Making Student Loan Repayments
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In This Guide
- Repaying Student Finance
- When Do I Start Repayments?
- Repayments After Moving Abroad
- Paying Back My Student Loan Early?
- What are the Interest Rates?
- Understanding the Statement
- Contact About Repayments
You’ve borrowed money and graduated from university, but what about the repayments? It’s easy to bury your head in the sand and skip the details but as you delve deeper you’ll soon see that the repayments aren’t as intermediating as you first thought.
There are different terms and conditions that make the repayment quantities vary and that’s why it’s all dependent on your individual situation. We’ve tried our utmost to answer as many questions as possible and help you work out where you stand. You will not need to repay your loan until you are earning over the threshold, we also cover repayments for those that are moving abroad.
Repaying Student Finance
For some, applications are a doddle and the headache often surfaces around the time the repayments are due. It does not need to be difficult, in-fact much of it is done for you. This again, depends on your circumstance and whether you’re working for a company, living in the UK and are earning over a certain amount. Another factor to be aware of is that their regulations are forever changing and the rules from five years ago may not apply today. We have entered the discussion on paying back your student loan in detail below, work out how much you owe and if you need to notify the student finance office of your earnings.
How Much to Repay?
The terms have changed somewhat in recent years meaning that those who took out their loan in England or Wales before 2012 will make repayments of 9% as soon as they earn over £18, 330 whilst those who got their financial aid after that year will not make repayments until they earn £25,000.
If you got your student help after April 2012 then here’s the threshold and the amounts you will pay back in relation to your salary/earnings.
- £21,000- Monthly payment is £0
- £23,500- Monthly payment is £18
- £25,000- Monthly payment is £29
- £27,000- Monthly payment is £45
- £21,000- Monthly payment is £67
You only start repaying once you earn over the threshold but the threshold varies depending on what type of plan you’re on, plan 1 or plan 2.
If you took out your loan before 2012 in England or Wales then you’re on plan 1. If you have taken out your finance in Northern Ireland or Scotland, it will always be on plan 1.
Those that received their amount after 2012 will be on plan 2 and have a higher threshold (the one listed above).
When Do I Start Repayments?
The aforementioned threshold marks the period that you’ll start repaying but you don’t have to start this until the April after you’ve finished your course. For more information on the threshold and how much you will be expected to pay back, check out the table breakdown above.
Repayments After Moving Abroad
There are lots of variables that can affect your repayments and many questions that often crop up. One that includes the issue of moving abroad and whether that means you will still be required to make repayments.
You will have to repay your loan regardless on where you’re residing, the rumour circulating about ditching your loan and moving abroad could land you in trouble. If you’re not earning money- then you will not pay, if you are then you will have to pay whether you’re in the UK or not.
Paying Back My Student Loan Early?
Whether you should attempt to pay back your loan early or not is a difficult one as it’s hard to predict whether or not you will be earning lots of money in the future. If you’re expecting to land a high salary and want to pay off your debt before accruing high interest charges then you should go for it.
In reality though- most students never manage to pay off their loan in its entirety and the government don’t manage to get all of their money back. That’s why you shouldn’t throw money away that you have not got. By trying to over-extend and pay back lots of money, it could have you left strapped for cash.
The long and short of it, is that this isn’t the most pressing of debts and it could be worth putting the extra money into something else.
What are the Interest Rates?
Student loan interest rates are always a topic that many potential borrowers wish to broach, but it’s dependent on your income. It’s best to stay on top of things and if they ask for details on how much you’re earning then be sure to reply as you will be accumulating a 3% RPI (which is top of the scale for interest).
How does the interest work? Well- it often changes for those who have taken out plan 2, it can vary each September. It’s currently RPI plus a percentage, this percentage is dependent on how much you earn. If you earn under £25k then you will just be charged RPI, if you are earning £35k you will incur an RPI and 1.5% charge but £45k and above will mean that you pay RPI plus 3%.
What is RPI?
RPI stands for Related Prices Index and is a term that simply relates to the inflation. In this instance, it is alluding to the amount of interest we are accumulating from student loans. Student loans start incurring interest rates from the moment you take them out, including when you are studying.
Understanding the Statement
From time to time you will be sent a statement from the Student Loan Company, they will reveal all of your information about how much you have paid and your interest rates. Understanding the statement is pretty simple but all the detail in one-go can become rather overwhelming and that’s why we have simplified it below.
Your Opening Balance
If the opening balance is shown at £0, then it means that the loan wasn’t taken out on the start date that’s stated. The opening balance will be a reflection of the amount you owe during the date that is mentioned. If you began studying in September 2012 but your statement showcases a date of April 2012, then your opening balance will display 0.
This is fairly straightforward and is just a column revealing how much you owe at that stage.
Loans Borrowed Total
If you have graduated and not borrowed any more then the second row will be shown as £0. It reveals the amount that you have borrowed and if the statement dates are set as the time you borrowed, it will display the initial amount that has been lent to you. It’s likely that this amount has now increased due to interest over the years and that’s broken down on other rows mentioned below.
Amount of Interest
This is usually the daunting part of a statement, as it gives you the information about how much interest you have accrued. You should not let the figure worry you too much- although the amount totals up your interest during the statement period.
Although this figure can sometimes look a little high, you should remember that you’ll only ever pay 9% of what you earn and this also depends on the thresholds previously mentioned. In truth, most students never pay back their entire loan as it’s wiped off after 30 years.
The forth row down will let you know how much you have paid back during the statement period. If you had taken out your loan prior to 2012 then you will be accustomed to the £21,000 a year threshold, if you were to earn £21,400 in a year you will be expected to pay back £36, which would be 9% of what you earned.
Once you have exceeded the threshold amount you will start paying 9% of that towards your debt, there are other variables with the RPI and percentage that we discussed. If you are yet to graduate then you will see that this row has £0 repayments.
Again- this figure can be overwhelming as it highlights the amount you still owe after calculating all of the above. The closing balance, closes after the last date shown of the statement period. It is the amount from your total borrowed added with the total interest and anything you have repaid would have been taken away from this amount.
This is the total that you owe but as mentioned before, you will only ever pay a set amount and after 30 years your debt is then wiped, so do not let it panic you!
Contact About Repayments – 0300 100 0607
If you still have queries about repayments or how much you will be paying then it could be worth giving them a call. We have compiled all of the most important phone numbers for you right here and made sure that you can speak to the Student Finance experts for help on repayments. Lines are open Monday to Friday 8am – 8pm and Saturday & Sunday 9am – 4pm.
If you are moving abroad, can’t understand your statement or are wondering whether you are due to repay then you should read through this article once again, otherwise, get in contact with your enquiry today.