When will the balance of your student loan be forgiven, and how much money will you still owe when that happens? Everything you need to know about repaying yours is included in this article.

What is the maximum amount that I can borrow for my student loans?

It is dependent on how much money you make as well as where you live.

If you earn more than the repayment threshold (which is currently set at £27,295) within the first 30 years following graduation while residing in the United Kingdom, you will be required to pay 9 percent of that excess amount.

If you live abroad (or plan to live abroad), the general idea is the same, but we’ll discuss that aspect in a different section.

The following table provides a breakdown of the various pay bands and how much each one will cost you.

wages range Monthly student loan repayment cost* Annual student loan repayment cost*
Up to £27,295 £0 £0
£27,295 – £30,000 £0 – £20 £0 – £243
£30,000 – £35,000 £20 – £58 £243 – £693
£35,000 – £40,000 £58 – £95 £693 – £1,143
£40,000 – £45,000 £95 – £133 £1,143 – £1,593
£45,000 – £50,000 £133 – £170 £1,593 – £2,043
£50,000 – £55,000 £170 – £208 £2,043 – £2,493
£55,000 – £60,000 £208 – £245 £2,493 – £2,943
£60,000 – £65,000 £245 – £283 £2,943 – £3,393
£65,000 – £70,000 £283 – £320 £3,393 – £3,843
£70,000 – £75,000 £320 – £358 £3,843 – £4,293
£75,000 – £80,000 £358 – £395 £4,293 – £4,743
£80,000+ £395+ £4,743+

*Figures have been rounded

Be aware, however, that the minimum amount required to begin the repayment process can fluctuate on an annual basis.

Over the course of the previous few years, the threshold has been steadily increasing in accordance with inflation.

Nevertheless, universities minister Michelle Donelan stated in January that the threshold for repayments will continue at £27,295 per year for 2022-23. This news came as a surprise to many students.

According to the Institute for Fiscal Studies, which characterised the change as a “tax raise by stealth,” this implies that graduates earning £30,000 will pay £113 more in real terms in taxes as a result of the decision.

When do you think I’ll be able to pay off my school loan?

Warning: the vast majority of people will not truly pay off their college loans.

Their payments won’t be sufficient to cover both the interest (which will be covered in the following section) and the principal balance of the debt. On the other hand, if after 30 years you still haven’t paid off the loan, the remaining balance will be cancelled out.

For the vast majority of students, this implies that student loans function more like a graduate tax, which is something that middle-class and higher-income earners will be paying for the majority of their working lives.

You should be aware that the same 30-year payback window applies to you whether you are a mature student.

When it comes to my student loan, how much interest will I be charged?

It is possible that the fact that you will be charged interest on your student loan as soon as you take it out would come as a surprise to you. However, this will stop happening after you have completed your education.

While you are studying, you should make time for plan 2 interest.

During the time that you are in school, interest will be accrued at a rate that is three percent more than the Retail Price Index (RPI; a measure of inflation).

The rate that is used to calculate the RPI is typically determined in September of each year using the rate that was in effect in March of that same year.

If the RPI was 1.5 percent in March 2021, then the interest on your student loan should have been calculated at a rate of 4.5 percent between September 2021 and August 2022.

However, the government routinely compares the interest rates that are set on student loans to the interest rates that are currently on the market for equivalent personal loans. As a result of a drop in the “prevailing market rate,” the interest rate has been capped at 4.4 percent. On the other hand, this is forecasted to go back up to 4.5 percent as of March 2022.

After you graduate, you should have Plan 2 interests.

After you receive your diploma, things start getting more difficult. The quantity of interest that you will be charged is going to be proportional to the amount of money that you earn.

If your annual income is less than £27,295, your interest rate will be equal to the RPI.
If your annual income is greater than £49,130, your interest rate will be RPI plus up to 3 percent.

The additional interest rate that you’ll be required to pay over RPI will progressively increase for people earning between £27,295 and £49,130, and this rate will rise with the amount that you earn.

Therefore, you will be subject to RPI plus 1.5 percent if you make £38,213, which is around the median salary between £27,295 and £49,130.

How do student loan repayments work?

The Student Loan Company is in charge of collecting repayments for student loans.

The earliest date on which you will begin making payments is either:

The following April, once you have completed your programme
If you started the course in January and are studying part-time, the exam will be in April four years later.

Your employer will calculate and deduct repayments on your behalf, however if you are self-employed, you will need to settle this in your tax return. Repayments will be computed and deducted automatically by your employer.

The following are some examples of repaying student loans:

In order to assist you in making sense of all of this, we have conjured up three instances of graduate earners and the amounts they would pay.

All of these calculations were accomplished with the use of the Student Loan Calculator, and they are predicated on the following assumptions:

The RPI is equal to three percent on average (student loan interest is dependent on this measure, but to simplify the calculations we assume an average rate over the entire period)
The average wage in the UK is growing by 4% each year (this sets the earnings thresholds for making student loan repayments each year).

Example 1: £27,000 beginning salary

Tom takes out loans amounting to a total of £53,850 over the course of three years (£9,250 per year for tuition fees and around £8,700 per year for maintenance).

