Most graduates these days leave university with a student loan

Repayments are only required when you start work and earn more than a threshold figure. If you’re worried about being able to afford your student loan repayments, you may be at risk of having unmanageable debts.

So, the all-day drinking and last minute cramming for finals is over… now it’s time to pay back those student loans!

Bad news indeed, but you knew deep-down that it would have to be repaid at some point! However, student loans provided by The Student Loans Company based in Glasgow are far better than anything on offer by the high street banks. The loans are based on the rate of inflation rather than the Bank of Englands base rate, so although there is a nominal amount of interest to pay, your debt will never escalate out of control like it could with a personal loan.

The Student Loans Company (SLC) Website

From 1 September 2005 until 31 August 2006 the interest rate, which applies to student loans will be 3.2%. The current interest rate of 2.6% will apply until 31 August 2005.

Did you start in higher education on or after 1 September 1998?

Also known as Student Support Schemes (SSS).

You will need to start repaying the debt once your gross annual income exceeds £15,000 per year.

For every pound you earn over the £15k threshold, you will be required to pay 9% to the Student Loans Company.

So if you earn £25,000 per year, you will pay 9% on £10,000, which will be taken out of your wages by the HM Revenue & Customs (formally know as the Inland Revenue) – so there is no way to escape the repayments!

The repayments continue until the loan has been repaid. But should your earnings drop below £15,000, the repayments will stop until you earn over the threshold again.

Did you start in higher education before September 1998?

These are known as Mortgage Style student loans.

You are allowed to defer your repayments for a whole year at a time, if you do not earn above the threshold which is 85% of the national average (currently around £21,000 per year).

The monthly repayments are then calculated so that you repay the debt somewhere between 5 and 8 years.

Graduate Loans

These are loans from High Street Banks, not the Student Loans Company.

Banks are very generous when lending to students, with large interest-free overdrafts, credit cards and loans with deferred payment schemes.

But beware of high interest rates and shop around before you make any decisions on which bank you choose. You must keep to the agreed monthly payments of graduate loans, as the banks are unlikely to accept reduced payments if you are unable to work.

If you are experiencing problems with your graduate debts, PayPlan may be able to assist you in reducing the monthly repayments to a more manageable level.

Call us on freephone 0800 316 1833 or contact us. 

Go to our debt information library for detailed information on all debt-related issues.