Student finance, the truth about uni fees, loans & grants
There are many common myths surrounding student finance and lots of incorrect information spread across social media and news. If you’re a student and you’re about to apply for student finance, it can be a daunting time. With so many people offering words of wisdom, and not always positive, you can start to feel differently towards your future studies. Here, we urge you to only look at the facts and you’ll see it’s far less scary than you expected.
Student loans
Firstly, it’s worth noting that you can pay for your studies outright without the need for a loan, should your financial situation allow. But, for most students this isn’t an option, so student finance seems the most obvious choice. Also, it’s worth noting that student finance is one of the only loans that doesn’t affect your credit score. It might be taken into consideration with mortgage lenders in an affordability check, but it won’t show yon your credit check. So, although you might have this loan for many years to come, it might not be the noose around your neck you anticipated. Whether you’ve just started university or you’re a few years the other side, your student loan will be with you for a while. For this reason alone, it’s worth understanding how your loan works.
How student finance works
Just like with most loans, student finance does come with some rather overwhelming terms and conditions. Therefore, we recommend you ensure you are aware of the most important factors.
- What you pay depends on what you earn. You will only have to start repaying your student loan once you start earning over a certain threshold and depending on which loan plan you choose. Loan Plan 1 – The threshold for plan 1 is currently £364 a week or £1,577 a month. Loan Plan 2 – The threshold for plan 2 is currently £494 a week or £2,143 a month.
- Repayments are automatically deducted from your salary, just like your tax, national insurance and pension contributions.
- Once you reach the threshold, you pay 9% of anything you earn above it. The more you earn, the more you pay.
- If your salary goes down, or you stop working, your repayments will be adjusted automatically. Note: The Student Loans Company tracks your income using your National Insurance number. So, they’ll know when you’ve gone over the threshold and must start paying back your loan.
- Any outstanding debt (including interest) is wiped out if you don’t pay your student loan within 30 years from the April after your graduation date. So, you don’t have to worry about your debt being passed on to your future children.
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