An overpayment only changes the long-term cost if it affects how much you repay before the remaining balance is written off.
Wayli helps you organise those details before you continue with AI.
Built to help my daughter understand how student-loan repayments really work. Shared in case it helps you.
This tool began with a question from my daughter about whether paying extra towards her student loan would actually help.
I built it to make the repayment rules, assumptions and likely outcome easier to understand. It is shared in case it helps you explore the same question.
Plan 2 repayments are linked to your income, while interest is charged on your outstanding balance.
Early-career salaries are often relatively modest, while balances may already be large after university and years of accumulated interest.
Whether your balance grows or shrinks depends on whether your repayments consistently exceed the interest being added.
You repay 9% of earnings above the Plan 2 repayment threshold.
Interest is charged on the outstanding balance, regardless of how much you repay each month.
Any remaining balance is normally written off after 30 years, depending on your loan terms.
One of the most surprising things about Plan 2 is that two graduates with similar loan balances can experience completely different outcomes, simply because their salaries grow differently over time.
Repayments often stay below the interest being added.
The balance may grow until the remaining amount is written off.
Repayments begin catching up with interest, leaving the outcome less certain.
In these illustrative scenarios, future earnings can materially change the projected outcome.
Repayments are more likely to exceed annual interest in this illustrative scenario.
Full repayment may be more likely, so overpayments may have a larger modelled effect.
These examples are not thresholds. Your balance, remaining term, interest rate and future earnings can change the outcome.
Whether overpaying makes a meaningful difference depends first on whether the loan is likely to be repaid before write-off under the entered assumptions.
Extra repayments may not significantly change the final outcome before your remaining balance is written off.
If the remaining balance is still likely to be written off, extra repayments may have limited effect on the total amount repaid.
Overpayments can reduce the total interest paid and shorten the time it takes to clear the loan.
This is where overpayments are more likely to reduce the modelled interest and repayment period.
These simplified examples show how future income, the remaining term and the starting balance can lead to different outcomes.
Repayments may remain below interest for years before stabilising.
Repayments are more likely to exceed interest, making full repayment likelier.
Future income and the remaining repayment period can influence the outcome as much as the starting balance.
You've seen how Plan 2 works. Now use your own salary, balance and graduation year to see how those principles apply to you.
Enter your repayment plan, salary, balance, graduation year and any voluntary overpayment to see what the current model indicates.
See when extra repayments change the outcome - and when they may not.
See why the same salary can produce different repayment totals.
See which factors can move a loan from likely write-off to full repayment.