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Student loan repayment guide

Most students in UK take out a loan with the Student Loans Company (SLC) to finance their higher education. If you completed your higher education by taking out the student loans, the next step after graduation is to plan how you will repay your loan. Our student loan repayment guide provides information to help you prepare to repay your loan and the interest that will have accumulated during your studying.

Repayments

Student loan repayment is not required in UK until the April after graduation. Even then, you will not be required to repay your loan if you are not earning an income of at least £15,000 annually. Until your annual salary reaches the £15,000 threshold, you will not have to make loan repayments for 25 years after graduation. After this time the Student Loans Company will write off your outstanding debt. Also, if you become disabled and you are unable to work or you die, your outstanding debt is cancelled.

However, if you earn more than the set annual salary threshold you are unlikely to fail to make loan repayments. Your employer will automatically deduct student loan repayments from your salary through the Pay As You Earn (PAYE) scheme together with your tax and National Insurance payments.

Student loan repayment contributions are equivalent to 9% of your salary. You can, however, make larger payments at any time without any financial penalty if you want to clear your loan much faster. The Student Loans Company (SLC) is informed of your total repayments at the end of the financial year.

Working overseas

Students who move to work abroad after graduation are required to make their student loan repayments directly to the Student Loans Company. This is because they are not governed by UK regulations while working overseas. In this case, the income threshold for which you will be expected to start making your loan repayments will be higher than £15,000.

The monthly contributions you will be required to make may also be higher or lower than the typical 9% to compensate for possible differences in living costs abroad. This particular information in our student loan repayment guide is especially useful to non-UK students who go back to their countries after graduation to work.

Second degree

If you go back to study for a second degree and you get another student loan, your existing student loan repayment will be suspended until you graduate for the second time. After graduation, you will be required to commence your total loan repayments again under similar terms as those for your first student loan application.

If, however, you are earning more than the £15,000 threshold as a student, you must continue to pay your initial student loan as usual. This student loan repayment guide advises to prepare for student loan repayment well in advance to ensure the repayment process is as smooth as possible.

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