Question 1

How does this calculator compare repaying and investing?

Accepted Answer

The calculator models two scenarios side by side: overpaying your UK student loan versus investing the same amount in an ISA, pension, or GIA. It projects outcomes for each scenario based on your salary, assumptions, and investment return inputs, so you can explore the projected difference at retirement.

Question 2

Does this tool provide financial advice?

Accepted Answer

No. This tool is for educational purposes only and does not constitute financial advice. All outputs are projections based on the assumptions you provide. For personal financial decisions, consider seeking independent financial advice.

Question 3

What assumptions does the model use?

Accepted Answer

The calculator supports UK student loan Plans 1, 2, 3, and 5, modelling each plan's repayment rate, threshold, interest formula, and write-off period. Investment returns are applied as a constant annual rate. You can adjust salary growth, RPI, investment return, and other parameters. The model does not account for market volatility, ISA annual allowances, or pension lifetime allowances.

Question 4

Who might find this comparison useful?

Accepted Answer

Higher-earning UK graduates who expect to repay their student loan in full (rather than reaching the write-off date) may find it useful to compare the opportunity cost of overpaying versus investing. The tool is also relevant to anyone evaluating the trade-offs between early loan repayment and long-term investment growth.

Question 5

What is the opportunity cost of overpaying a student loan?

Accepted Answer

The opportunity cost is the projected investment growth you forgo by using money to repay the loan early instead of investing it. For graduates on track to repay in full, overpaying can save on interest but the same money invested may produce a higher projected value at retirement, depending on assumed investment returns. The calculator illustrates this trade-off under your chosen assumptions.

Compare Repaying Your Student Loan vs Investing (UK)