In this week’s episode of Merryn Talks Money, personal finance experts Merryn Somerset Webb and John Stepek tackled a question from Hugo, a listener in his twenties, on how best to manage student debt and build wealth.
Like many recent graduates, Hugo owes more than £50,000 (about $64,910) in student debt and is uncertain whether paying down this debt or investing elsewhere—such as in the property or stock market—would be the most rewarding financial strategy.
The discussion on Merryn Talks Money offers valuable insights into the complexities of the UK’s student loan system, especially for graduates weighing repayment against other financial goals.
Somerset Webb and Stepek explain that UK student loans differ significantly from other debt types: payments are tied to income, and debt balances are eventually written off after a set period.
As a result, overpaying the loan may not necessarily lead to financial benefits for all borrowers.
This episode also highlights recent changes to the UK student loan system, which are increasing interest rates on loans taken out in recent years, a factor that could influence repayment decisions.
The hosts emphasised that while paying down debt can feel prudent, it may be more financially advantageous for some graduates to direct funds toward investments with the potential for long-term growth.
Somerset Webb and Stepek encourage graduates to consider their own income trajectory, career stability, and financial goals when deciding on a plan.
