By Olamide Majekodunmi
Ahh.. so, the new university year is nearly upon us! For some of you, I am sure you will be waiting on the first instalment of your student loan. I remember the satisfaction I used to get when I received the text from the Student Loans Company informing me that my student loan will be entering my bank account. However, once I became a graduate, I realised I needed to get my head around the process of paying it back…
Are you aware of how your student loan really works and how you go about paying it back? If not, rest assured,
I am here to help explain how the process of paying your student loan works. If you are still currently at university or a recent graduate, this article will apply to you!
So, as many of you are aware, your student loan is money paid to you by the government in order to help you get through your time at university.
This may be to cover your tuition fees or to help you survive financially day-to-day. I am not sure about you; however, I am definitely in a lot of student debt as I took out both a tuition fee loan and a maintenance loan to help me get through my four years of university.
3 key things to note:
1. Once you graduate, you will have to pay this student loan back over a period of time with a set amount of interest.
Despite this, your student loan is something I personally don’t think you should worry about too much. This is because you do not have to make any student loan repayments until the April after you graduate and until you are earning over £26,575 a year.
Once you do become eligible, you will only have to repay 9% every year of anything you owe. This fixed amount will stay the same regardless of how much money you owe.
2. This loan is then wiped off after 30 years.
3. As the cost of education has risen substantially in recent years, student loans have become one of the largest sums of debt most people in the UK owe.
Now… Some of you may be wondering whether or not it is a good idea to pay of your student loan in full when you get the chance. Here is when you should and shouldn’t consider paying off your student loan:
Reasons Not to Pay off your Student Loan
⬛ 83% of graduates will never end up repaying their full student loan.
⬛ You only repay 9% of anything over £26,575 no matter how much you owe.
⬛ You have no obligation to repay your student loan if you are out of work.
Reasons to Pay Off Your Student Loan
⬛ You know you will repay it in full anyway so paying it off early will save you interest.
⬛ You feel a moral obligation to repay it.
⬛ You have no other debt – including your mortgage.
The term ‘debt’ can often cause feelings of stress or anxiety which is why I wanted to share this information with you all.
*Please note: All information stated in this article refer to student loans taken out after September 2012.
Business Management (Year in Industry) graduate.
If you do have any questions or would like a chat then feel free to find me over on @allthingsmoney_ on Instagram or Twitter!