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Student Loan Debt Help & Advice

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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

A student loan can mean the difference between being able to go to university or college, and not being able to go at all. But when student life is over and you head out into the world of work, it’s important to understand how you’ll pay it back.

You only start to pay your student loan back when your wages go above a certain level (often referred to as a ‘threshold’), so when you first graduate, it’s easy to forget about it if you’re on a lower income. However, not keeping up with your loan repayments 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?

Depending on the type of loan you have, you won’t have to make any payments to your student loan until you’re paid more than the threshold for your student loan plan. At that point, it varies:

  • If you have a Plan One loan, you’ll start paying this back as soon as you start earning more than £19,390 in a year.
  • If you have a Plan Two loan, your repayments will start as soon as you start earning more than £26,575 in a year.

Normally payments will come straight from your wage through the PAYE system or by self-assessment if you’re self-employed.

Payments will come off after your tax and National Insurance is paid, so this can often come as a surprising extra expense on your payslip.

Also, if your yearly wages are below the level mentioned above, but your weekly or monthly wages push you above it every so often, you may find an occasional 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, it can cause serious money problems.

When taking out a student loan, you have agreed, by law, to pay it back to the Student Loans Company. They have the right to accelerate your debt, which means they can get a court order for any outstanding debt to be paid in 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 do to 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

You can also work with an accountant who will help you with your tax return before it’s filed. This can help ensure that you’re paying the right amount.