The 10,000 run the risk of wasting money by choosing to repay their student loan when they don’t have to.


‘For some, overpaying is simply flushing money down the toilet’

Martin Lewis, founder of MoneySavingExpert.com, said: “In practice, for most people, student loan repayments act more like a tax than a debt.

“With interest rates for those who started college in 2012 or after as high as 6.3%, some may assume that paying as much as possible is a blessing. Yet statistics show that the vast majority, over 80% , of these college graduates are unlikely to pay off their loan in full in the 30 years before it expires, so that the interest rate is not what they will pay. For those with lower incomes, overpaying a Some of your loan is often worthless, as it will not change what you pay in the future, in which case overpaying is simply flushing money down the toilet.

“For those who started college before that (or those in Scotland or Northern Ireland since), since both the amount borrowed and the interest rates are lower, they are more likely to pay off all debt before it is due. pay off the loan.

“But the interest rate is lower, just 1.75%, so if you have cash to make voluntary payments, there are generally better ways to use it. Clean up other debts first and consider putting extra money in a savings account to avoid Borrowing in the future. After all, you can earn more there than the interest costs you, up to 2.6%. “


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