Repaying student loans

UK students who have taken out their full loan entitlement (to cover fees and living expenses) will be borrowing over £8000 a year − and maybe considerably more if they start in 2012. So it is worth being realistic about the repayment arrangements.

You pay back the amount you have borrowed, adjusted for inflation – so the amount you pay back is equivalent in spending terms to the amount you borrowed. At today’s rate of inflation, if you have borrowed £10k, the debt will increase by about £12.50 a month.

You start paying back your student loans through the tax system, after you have finished your studies and you are earning over £15k pa. You pay at the rate of 9% of those earnings over the £15k threshold. For those starting their course in 2012, the threshold will be raised to £21k.

Here are some examples.

• If you are earning £14,999 pa, you pay nothing.
• If you earn £20,000 a year, you will pay 9% of £5000 (ie the difference between £15k and £20k). This means you will pay £450 pa (£37.50 a month).
• If you earn £50,000 a year, you will pay 9% of £35,000 (ie the difference between £15k and £50k). This means you will pay £3150 pa (£262.50 a month).
• If your earnings never reach £15,000, you never repay your loan nor any part of it.
• The outstanding balance of your loan is cancelled after 25 years (35 years if you live in Scotland), if you die, or if you become permanently unable to work through illness or disability.

More information can be found on the student support websites for England, Scotland, Wales and Northern Ireland.