economy
I’m spending my house deposit savings to pay off my postgrad student loan
Lucy O’Brien was shocked when she discovered how high interest rates were leading to ballooning debt
TL;DR
- The author, a graduate from 2021, is using savings meant for a house deposit to pay off her postgraduate student loan.
- A new 6% interest rate cap is being introduced for some student loans, but most 'plan 2' graduates will still see their rates increase due to inflation linkage.
- The author's initial borrowing of £51,529 has grown to £65,879, with her master's loan balance increasing despite repayments.
- She calculated that continuing monthly payments would take until 2034 to clear her master's loan, costing over £7,000 in interest.
- To avoid further interest accumulation, she made a lump-sum payment and plans to clear her postgraduate loan by 2026.
- This decision delays her property purchase but saves thousands in interest and will boost her salary by removing the monthly deduction.