How much will I repay per month and year?
You don't start paying your student loans back until you are in employment and earning over £15,000 per year. The amount you pay back depends on your salary so the more you earn, the faster you repay the loan. Provided you are earning over the threshold, you will have to start repaying the loan from the April following your graduation.
Currently you are expected to pay 9% of the money you earn over £15,000. You can pay more than the monthly amounts if you wish. When you are employed, student loan deductions are made automatically from your salary through the PAYE (Pay as you Earn) system.
Remember that student loans accrue interest from the date they are paid until you've repaid them in full. The interest rate on student loans is linked to the rate of inflation. This means that the value of the amount you have to pay back will be broadly the same in real terms as the value of the amount borrowed. Remember however, that interest rates vary from year to year and this will affect how much you will have to pay back.
This information only applies to official student loans that you receive from the student loans company, not other types of debt like career development loans, professional students’ loans or other bank loans. If you have to take out other loans such as bank loans, make sure you understand the interest rate and know when you will have to start repaying the loan. Many student bank accounts offer interest free overdrafts, which can be a good way to borrow extra money, but you will often be charged interest soon after you graduate. Talk to your bank to find out more about overdraft rates.
The student loan is seen as the best way to borrow because the interest rates are linked to the rate of inflation. However, remember that you will have to manage the repayment of this, alongside other expenses when you graduate. You may need to move with your new job so will have different living costs, such as rent and transport. If you have other debts such as overdrafts, credit cards or other loans, you will need to manage these too, plus when you start working, you will pay tax and National Insurance contributions will be deducted from your salary. Budgeting doesn’t have to stop once you've graduated!