I don’t know how the student loans in Canada and the US are calculated by in England the rate of borrowing goes in line with RPI. Due to recent cuts in the Bank of England base rate this RPI is droppping fast and may soon be in the negatives. What does this mean? In theory the treasury could be paying back interest on the loans. My sister is in this category as she will start paying back in April of this year when the RPI is predicted to be dropping to as low as 0.8 %!

@ Susie – It sounds like you have an interesting plan, but one thing to note: there are two different types of student loans, with the interest treated differently. Subsidized loans have the interest paid by the federal government while you’re in school; unsubsidized loans do not (the interest accrues while you are getting your education and is added to the loan total). Depending on the exact mix of loans you are able to get and type of investments you make, investing an amount of money equal to loan principle when you start your education may, or may not, grow enough to completely repay the loans by the time you graduate. Starting with more money to be put aside will allow you do so, but you should be sure to run the numbers first, so you know how much to set aside.

I know a family friend who is a successful lawyer in our city in his upper 50s and STILL has student loans from law school! That’s insane. I encourage students to do everything necessary to avoid student loans.