For many people, a student loan is the difference between being able to go to university/college and not being able to go at all.
Under a new law, you will only start to pay your loans back when your wages go above a certain level, so it often falls to the back of the mind when you first graduate. However, not keeping up with your loan payments when you’re supposed to can end up causing you some serious money issues.
When do I need to make payments to my student loan and how much are they?
Thanks to recent changes to the law, you won’t have to make any payments to your student loans until you are getting wages of more than £17,495 each year.
Once you reach this stage, you will be expected to pay back 9% of the money you earn above the £17,495. Normally payments will come straight from your wage through the PAYE system or by self-assessment if you’re self-employed.
The payments will come off after your tax and national insurance etc., so this can often come as a surprising extra bill at the end of each month.
Also, if your yearly wages are below the level mentioned above, but your weekly or monthly wages accidently push you above it every so often, you may find a payment to your loan on your wage slip.
What happens if I don’t make a payment to my student loan when I’m supposed to?
If you don’t keep up with your student loan payments, this can cause you some serious money problems.
When taking out a student loan, you have agreed, by law, to pay it back to the Student Loans Company in line with the rules laid out above. They have the right to accelerate your debt, which means they can get a court order for your debt to be paid in the one go, including interest.
This often causes the balance to become completely unaffordable and, since the payments are taken straight from your wages, leave you short for all your other bills.
Ways to keep on top of student loan debt
It can be hard to keep track of your payments to your student loans, especially when they are taken before you even see your wage slip. However, there are things you can to help make sure you stay on top of them.
Firstly, it’s important to check that the correct amount is being taken via PAYE. If you think you are overpaying, contact your payroll department and the Student Loans Company to have this reviewed.
If you’re self-employed, use an online calculator to work out roughly what you’ll owe based on what you think you’ll earn and put this amount aside. Doing this as soon as possible will give you more time to save up
It’s also good, if you’re self-employed to work with an accountant to help with your tax return before sending it back. This will help to guarantee that you are paying the right amount.
If you’re struggling with student loan debt and need help, call us now for free advice or complete the form on our page. We can start to work through your debt problems from the moment you contact us, and our advisors are trained to give you the best advice for your situation.
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