After graduating in 2021, he begins working at a company where he is paid £27,000 per year and is given an annual pay raise of 2% on average.

Despite the fact that Tom borrowed $53,850 for his education, his total student loan debt after 30 years came to approximately $148,946. This was due to the interest that was added to the loan.

This may sound frightening, but provided the repayment levels rose in pace with or above his salary increases, he would not have been required to repay any portion of his loan at any point in time (since he never earns more than the repayment threshold).

Because of this, the entirety of Tom’s loan will be discharged, and he will not be required to make any repayments.

The total amount borrowed is £53,850.
Total repaid: £0
After 30 years, the total amount that has been written off is: 148,946.

Example 2: £38,300 beginning salary

In the same year that Megan began her studies at the university in 2017, she took out a loan in the amount of $53,850 to cover the costs of her three-year programme. Megan did not begin her professional job until 2021 and began earning $38,300.

Due to the fact that her annual income was greater than £27,295, she was assessed an interest rate on her loan that was approximately RPI plus 1.5 percent, rather than simply RPI.

If Megan’s salary keeps growing at a rate that is above the average of 5% per year and inflation keeps moving at its present rate, she will wind up paying back a total of £91,237 over the course of the 30-year repayment period.

On the other hand, Megan’s debt wound up growing as a consequence of the higher interest rates that she was charged. This indicates that her repayments were not even sufficient to cover the interest that was imposed on her student loan, which means that a significant amount will still be wiped off once 30 years have passed.

The total amount borrowed is £53,850.
Total repaid: £91,237
After 30 years, the total amount that has been written off is: £115,278.

Example 3:  £50,000 starting salary

Olivia took out the same loan of £53,850 to support the three years of her programme. After graduation, she found a position that paid £50,000 per year; but, despite these earnings, she was unable to pay off her student loan.

She began making payments of £2043 every year (9 percent of everything that was over the threshold of £27,295), but those payments were not even enough to cover the £3,681 in interest that she was charged after she graduated from university.

Olivia’s wages climbed by 5% per year, which resulted in an increase in her overall repayment amount.

However, after 30 years, Olivia had paid back the whole of 161,197 pounds.

However, by this time, due to the high interest rate that was applied to her loan (three percent above RPI), her outstanding debt will have increased to be significantly more than the initial amount that she borrowed.

In spite of having repaid £161,197 of the outstanding student loan debt, the remaining balance of around £19,836 will still be discharged.

The total amount borrowed is £53,850.
Total repaid: £161,197
Total amount that can be deducted after 30 years: £19,836

If I move out of the country, do I still have to pay back my student loans?

When you work abroad, your student loan repayments are computed in the same manner as when you work in the United States; but, depending on the country in which you are employed, your earnings could be greater or lower. This is due to the fact that certain countries have a cost of living that is either lower or greater than that of the UK.

The fundamental idea is the same. You will be responsible for repaying nine percent of whatever that is in excess of the local criteria. On the official website of the government, you may view the repayment thresholds for 2021-22 for countries all around the world.

The following factors are considered for determining the overseas earnings level for the repayment of student loans:

According to data provided by the World Bank, which compares the average cost of living in different nations, the yearly earnings threshold in the UK during the relevant time period was as follows:
The exchange rates, computed using the average rate for the calendar year in the UK before to the current one.

If you are considering working in another country, you will need to calculate how much your income will be reduced due to the amount of student loan repayments you are required to make.

If you do make the decision to work in another country, you are required to inform the Student Loan Company of both your location and the amount of money you are making.

In the event that they do not have information about your income, you will be charged a consistent sum every month; this amount will also vary depending on the country in which you are located.

Will applying for a student loan have an impact on my current credit rating?

Because student loans are not included on your credit reference file, the amount of student debt you owe will not have an effect on your credit rating.

Borrowers who took out their loans prior to 1998 and fell behind on a payment are the only people who can get out of this obligation.

When applying for a mortgage, this is a question that many people have, but the reality is that the amount of student debt you have won’t have any bearing on your chances of being approved. Lenders may take into account the amount that you are currently making on your payments when determining how much money you are eligible to borrow for a mortgage.

How can students who are only attending school part-time repay their student loans?

If you are a part-time student, you are subject to the same obligations and repayment thresholds as full-time students.

Find out more about the financial aspects of working part-time as a student.

I’m going to be a postgraduate student next year; how much will I have to pay?

You, like undergraduate students, will begin to accrue interest on your balance on the day that you make your initial payment.

The current interest rate is 4.4 percent and is typically determined by adding 3 percentage points to the RPI. You will only be responsible for paying back six percent of any income that is earned in excess of the repayment threshold, which is presently set at £21,000.

Is it possible that the terms of the repayments will evolve in the future?

There is no assurance that the current guidelines for loan repayment will remain unchanged over the next three decades.

Nevertheless, significant adjustments to the way the system operates are typically more likely to have an effect on new students than on those who are already enrolled in the system.

Having said that, it is a good idea to keep a watch on any modifications or new rules as they are released. This will allow you to determine whether or not they will effect you, as well as how much they will increase your costs.

