Is it worth paying off your student loans early? UK
Posted: Fri Feb 09, 2024 3:39 am
Hello all,
I've been living in Japan for around 15 years and in that time I've only paid the required amount towards my UK student loans. This worked out well for me over the years as the interest amount was low enough that I managed to reduce my total loan amount by around 25% while only making the minimum payments. However, I only managed to reduce my loan by around £100 from 22 to 23. After that, the minimum amount I have been paying since April 2023 is much less than the interest that is added on each month and so my loan has increased £700 since April 2023.
It made sense for me to not pay off my loans early when the interest was less than 1% but now that it's sitting at 6.25% the idea of paying it off and forgetting about it seems more appealing.
Due to when I attended university, my loans won't get written off until I'm 65, which will be close to another 30 years for me.
With all this in mind, should I try and pay off my students loans as soon as possible or hold the line and continuing paying the minimum while watching the total amount rise, in the hopes that it will all be reduced to zero when I'm 65? I currently hold enough in my UK savings account that I could pay off a large chunk today, but in all honestly I'd rather put that money towards my investment accounts or towards a Masters degree.
I've been living in Japan for around 15 years and in that time I've only paid the required amount towards my UK student loans. This worked out well for me over the years as the interest amount was low enough that I managed to reduce my total loan amount by around 25% while only making the minimum payments. However, I only managed to reduce my loan by around £100 from 22 to 23. After that, the minimum amount I have been paying since April 2023 is much less than the interest that is added on each month and so my loan has increased £700 since April 2023.
It made sense for me to not pay off my loans early when the interest was less than 1% but now that it's sitting at 6.25% the idea of paying it off and forgetting about it seems more appealing.
Due to when I attended university, my loans won't get written off until I'm 65, which will be close to another 30 years for me.
With all this in mind, should I try and pay off my students loans as soon as possible or hold the line and continuing paying the minimum while watching the total amount rise, in the hopes that it will all be reduced to zero when I'm 65? I currently hold enough in my UK savings account that I could pay off a large chunk today, but in all honestly I'd rather put that money towards my investment accounts or towards a Masters degree.
