Hundred SummersShould I overpay my student loan? Simulated, not sloganised
The most-asked student loan question has an unpopular answer: for most Plan 2 borrowers, voluntary overpayments buy nothing, because the loan writes off before it clears; the 9% is a graduate tax, and overpaying a balance destined for write-off is a donation. But high earners who WILL clear it face a genuine guaranteed-return decision. This calculator simulates your loan to write-off with the Hundred Summers app's own repayment function and tells you which side you're on. Your figures never leave your browser.
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Worked example
Computed when this page was built by the same engine that runs the calculator above, so the figures below and the live tool can never disagree. Change any input above to see your own.
| Inputs | |
|---|---|
| Plan / balance | Plan 2, £45,000 |
| Salary | £40,000, growing 3.0% |
| Loan interest | 6.0% |
| Years to write-off | 35 |
| Lump sum considered | £10,000 |
| Investment growth instead | 5.0% |
| Results | |
|---|---|
| Without overpaying: repaid / written off | £125,101 / £55,913 |
| Repayments the lump sum saves | £19,826 |
| The same lump sum invested is worth | £55,160 |
| Does overpaying win | No |
The next question
What's left over each month? →Household budget calculator
Or answer it with everything else: the full Hundred Summers plan connects your pay, pensions, savings, property, tax and spending year by year, and stress-tests them across 500 simulated market histories.
Read the guide
- Student loans: a graduate tax in disguise, and why overpaying usually loses →How Plan 2 and Plan 5 repayments really work (9% above a threshold, not a debt you chip away at) why most borrowers never clear the balance before write-off, and the honest test for whether an overpayment is worth making.
The graduate-tax lens
Treat a UK student loan as what it behaves like: a 9% income tax surcharge with an expiry date. Through that lens the question “should I overpay?” becomes “can I buy out of the tax for less than I'd otherwise pay?”, and the simulation answers it. If the balance dies of old age before it clears, the answer is no at any interest rate. If it clears in your final years, partial overpayment claws little. Only when it clears early does the loan's interest become a real, guaranteed hurdle rate, and a guaranteed 6–7% is genuinely hard to beat after tax.
Two wrinkles the slogans skip: pension contributions by salary sacrifice reduce the income your 9% is charged on; a quiet discount on the loan that favours pensions over overpayment; and the loan never appears on your credit file or affects mortgage affordability beyond the payroll deduction itself. The full Hundred Summers plan carries your loan through every projected year with this same repayment function: see also the repayment calculator and take-home pay calculator.