into your planning.
I answered a similar question here.
As Hart CO's answer notes, the chances are you will end up paying off the loan before it is forgiven, so the high interest rate strongly indicates paying most or all of it off quickly.
The factors to balance against are:
