"Junior bankers in London should spend their entire bonus paying off their student loans"

I spent my entire career in banking in London and now that I am happily retired, I'm giving the same advice to all the young people I meet: before you do anything, pay off your student loans.

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I've made sure that my own children are not encumbered with these things. When my son went to university in 2015, student loans were all the buzz. However, I checked the student loan company website and couldn't believe that they were charging monthly compound interest at RPI plus 3%!!! 

I immediately warned everyone I knew against getting involved with this scam. Most of them ignored me and are now regretting it. RPI is way higher than CPI and these loans are spiralling out of control. 

If you take a student loan balance on graduation of £50k-£55k, then at the moment you will need to earn £70k a year simply to ensure your 9% repayment keeps up with the interest cost. The monthly compounding is evil. 

Too many people ignore this. People see that the debt on the student loans is forgiven after 30 years, but ignore everything else. There are five different repayment plans, but all you really need to pay attention to is the fact that once you're on £27k+ a year as a working graduate, you're hooked in. People have sleep-walked into a nightmare. 

And if you want to get out, or to query something? Check the reviews of the Student Loan company's customer service: 94% are one star. 

Trust me. This is not a company you want to be dealing with. Before you do anything with your bonus this year, pay the loan off. You will thank me in years to come.

Toby Gallagher is a pseudonym

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