Keeping control of growing debts


How much can I borrow?

Means-tested, based on parents’ income. Average loan is about £10,000 but new top-up fees suggest this will rise.

When do I have to start paying it back?

Not until you are in full-time employment, earning more than £15,000. The repayments are deducted automatically from your wages by your employer, at the same time as income tax and National Insurance. Payments are a fixed percentage of what you earn, so expect the amount to rise if you get a bigger pay-cheque.

Student loans and top-up fees mean graduates are burdened with ever-higher debts, but there are ways to manage your student borrowings carefully.

From this September, the new higher education fees regime means students now have to pay for the cost of their tuition after they graduate, rather than up front. So student debts are going to grow even more.

Universities and colleges can now charge up to a maximum of £3000 a year in tuition fees – and most have opted for that figure. Coupled with this, most students now claim the full student loan available, to help cover the cost of living while away at college. In the most extreme cases, this could leave some students with debts of £22,000 when they graduate, says the National Union of Students‘ vice-president Veronica King.

“This will have an impact on the economy. Students already have to borrow so much more to fund higher education, they are starting pensions much later and taking longer to get onto the property ladder. The new fees regime will only compound that.”

Part of this is psychological, says Miss King. “People would rather concentrate on paying down debts than beginning savings, and just can’t do both.”

Harper students

No control

Student loan repayments are calculated by the Student Loans Company and removed from salaries with tax and national insurance. The amount you pay will increase depending on what you earn, and you will have no control over these mandatory repayments.

You won’t have to make any repayments if you earn under £15,000 a year. But at that threshold you will be paying £5.19 a week.

“It really adds up quickly and even a small pay-rise can make a big difference to your repayments. For example, a £1500 a year pay increase can mean £20 a month more to pay back,” says Miss King.

Compared with commercial loans, the student loan is still a better deal, and it’s very much the norm to borrow money from the SLC.

“Take the loan and use it, but try hard to manage your finances while you’re at university. Get into the habit of budgeting where you can, and always find out what grants and allowances may be available to you,” says Miss King.

Universities that want to charge the maximum £3000 fees have to present a fair-access agreement, so some form of bursary or grant will be available to some students.

“Keep track of your spending and don’t be afraid to look at the bank statement. Avoid credit cards where you can, and if you need to borrow more money to undertake further studies, do your research”.

  • Don’t be deterred by top-up fees
  • Start as you mean to go on and manage your money
  • Find out what help you might be entitled to

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