March 8th, 2010
Posted in 
Worried about paying your student loan back after university?
Confused about how much you owe and how much interest you’re paying? Well start listening because The Grade has all your answers.
For those of you who have taken out a student loan since 1998, you will have what is known as an “Income Contingency Loan”. In simple English, it means the amount you pay back when you start working will depend on what you earn.
You will only start paying back your student loan once you have graduated and are earning at least £15,000 per year, or more. After this, 9% will be deducted from your wages.
However, it is only deducted from the amount that you earn over £15,000. For example if your annual salary is £20,000, you will have 9% deducted from the extra £5,000 of your wages.
The loan payment is also taken before tax making it more money efficient for you… not bad hey?
If you are money smart and want to pay back your loan early; you can do this online, by post or by setting up a standing order or direct debit through Direct Gov. You can make payments from as little as a fiver, however, this will not reduce your monthly payment.
Paying extra money towards a student debt does have its advantages as the balance is accruing interest whilst the debt is outstanding. It’s not all bad as the interest rate on a student loan is substantially lower than what you would find from any bank in the High Street.
There is also great news on the finance front for students at the moment. The government decided not to apply any interest rate between August 2009 and March 2010, giving you guys 6 months free anyway! That’s not a bad deal.
Don’t forget if you have any queries or want a little more information regarding the repayment of a student loan, you can find it at www.direct.gov.uk.
Tags: direct gov, loan, student loan
