When do Student Loans have to be Repaid?

Living the life of a university student can become quite expensive. There are not only the upfront tuition fees and accommodation costs but hidden extras like going out or paying for essay writing services at Best Custom Essay if the need arises.

For 2012 starters, the estimated cost is suggested to be between a staggering £53,000 and £60,000 for a typical three-year course.

However, graduates are not expected to start paying back their loan until they surpass earnings of £21,000 (previously set at £15, 795 for university starters before 2012) and will make smaller repayments than their predecessors.

After £21,000, graduates pay back 9%of everything above £21,000. For example, a starting salary of £30,000 would demand a repayment of £810 a year, or £67.50 per month (9% of 9,000).

Once your earnings are sufficient, the Student Loans Company will automatically begin to subtract the amount appropriate to your earnings directly from the employer.

Paying the minimum required of their loan each month may keep most earners happy but the rising interest costs, of up to 4.4% on some loans, have prompted many to pay off their loans early.

Smaller repayments on a greater loan size means that graduates will be paying out for far longer than before, hurting their potential long term saving plans. In this case, you will find you can start overpaying your loan by contacting the SLC straight away.

Unlike a mortgage or other bank loan, there are no overpayment fees but also no way of reclaiming your extra money either, should you need it again.

Should your career not set off on your intended trajectory, it can be worth remembering that all student loans are cleared later in life.

For those starting university after 2006, should you not earn over the minimum threshold for 25 years after graduation, your loan will be written off – perhaps not something to aim for, but it takes some of the pressure off.

Vijayraj Reddy
Vijayraj Reddy is founder & editor-in-chief of Startmysalary.com, a financial blog which helps people to earn money, invest money and save money. You can find him on Facebook & Twitter or send him email at [email protected]

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One Response to “When do Student Loans have to be Repaid?”

  1. Edgar says:

    having a student loan is harder to pay than it sounds. I hope with the new president is able to lower interest on student loans. It sucks because getting out of college your already in debt.
    Edgar recently posted..Double if not triple your money!My Profile

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