Understanding Student Loans

understanding student loans

Thinking about university, worried about the student loan?

There is lots of information out there, so here is a simple guide to get you started,

You only pay your loan back once you are earning more than £21,000 pa.  What about the rest? We had a quick look and filtered out some of the info.

Loans and grants:

  • Loans you pay back, grants, you don’t. Both are paid into your account on the same day through a BACS system, up to ten days after enrolment and then first day back of any term
  • Loans are 65/35, which means you apply for 65% and you are means tested for 35%
  • Grants are fully means tested and the amount you get is deducted from the overall amount of your loan
  • Though your repayments are a long way off its worth understanding them now
    • They are automatically deducted by your employer; “payroll deduction”, if your pay falls below or you stop work your payments automatically stop
    • Interest on student loans is set at the rate of interest +3% pa starting as soon as your loan starts
    • After study and before you start earning £21,000 the interest is set with inflation, after you start earning + £21,000 it is in line with inflation +3%

 

Salary Monthly repay Yearly repay
£20,000 £0 £0
£30,000 £67.50 £810
£35,000 £105 £1,260

Learn to budget

Student finance credit your bank in three payments per academic year. You have 12 weeks to manage all of your spending and bills during term; budget wisely! Some companies such as mobile bills will give discounts for payments in advance.

TV licence is reduced to students remember to chose that option when calling, some councils give discounts to students but if you don’t keep up payment you lose the right to pay the annual bill in installments… everything is worth the phone call.

If you have an overdraft or a credit card, don’t count the amount of those in your budget as you can incur bank charges putting you at risk of debt.

Take a look at these websites for more information:

 

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