Silver and gold coins stacked in front of a gold wall clock

Since university tuition fees trebled to £9,000 each year; student loan repayments have plagued the minds of many graduates. As if leaving the education bubble for the real world isn’t scary enough; with claims that student debts are upwards of £50,000, it’s only normal to feel anxious about such figures.  

On a mission to debunk some myths, we give you the lowdown on the UK’s student loan repayment system.  

“University is too expensive”

Tuition fees should not stop anyone from going to university. Designed to cover fee costs, students can borrow up to £9,250 each year. While a maintenance loan of up to £8,200 – or £10,702 in London – is used to cover rent, bills and study materials.

The amount you are awarded is dependent on your household income. But nobody with a student loan agreement, we repeat nobody, will be forced to pay the costs upfront.

If you had a grant or bursary, these do not need to be repaid at all.  

“Student loans must be repaid immediately after your degree”

Okay, lets start with the good news. You only start repaying your student loan when you're earning more than £21,000 annually. Once you earn over this threshold, a deduction will be taken from your salary along with tax and national insurance.

The amount you repay every month depends on your overall earnings. Essentially the more you earn, the more you pay back. 

Graduates can increase their payback amount to reduce the total repayment period. Although this is not always advisable as you may end up paying back more in the long run. 

“You will be left with lifelong debts”  

The thought of being hindered with huge debts just as you enter the working world is enough to give any new graduate nightmares. But there’s a possibility you may not repay your student loan in its entirety anyway. After a total of thirty years, the debt is wiped completely.  

White piggy bank on wooden table

“Interest is calculated at the rate of inflation”  

The interest paid on your loan depends on the current Retail Price Index (RPI) in your country plus your financial circumstances. Unfortunately, this will cause student loan interest rates to vary considerably with graduates paying all different amounts.   

“Student loans impact on your credit rating”

Taking out a student loan does not affect your credit score and will not be made visible to credit reference agencies unless requested on an application. 

if your student loan repayments are accounted for, The Independent, claims it may well be used to better calculate your net earnings. Under the new system you pay back less annually so could end up financially better off. 

“Moving abroad will clear my outstanding student loan debt”

Sorry to burst the bubble, but this one is wishful thinking! Running away to warmer climates is an extremely attractive prospect after an intense period of study, but you can’t run away from the student loans company - they will hunt you down!

If you are living abroad for more than three months, you must complete an Overseas Income Assessment Form and notify them should you need to adjust your repayment amount. 

Find the right course for me!