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Student Debts Explained | AD

Student loans tend to be one of the biggest loans that we take out in our lifetime. It is a big factor affecting whether we decide to go to University or not. It's something that is important for you to get your head around if you're already at University or are applying.

The average student debt has risen to £50,800 since the interest attached to student loans was officially increased to 6.1%. The most annoying and worry thing this for us students it that the majority of us are young when we take these loans out and sign up to the without thinking much further than securing our place at University. It's not all too surprising that by the time we graduate and actually start to consider how we're going to pay these sums of money back, most of us will be feeling at least a little concerned. 

But don't worry! You are not alone. Plenty of students are in the same boat and there are steps that you can take to clear your student loans without struggling financially. 

Interest on Student Loans

Interest begins to accumulate on student loans as soon as you take the loan out. This means that you will be generating further debt throughout your studies. But try not to worry too much about this, it is simply a problem that you will have to tackle later.

Repaying Student Loans

Before you stress about having to start paying student loans back when you graduate, it's important to remember that you only have to start repaying your loan when you meet a certain threshold. Once you meet this threshold, you can start repaying. If you earn a significant amount of money, you could consider paying off student loans early to reduce the amount of interest that you fork out.

How The Student Loan Company Knows How Much You're Earning

You may be wondering how the student loan company knows how much you're earning in order to deduct repayments from your account. Put simply, they use your National Insurance Number ti track your income. They will instruct HMRC to notify your employer that payments should be deducted from your earnings once you start working. If you are self-employed, the company will figure out how much you owe once you have submitted your tax return.

Paying from Overseas

If you decide to move overseas once you have completed your studies, you will have to submit an Overseas Income Assessment Form, which can then be used to determine how much you need to pay while you are overseas.

Hopefully all this information will make the process of student debts simpler! Keep these pieces of advice in your mind, especially when you're earning sufficient amounts of money to start repaying!



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