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 £27,295
You Have to Pay Back 9% Of What You Earn, in Excess Of £27,295. The repayment of your student loan starts when you start to earn over £27,295.
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.
#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
As inflation rises, the Government has to charge ‘above-inflation’ interest rates on student loans. Interest rates are between RPI+0.25% and RPI + 0.35%.
Depending on how much you borrowed, the interest will be charged at a rate of RPI+0.25%.
If your income is over £41,000, then the interest will be 0% for up to 30 years or until you’ve repaid the debt in full – whichever comes first.
What Are the 3 Types of Student Loans?
There are three types of student loans:
- Federal loans
- Private loans
- Refinance loans
Federal loans are provided by the government, while banks, credit unions and states make private loans and refinance loans.
How Much Is a Student Loan in the UK?
Eligible full- and part-time students can borrow for the full cost of their course fees, up to £9,250 per year (or up to £6,165 a year at private universities).
This money isn’t means-tested, so household income won’t affect how much you get.
How Much Can You Get In Student Loans?
The maximum Maintenance Loan is £12,382 and is paid to students who will be living away from home and in London, and whose annual household income is £25,000 or less.
How Much Is Student Loan Monthly?
Once you leave your course, you’ll only repay when your income is above the repayment threshold.
The current UK threshold is £27,295 a year, £2,274 a month, or £524 a week.
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.