New Zealand

Student Loans – Should You Pay Them Back?

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Martin Lewis explains how the student loans are changing.

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The question of whether to pay back student loans is a significant one, and the answer can depend on various factors including financial situation, career goals, and personal values. Here are some key points to consider:

  1. Legal Obligation: Generally, student loans are a legal obligation, and failing to repay them can have serious consequences, including damage to your credit score and potential legal action1.
  2. Interest Accrual: Interest may continue to accrue on your loans, increasing the total amount you owe over time1.
  3. Income-Driven Repayment Plans: Some repayment plans are based on your income, which can make your payments more manageable if your income is low1.
  4. Loan Forgiveness Programs: In some cases, you may qualify for loan forgiveness programs, which can erase some or all of your debt after a certain period of time or under specific conditions1.
  5. Financial Goals: Paying off loans early can free up money for other financial goals, like saving for retirement or buying a home2.
  6. Psychological Impact: Carrying debt can have a psychological impact, and paying off loans can provide a sense of financial freedom2.

It’s important to review your loan terms, consider your financial situation, and possibly consult with a financial advisor to make the best decision for your circumstances. For more detailed information, you can refer to resources like Forbes Advisor and NerdWallet, which offer comprehensive guides on student loan repayment13. Remember, the decision should align with your long-term financial health and goals.

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