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Original poster

Student Loan repayment of over £1,000 a month. WWYD

36 replies

geordiegoose · 10/04/2024 13:07

Dd has secured herself an exceptionally well paid job. She’s a lawyer in London. Her current student debt is £70k.

This year her salary is £170k. This means she will pay roughly £13k in a student loan repayments. The current interest rate is 7.7% on her debt.

Now it might make sense to repay the student loan now and save interest and future payments. But what if she decides in two years time that she doesn’t want to work in such a high pressured career? What about savings? What about saving a flat deposit?

OP posts:
Francisflute · 10/04/2024 13:09

What's the question, is that the amount the SLC has calculated she needs to pay back or is she paying extra?

Original poster
geordiegoose · 10/04/2024 13:10

Oh it missed the last paragraph.

My question was. Is it better to pay off the student loan now by scrimping for two years and prioritising that, or is it better to just pay it off at the prescribed rate?

OP posts:
Hollyhead · 10/04/2024 13:13

I’d personally just pay at the prescribed rate for now - she’ll be bringing home ?7.5/8k a month so I’d save a house deposit out of that first.

Ifailed · 10/04/2024 13:13

paying 13K out of a salary of £170k is hardly scrimping!

LivingDeadGirlUK · 10/04/2024 13:13

It's better to just pay it off as she goes, I would not bother trying to overpay it now. She doesn't know what her circumstances may be in the future and ultimately student 'loan' is actually a graduate tax.

Saying that, she shouldn't be scrimping for anything on that wage!

somewhereovertherain · 10/04/2024 13:14

If she's going to stay earning that level makes sense to pay off ASAP.

if she's not, it doesn't but would need to drop to about 50/60k to not be worth paying off.

at the level shes at it would clear in 6-7 years naturally.

Lougle · 10/04/2024 13:14

If her salary is £170000, it would probably be best to pay off the student loan because the loan interest rate is higher than a mortgage would be. She'll pay £13000 this year, but her loan value will go up £5400.

PickledPurplePickle · 10/04/2024 13:18

Prioritise paying it off as quickly as possible

ObliviousCoalmine · 10/04/2024 13:20

She'll take home about 80-90k depending on her pension contributions. Even if she took 35k out of that this year and 35k next year to bulk pay off the loan, she wouldn't be "scrimping"...

ObliviousCoalmine · 10/04/2024 13:21

And as pp's have said, for the interest rate, she'd be better off getting rid asap.

Greyat · 10/04/2024 13:25

I'd clear it and save £5390 pa in interest

user1492757084 · 10/04/2024 13:25

Pay off as soon as she can and start her life afresh.
She needs to live like a student for three more years. Spend little ...repay the loan.

Greyat · 10/04/2024 13:26

I'd really expect a young woman capable of earning £170k pa to be making these decisions herself Grin

somptuosité · 10/04/2024 13:28

If she remains on that wage she will pay it off quickly. How old is she? What was her original loan amount?

Rosesanddaisies1 · 10/04/2024 13:29

Greyat · 10/04/2024 13:26

I'd really expect a young woman capable of earning £170k pa to be making these decisions herself Grin

This. I’d be mortified if my mum asked strangers on the internet about my personal finances.

idontlikealdi · 10/04/2024 13:29

Greyat · 10/04/2024 13:26

I'd really expect a young woman capable of earning £170k pa to be making these decisions herself Grin

😂very true. I'd also have expected her to have gone into into this eyes wide open.

She'll be taking home c £8.5. £7.5pcm is plenty to save a deposit from and she won't be scrimping.

AskingForAFriend12 · 10/04/2024 13:32

geordiegoose · 10/04/2024 13:07

Dd has secured herself an exceptionally well paid job. She’s a lawyer in London. Her current student debt is £70k.

This year her salary is £170k. This means she will pay roughly £13k in a student loan repayments. The current interest rate is 7.7% on her debt.

Now it might make sense to repay the student loan now and save interest and future payments. But what if she decides in two years time that she doesn’t want to work in such a high pressured career? What about savings? What about saving a flat deposit?

What sort of law is she in? Asking for my son:)

MaverickBoon · 10/04/2024 13:36

idontlikealdi · 10/04/2024 13:29

😂very true. I'd also have expected her to have gone into into this eyes wide open.

She'll be taking home c £8.5. £7.5pcm is plenty to save a deposit from and she won't be scrimping.

Edited
Show quote history

To be fair, she may well be making the decision for herself (she may not have asked her parents for their thoughts but it's perfectly valid for them to ask for advice surely?)

And what is there to indicate that she hasn't gone into it with her eyes open? I may have missed something in the OP.

FrenchandSaunders · 10/04/2024 13:43

Wow she won't be scraping by if she's bringing that wage in and paying £13K a year.

Bjorkdidit · 10/04/2024 13:45

But what if she decides in two years time that she doesn’t want to work in such a high pressured career? What about savings? What about saving a flat deposit

If this is a real concern, she could save as much as she can separately, then if she decides in a year or two's time that she wants to go travelling, change career, go on parental leave, buy a property or anything else that means she won't be liable for high student loan repayments, she still has the money and will have earned back some of the interest charged.

As she's a top rate tax payer, she'll need to consider tax on interest, but I think there's a cash ISA that's just been launched that pays over 5%, so that's good for the first £20k. She might as well aim to put £50k in premium bonds as, while the average payout rate is 4.4%, it's tax free, so worth quite a bit more to her.

Mercurial123 · 10/04/2024 14:10

I'd let my daughter, who is earning 170K a year, decide how she wants to pay her debt off.

TheFlis · 10/04/2024 14:15

At that rate I would pay it off asap and save thousands in interest. Even if she decides to take a less stressful role in a few years it sounds like she will always be a higher earner so plenty of time to save for a deposit when she is debt free.

BudsBeginingSpringinSight · 10/04/2024 14:48

Oh they are out today! 🤣🤣.

People can be earning a lot of money and still be absolutely clueless about money.

Earning a high salary doesn't fill someone's brain with good money management and good tips on what to do... I know some extremely rich people who earn well and they don't have the first clue about finance.

BudsBeginingSpringinSight · 10/04/2024 14:51

@geordiegoose tell us what law pleaae