Before you sign on the line, you should know the facts about student loans.

If you're a student, then the way your life will change when you graduate from college is probably on your mind.

After all, it's not just about getting a job and starting to work; it's also about figuring out how to pay off your loans without taking on more debt.

And that means paying back those student loans.

Here are the seven things students should know before taking out loans (or if you're already struggling with them).

#1. Student Loans Have Strings-Attached

You're going to have to pay them back, and the payment terms of your student loan will depend on how much debt you take out.

Another factor is what type of a tertiary institution¹ you attend (public or private).

#2. Student Loans Can Be Excellent

If you need the cash to pay for university and don't have a better option than a student loan is right for you.

You don't need to borrow the total cost of tuition, books, and living expenses to attend college.

Student loans can be an excellent way to fund your education without having all that money upfront.

Still, it's essential to know about interest rates and repayment options so that you're prepared when it's time to pay back your student loans.

#3. You Only Pay Back 9% In Excess Of £22,015

The repayment of your student loan depends on the plan you're on and starts when you earn over a certain threshold.

Whichever plan you're on, you'll only have to pay back 9% of your income over the minimum threshold.¹

The better the terms of your deal is and the less debt load you take on, the lower repayments will be, which is excellent news if you have a low income.

#4. Debt is written off After 30 Years

If you have a very high income and are on the best possible deal, it will take just over 23 years for you to repay your student loan in full.

That's not bad at all if that's what you're looking for,

But bear in mind that your monthly repayments could be more than £400 per month even if you're on the best possible deal.*

* This is for indicative purposes only.

#5. What The Research Shows About Repayments

Research has shown that most people earning over £27,295 will never pay it all back within 30 years.

If you have a meagre income, your monthly repayments could be as high as £50, but the less debt you take on, the higher your overall repayment.

#6. You Only Need to Pay After Your Course is Complete

If a collection agency is coming after you for unpaid balances and you're still studying then you should know that loans are paid in arrears².

This means that you don't need to pay anything until after your university course has finished, then the money is owed by default.

#7. How Inflation Affects Student Loans

Student loans are linked to inflation, meaning that the amount of interest charged on the loan is determined by the Retail Price Index (RPI) inflation rate.

When inflation rises, the interest rate on the loan also increases, leading to higher repayments.

However, the repayment amount is also tied to the individual's earnings, with repayments only being made once the graduate's salary reaches a certain threshold.

Common Questions

In Conclusion

The doors to a prosperous future are opened by obtaining a good education.

Sometimes, for us to attain that we need assistance through student loans. Be that as it may, you don't need to dread them.

You just need to be aware, prepared, and willing to move forward with all the student loan facts you need to know.

References

• www.fastweb.com/financial-aid/articles/seven-things-high-school-students-should-know-about-student-loans
• www.futurefinance.com/blog/everything-you-need-to-know-about-student-loans/
• www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/
• www.forbes.com/sites/maggiemcgrath/2016/01/05/10-things-you-absolutely-need-to-know-about-student-loans/?sh=7b60e5b410d0
• www.bbc.co.uk/news/newsbeat-51190779