If you already understand the basics of student funding: how student maintenance loans and grants work, and how you pay your tuition fees, you also need to know how you'll go about paying all this money back. Don't Worry You will not be poor whilst you're a student (unless you waste all your money on shoes, booze, and hilarious gadgets). Yes, tuition fees have gone up a lot in 2012, but this won't affect you at all whilst you're at university, and once you've graduated and have

If you already understand the basics of student funding: how student maintenance loans and grants work, and how you pay your tuition fees, you also need to know how you'll go about paying all this money back. Don't Worry You will not be poor whilst you're a student (unless you waste all your money on shoes, booze, and hilarious gadgets). Yes, tuition fees have gone up a lot in 2012, but this won't affect you at all whilst you're at university, and once you've graduated and have

Paying Back Your Student Loan

Posted in Undergraduate Finance Advice

 

If you already understand the basics of student funding: how student maintenance loans and grants work, and how you pay your tuition fees, you also need to know how you’ll go about paying all this money back.

Don’t Worry

You will not be poor whilst you’re a student (unless you waste all your money on shoes, booze, and hilarious gadgets).  Yes, tuition fees have gone up a lot in 2012, but this won’t affect you at all whilst you’re at university, and once you’ve graduated and have started earning lots of lovely money, you’ll repay less per month than graduates who went to uni under the old system. 

How it Works

The earliest you can start repaying your student loan is the April after you graduate.  If, by this point, you are already earning a salary of £21,000 or over, you’ll start making your repayments.  These are automatically taken out of your pay every month by the Student Loans Company (like taxes), so there’s no need to worry about getting started.

How Much do I Repay?

When you start earning over £21,000 per year, a simple sum is used to calculate your monthly repayments: 9% of everything you earn over £21,000 is paid to the Student Loans Company.  For example, if you are earning £22,000, then you will only pay back 9% of £1,000 (or £90) per year.  If you are earning £47,000, you will pay back 9% of £26,000 (£2,340) every year.

You don’t keep repaying your loan forever: 30 years after you start your repayments, your debt will be wiped.  This is true however much you’ve paid back, so even if you never earn over £21,000 per year, and you never make a single repayment, your student loan will be wiped.  This actually means that a lot of people will never pay back their whole student loan, as how much you repay depends on how much you’re earning, not the total amount you owe. 

The most interesting bit of all this is that whether your fees are £6,500 per year or £9,000 per year, the amount you pay back per month will be the same. You’ll just pay back for a bit longer if you borrow more money (but after 30 years your repayments stop, even if you've still got money to pay off).

Use this calculator from Money Saving Expert to get an idea of what this might mean for you:

The most important things to remember are:

-          Tuition fees going up doesn’t mean you’ll be poor whilst you’re a student.

-          The amount of money you pay back each month depends much more on how much you’re earning than how much you borrow. 

-          After 30 years, if you haven’t paid back your whole debt, it’ll be wiped.

We think this video explains things very well, so watch it if you’re still a bit confused.

If you’re looking for ways to leave uni with less debt, you’re in the right place.  Scholarship Search lets you search for scholarships by organisation, or find  student funding for your specific subject.

Other useful links:

Student Finance TaskForce (brought to you by Martin Lewis, of MoneySavingExpert.com fame)

Student Finance England

Student Awards Agency for Scotland

Student Finance Wales

NI Direct

Search for a grant, fee waiver, bursary or scholarship now on Scholarship Search, and find your student funding today.