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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).
NickCJ
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