How should I deal with my student loan? - Seedly
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Kim Wang

Asked on 26 Jul 2019

How should I deal with my student loan?

As a recent graduate, should I rush to pay my student loan ($16k, 4.5% annual interest) or should I take my time and hold back more cash so that I’ll have more to invest after 2-3 years (betting on the assumption that the market will bottom out by then)?


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There are opportunities in the market at all times. So I will not try to predict the market.

For your student loans, 16k is not a huge sum. Being a recent graduate you should be in your early or mid 20s, I suppose?

You can consider the amount of loan you want to pay back monthly and still ensuring you have a healthy cashflow. Assuming you have an income of 3k. After CPF it will be 2.4k and say if you wish to have a surplus of 400 a month, you can work backwards to decide the amount you are gng to pay. And then look at how long it will take to clear. If you are good with it, work from there. If not, adjust accordingly.

For me, I work on timeline, for example, say I want to clear my loan in 3 years, I just work on the amount I need to pay per month or year to clear it in 3 years.

And from there adjust my expenses accordingly around the loan, having some for insurance, savings, investments and daily living.


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Kim Wang

26 Jul 2019

Hi Clarence, thank you for your detailed reply. I am thinking of clearing my student loan ASAP, ideally within one year. My salary is not huge ($2.5k+ after CPF), but I am planning to cut down on my expenses and pump whatever I have into my loan. Initially I was thinking of not having any savings, but after second thought I might allocate some aside just in case. Thank you for sharing your personal strategy👍🏻
Clarence Chua
Clarence Chua

26 Jul 2019

Most welcome
Level 5. Genius
Answered on 03 Nov 2019

Clearing it asap was the best choice I made for mine.

I have peers that are still clearing the debt and the interest itself are so not worth it.

Just endure the starting part of working. Don’t get tempted to spend.


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