Do I have the option to make payments on my student loans on my own time?

You have the option to make extra voluntary donations at any time, either on a one-time basis or through recurring automatic deductions if you so choose. In principle, this will mean that you will pay off your loans sooner; but, if you are among the majority of people who can anticipate to make repayments for 30 years, then this will not save you any money in the long run.

Having said that, this could be beneficial for certain individuals. If you have a windfall come into your possession, such as an inheritance or a bonus from your employer, paying down your student loan could boost your probability of clearing your debt, which would mean that you would no longer be taxed 9 percent of everything over the threshold.

These additional repayments are only worthwhile if they get you closer to paying off the debt in full or enable you to pay it off earlier than you otherwise would have been able to. An overpayment won’t lower the amount you have to pay back each month, in contrast to several other kinds of loans.

If you have any outstanding debt, whether it is £2,000 or £20,000, you will be responsible for paying 9 percent of any amount that is above than the payback threshold.

You are able to make voluntary payments at any time by logging in to your account at SLC.co.uk and selecting the “Payments” tab.

How can I ensure that I do not pay off my student loan in excess?

Due to the fact that HMRC and the Student Loan Company are the entities responsible for processing your student loan repayments, your payments will continue even after you have reached the point when you have paid off your loan in its whole.

Because their payments continued after the debt was paid off, 45,264 graduates in the academic year 2020-21 paid more than they needed to for their student loans.

The total amount of overpayment was over £16 million, with an average overpayment of £375.

Those who began their education prior to 2012 and participated in a previous iteration of the student loan programme are most likely to be impacted by this (Plan 1 student loans).

However, things have improved; since the 2015-16 fiscal year, when an excess of £53.35 million was paid out, the average overpayment has decreased by 38%.

Following the implementation of the new system, the number of graduates who were affected dropped by almost half, or 49 percent, from its previous high of 88,000.

When you have finished repaying your loan in its whole, HMRC will notify your employer to inform them to stop deducting repayments from your salary. However, because it might take up to four weeks for the deductions from your paycheck to be stopped, this may mean that you end up paying back more than you actually owe.

You have the right to request a refund if either:

You’ve already made payments that are greater than the entire amount that you owe.
Your yearly income was lower than the minimum required amount.
You began making payments on the debt before it was necessary for you to do so.
Because your employer put you on the incorrect repayment plan, you have already paid back more money than was necessary.

In the final year of your loan repayments, switching to direct debit for your payments can help you avoid paying more money than what is actually owed.

If the Student Loans Company (SLC) determines that you have overpaid for your student loan, they will either make an effort to get in touch with you to issue a refund or they will do it automatically.

This money ought to be repaid; however, if you are getting near to paying off your debt, it is preferable to get in touch with the SLC in advance so that you do not end up paying more than you have to.

How can I voice my dissatisfaction with my student loan?

When you consider that each year hundreds of thousands of students enrol in higher education, it’s not surprising that occasionally unfortunate events occur.

The erroneous amount may have been paid to you, an incorrect interest rate may have been applied to your account, or there may have been problems with your payments not being correctly recognised.

You have the option to file a complaint with the Student Loan Company; however, in contrast to other types of loan providers, the Student Loan Company is not regulated as a financial services company, so if there is a problem, you will not be able to file a complaint with the Financial Ombudsman Service.

However, you are able to take action. In this section, we will discuss the potential issues that may arise as well as potential solutions.

What could possibly go wrong at the Student Loan Company?

According to a Freedom of Information request that we put in, the Student Loan Company (SLC) received 10,771 complaints throughout the course of the previous year (2021), with an average of 42 percent (4,534) of those complaints being upheld.

The most common complaints received by SLC

According to the number of complaints received, the following types of pain were the most common:

SLC determines the maximum amount that individuals are permitted to borrow: In 2021, there were 1,480 complaints, and around one-third of these were validated (491)
SLC’s poor advise can be summarised as follows: In 2021, there were 1,073 complaints, and around 81 percent of these were validated (872)
Service to customers provided by SLC In 2021, there were 895 complaints; approximately 76 percent of these were validated (684)
The length of time it took for SLC to either process an application or assess the documentation that applicants had submitted:
808 complaints were lodged in 2021, and approximately 71 percent of these were validated (581)
Repayment challenges for those who are employed in other countries: In the year 2021, there were 415 complaints, and fewer than 1% of these complaints were validated (1)

Although January was a popular month for complaints when the second term started the previous year, October and November, which is immediately after students arrive at university and funds are tight, are typically the months in which problems reach their pinnacle.

When compared to the other months of the year, the SLC receives approximately 500 additional complaints during these three months.

“We work hard to ensure that we process student financing applications and any supporting information that is requested as promptly as possible,” said a representative for the Student Loan Corporation (SLC).

It is always regrettable when a customer complains about our service, and whenever it is possible, we strive to settle issues to a satisfactory level.

“We continue to make changes to our complaints procedure by applying insight from previous incidents to make continuing improvements to our business and application processes,” stated the company.