The UK student loan system can seem complicated and daunting. With ever-rising tuition fees and mounting living expenses, it’s no surprise that thousands of graduates are left to manage their student loans when they leave university.
For graduates wanting to take control of their student debts, managing student loans can be a complicated and lengthy process. Fortunately, the following guide outlines the available repayment options for UK graduates and provides helpful tips to ensure successful loan management.
Repayment Options
The repayment of student loans is based on an individual’s circumstances. Generally, a graduate will become eligible to repay their student loan when they earn at least £18,935 per year (or £1,577 a month).
When the salary threshold is met, the repayment will be calculated at 9% on all income above £18,935. If your salary is below the threshold you will not be required to make any repayments. If you are self-employed and your profits exceed the threshold, you will still be liable for loan repayment.
Given that student loan repayment is calculated on a sliding scale, your salary will ultimately determine how much you are required to pay. To find out the exact amount of your repayment, you can use the student loan calculator provided by the Student Loan Company.
For graduates wishing to pay their student loan off in one lump sum, this is possible and will save you from making future payments. You can also pay extra towards your loan throughout the year in order to pay it off earlier.
If you are unable to make your scheduled repayment on time, you are able to contact the Student Loan Company and freeze the payment. It is important to note that the freeze period will accumulate interest so it’s best to ensure regular payments where possible.
Tips for Loan Management
In order to successfully manage your student loan, there are a few helpful tips you should keep in mind:
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Track your loan balance: It’s helpful to track the balance of your student loan so that you know the exact amount you owe and when your loan is due for repayment. Make sure to check that your repayment is updated so that you accurately reflect the amount you are paying.
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Set up a budget: A budget will help you understand your financial needs and situations so that you can plan your payments accordingly. With an appropriate budget, you can even save up for outgoings such as holidays or car loans.
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Prioritise loan repayment: It is important to make loan repayment your top priority as interest on the loan can accumulate quickly. Making regular payments allows you to pay off the loan in the shortest amount of time and avoid potential penalties for missing payments.
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Seek help: If you are unable to make your repayment on time, it’s important to seek help as soon as possible. Most graduates are eligible to pause their loan repayment. Furthermore, The Student Loans Company provide a series of debt help plans that may be suitable for your circumstances, so make sure to check your eligibility.
Conclusion
Student loan repayment can be a difficult process for many graduates and loan management can be an overwhelming task. Fortunately, this article provides helpful tips and advice to ensure successful loan management and repayment.
It’s important to remember that, although student loans can seem like a huge burden, they are an investment that will pay dividends when you enter the job market. Therefore, it’s essential to take charge and manage your student loan effectively.