Journal 005
The Student Loan Calculator Taught Us About Tipping Points
Three simple scenarios revealed that the most important number wasn't the repayment. It was the point where the decision changed.
The first Wayli prototype wasn't trying to reinvent student loan calculators.
It was trying to answer one question.
Should I overpay my student loan, or invest the money instead?
The question came from my own family. My daughter was beginning her career and, like many graduates, faced a decision that could last decades.
At first, we built what looked like a straightforward calculator.
- Enter a salary.
- Choose a repayment plan.
- Compare two outcomes.
Job done.
Except it wasn't.
What changed
While testing the calculator, we deliberately modelled three different borrowers.
- Someone likely to repay the loan in full.
- Someone likely to have part of the loan written off.
- Someone close to the tipping point, where a small change in salary, investment returns or monthly overpayments could completely change the best decision.
The third scenario became the most interesting.
Changing a single assumption could flip the outcome.
A slightly higher salary.
A different investment return.
An extra monthly overpayment.
The recommendation changed.
Student loans aren't like most other borrowing.
So we stopped thinking about the final answer.
We became interested in the point where the answer itself changed.
The tipping point.
Why it mattered
Most financial tools tell you what happens under today's assumptions.
But student loans can last longer than many mortgages.
Wayli started asking a different question.
What would need to change before a different decision became the better one?
That proved much more useful.
Instead of simply recommending overpayments, we could show that an extra £5,000 of annual salary might change the outcome.
Instead of saying investing was the better option, we could show the investment return needed before that became true.
The calculation was still important.
Understanding how sensitive that calculation was became even more valuable.
Confidence comes not only from knowing today's answer, but from understanding how stable that answer remains if your circumstances change.
What I learned
Looking back, the repayment wasn't the most interesting part.
The tipping point was.
A good decision engine shouldn't stop at the result.
It should help people understand what would need to change before a different decision becomes the right one.
Spark
Inspired by:
- Internal sprint review