Should I pay off my student loan in full?

[Coolbreezee]

Currently on maternity leave.
I have £21k left on my student loan. £40k in the bank.
I plan to return to work in 12 months time.
My salary will be in the ballpark of £35k rising to £50k in the next couple of years.
Interest on my loan is approx 7%.

If I pay off my student loan I will be completely debt free. I will need to use some of my savings to get through maternity leave but will be in a good position to save when I get back to work.

Im just not sure what the best option as there are too many unknowns. I feel like with my salary I will be one of those people who ends up paying the loan off plus a LOT of interest. Any advice would be greatly appreciated.

You're a single parent living with your dad? No, absolutely do not use savings to pay off a student loan.

Your priority should be accommodation for you and your dc. Forger the loan. If you end up out of work it'll be frozen anyway.

I'm all for paying it off if you are mortgage free in a duel income household but in your situation your savings are needed for other more pressing things.

As a lone parent I'd say no, don't use it to pay off debt at the moment, keep the money for a house deposit.

If you buy smart (perhaps consider a move outside London) your property value will rise quicker than the cost of the debt.

Pay the debt out of your salary when you go back to work, I always think capital/savings is king and gives you choices and a safety net.

In your circumstances, I wouldn't.

Although yes, it accrues interest, if you stop work, get made redundant etc it's your only payment that also drops.

It's not a huge amount to pay per month and is better considered as a tax than a debt.

If your home situation was secure then the advice might be different but once you use your savings in this way you can't get them back.

Some very helpful advice. I'm now leaning towards holding onto the money for the next two years and then re-evaluating once I'm back in work and I know how much I'm earning. I know I will be accruing interest but at the moment it's worth it for the safety net. It definitely isn't a straightforward choice because I know Im going to be in the bracket of paying it off but with a lot more interest on top.

Fair enough - but this is quite unusual - most of the time the interest on savings will be less than the interest charged on the debt. I’m not 100% sure how interest goes on student loans. I just hate being in debt!

@Pippa246 I don't think anyone likes being in debt but the leverage and protection of savings outweighs the this in OPs case. It means she could buy a property with a bigger deposit and there for less debt longer term on a mortgage.

As a lone parent financial security longer term is key.

Just wanted to provide an update.
Thanks to the excellent advice of some posters I have changed my plan.

As @AlienFromAnotherWorld suggested. I plan to lock 30k away for 1year in a high interest savings account. I just checked my NatWest instant saver which is currently at 6% interest (better than I thought!). I will then use the remainder of my savings to support myself for the next year before returning to work.
Interest earned on my savings will nearly interest accrued on my student loan.
Once I am back in work, and there are less unknowns I will aggressively tackle the debt. Perhaps pay in 10k and then pay the rest from my income (I will re-evaluate at that point)

I would happily pay £1000 for the financial security, peace of mind, and options that come with having 40k capital at my disposal. As a package, it's not that bad.

Id like to thank the posters who reminded me it doesn't have to be all or nothing and those who gave me some perspective about possible future costs such as nursery fees which I hadn't fully considered.

😊