Student loans - loads must get written off??

[Tiggsy]

The other half has student loans of 30k.

My gut reaction was that paying these off ASAP would be an obvious objective.... But she wasn't so sure so i looked at the figures.

I ran various spreadsheet assumptions - firstly assuming the 1.5% interest rates stayed in place (obviously fairly optimistic)

She is 25 so has about 23 years until they write off anything outstanding.

By my calcs if you start with a modest income (23k) and get a 5% pay rise each year and the student loan cap (when you start paying) increases at 5% too (it is currently just under 17 K).....you are very likely to still have money outstanding at the end (age about 47)

So unless you think you'll get pretty good money....or the cap will not escalate very much..... There seems little point in overpaying to get rid of early - even more so if you are a woman and plan a career break for kids.

So is that pretty much the case..... People on modest incomes or planning to raise families - don't pay any more than you have to and wait for a chunk to get written off?

[Tiggsy]

as someone who left school at 16...yes, you'd like to think - however, it seems you can get that debt from just partying very hard and doing little work. Mind boggles.

[Tiggsy]

yep - she is 25 with a type 1 loan....so I guess she just keeps paying the minimum. odd

[Tiggsy]

as above, a director taking divs won't avoid student loan payments....and his div's are still on taxed company profits. So there's an NI saving but its not the "he's getting away with no tax" situation people think.