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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)
sidewinder
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