Are you excited about going to uni but worried about debt?
If you answered ‘Yes’ fear not, as we aim to help ease your concerns over the D-word. FirstIy, ignore newspaper headlines about students leaving university with £50k of debt – this is a meaningless figure, what matters is how much you’ll repay, and unlike other loans, student loans DON’T go on your credit file.
Now the phrase ‘student loan repayment’ often scares people, especially to young people from low-income backgrounds. Families from low-socioeconomic status (SES) households tend to have little income or wealth to buffer against unforeseen circumstances, therefore are often risk averse. Accordingly, many parents from low-income families are reluctant for their child(ren) to apply to university to avoid the prospect of accumulating debt. Ironically, what we call a student repayment isn’t really a debt like any other, in fact it acts far more like a graduate contribution fee than a loan.
Seven Key Things to Remember…
- you only contribute after you graduate and if you earn enough i.e. £25,000 in a year
- student loan repayments are taken via payroll i.e. a process used by employers to pay your salary after deducting Income Tax and NI contributions.
- the more financially successful you are, the more you will contribute in total
- if you don’t earn enough, you don’t have to contribute!
- you only have to contribute for 30 years, after that your remaining debt is written off
- bigger borrowing doesn’t increase repayments
- you can repay student loans early
For more information and useful guidance about the truth about university fees, student loans and grants, please check out the Student Loans Mythbusting article and apply for Pink Dynasty membership to gain full access to resource centre, and free admissions onto our money essentials workshops.
Best of luck!!