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Think you've somewhat called it no? If you are saving and can't beat x% you will ~be richer by the time you finish paying the loan off by overpaying rather than saving while interest rate is whatever your risk appetite for x is? Main difference being overpaying rather than saving doesn't give you money for house (bikes)
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It’s probably far too early for you or anyone to call. I wouldn’t overpay anything now, and make a note to look at it again in 5 years.
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I can offer you every sympathy. Crazy that there is such a high interest rates on these loans, and that people under a certain age have just got clobbered.
If I were you I wouldn't pay it off quickly, unless you had money lying around that you didn't know what to do with. There is always a chance that something happens - either to the loan or to you. It's pretty much accepted that the majority of these loans will not get paid off. If the last election had gone the other way they may well have been written off. That could happen in the future, especially as a larger proportion of the population end up paying them = more votes in it, year by year. Also your priorities / career direction / health might change in ways you can't forsee.
Not expert advice, just my two pence worth.
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I've never thought about paying off any extra from what I save/invest each month as the ~4-5% interest is less than I can get from investments on average in stuff like vanguard
This is already a pretty brave strategy - borrowing at 4-5% to buy risk assets that yield 7-8% through the cycle over the long term doesn't leave much margin for error. I guess it's OK if you are doing it tax-free in your ISA.
If you are pretty sure that you are going to be a higher earner I would just get it paid off ASAP, even if you have to clear out your Vanguard account to do it. Famous last words, but the likelihood that it gets written off strikes me as circa zero (particularly for higher earners such as yourself).
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@bobble
Can anyone help me out with some maths/thoughts please.
I am on a plan 2 repayment student loan (pay back 9% of anything you earn over £28k ish) with around 31k in debt. If you are a higher rate tax payer (I'm not), earning over over £50,274, you have a 65% marginal tax rate.
I will likely pay this off in full in the next 30 years organically . I've never thought about paying off any extra from what I save/invest each month as the ~4-5% interest is less than I can get from investments on average in stuff like vanguard. Also a chance I'll stop work early, my salary won't grow, government write it off early etc etc (though this is small).
I am not sure whether to accelerate paying it off or even borrow from family to fully pay it off or not. Why would I do this? Well, the (exorbitant) interest rate is RPI + up to 3%. RPI is 9% at the moment so the interest rate could be 12% in a few months once they recalculate it. Unless the government cap it. This would mean I'd be paying a lot more back in say year 23-30 of the loan when without this excess inflation now I'd have paid it off.
What would you do? I got shafted at uni compared to people a few years older who paid 3k and have less interest, but the current plan is for graduates who start after 2023 to repay for 40 years and have a lower starting threshold makes me feel less unlucky.
Cheers