A UK student loan is a tax, not a debt

You repay 9% of income above a threshold for a fixed number of years and the rest is cancelled. If you will not clear it before the write-off, overpaying buys you nothing.

Why it works

The balance and the interest rate look like a loan and behave like neither. Repayment is set by your salary, not by what you owe, so clearing the balance early does not reduce a monthly bill — it only ends one sooner. For the many graduates whose balance is written off with money still outstanding, every voluntary pound is a pound given away. The one thing worth working out is which side of that line you are on.

Do it exactly

Estimate with the rule, then check it against the calculator that models it properly.

Open Student Loan Calculator →

More in Finance

• The Rule of 72Money doubles in about 72 ÷ (interest rate %) years.
• Double the tax, round upIn the US, doubling the sales tax on the receipt gives a quick tip estimate.
• 114 triples, 144 quadruplesDivide 114 by the rate for tripling time, 144 for quadrupling.
• Ten years earlier ≈ twice the potAt typical market returns, starting to invest 10 years earlier roughly doubles your final balanc…

Should I pay off my student loan early?

You repay 9% of income above a threshold for a fixed number of years and the rest is cancelled. If you will not clear it before the write-off, overpaying buys you nothing. The balance and the interest rate look like a loan and behave like neither.

Browse all 104 rules of thumb →