Why You Shouldn’t Let Student Loan Stop You From Going To Uni
Guest post from Natalka (iwanttobuyahouse.co.uk) on why you shouldn’t let student loan stop you from going to university!
The whole idea of student loan is scary, right? £9,250 a year. Plus a maintenance loan of up to £11,354 a year. That’s over £61,000 of debt you’ll face once you’ve reached graduation. It’s no wonder prospective students, and their parents, are terrified of the idea of university. Luckily Natalka has been there and done that. And despite her frustration at the fact she was one of the first intake of students paying the extortionate £9,000 fees, she is living proof that there is a light at the end of the tunnel. Here’s her take on student loans…
I’ve completed my Advertising Bachelor’s degree and continued working at my student job. I achieved an upper second class degree if you’re interested. If not, I just wanted to gloat. Since finishing my degree, I have received several promotions and, subsequently, pay rises. I actually earn £10 an hour now, and on a zero hour contract my earning potential is endless. During the peak of summer I can work over 60 hours a week, earning up to £600 before taxes. I work in a restaurant, but there’s more about that over on I want to buy house blog. And although I have started paying back my student loan, it’s not anywhere near enough to put a dent in my dream to buy a house.
When You’ll Start Paying Student Loan
Simply put, you won’t pay back a penny until the April after you course is finished. If you’re a part time student, you get an extra four year before you have to start paying back your student loan. But none of that really matters until you’re earning at or above the salary threshold.
The reason I’m telling you about my life is so that I can explain how and when you’ll pay back your student loan. If you’re thinking about going to uni, and getting a student loan, then the first thing you need to remember is that you won’t pay back a penny until you earn over £24,996 a year. The average starting salary for a graduate is between £18,000 and £22,000 according to Bridgewater UK. Therefore, it is very unlikely you’ll be paying back any of your student loan debts for a while. At least not until you’ve got your feet on the ground, and established your career.
If you started university before the 1st of September 2012, then the threshold is a little lower for you. In this instance, you’ll start paying back your student loan debt once you earn £18,324. Obviously, this is a significantly lower salary, and therefore increases the likelihood of you paying it back. However, those of you who were fortunate enough to start university before 2012 only had to take out a student loan to cover the £3,000 fees. So I think it’s fair enough.
To get a better understanding of the thresholds and when you’ll start paying back your loan, see the student finance description below:
The thresholds are £352 a week or £1,527 a month (before tax and other deductions). They change on 6 April every year. You’re on Plan 1 if you’re an English or Welsh student who started your undergraduate course before 1 September 2012 or a Scottish or Northern Irish student
The thresholds are £480 a week or £2,083 a month (before tax and other deductions). You’re on Plan 2 if you’re an English or Welsh student who started your undergraduate course on or after 1 September 2012.
How Much Student Loan Will You Pay
Nine. Nine is the golden number. I’m assuming it’s the student loan companies way of mocking us for still attending university after they hiked up the fees to £9,000. I actually have no idea why they’ve chosen 9% as the figure. And there is nothing about it online. If you have any idea then please enlighten me. But for now, all you need to know is that you’ll pay back 9% of anything you earn that is above the salary threshold.
So let’s do some maths. The salary threshold (for the majority of us on plan 2) is, £24,996 a year, or £2,083 a month. This means that any money you earn, up to this amount, will be yours to keep without paying back any student loan. If you earn above that amount, you’ll pay 9% of the difference to the student finance company. If you earn £2,250 a month then you’ll pay back £25. Understand? Check out this super simple description from Student Finance themselves:
Example: Your annual income is £28,800 and you are paid a regular monthly wage. This means that each month your income is £2,400 (£28,800 divided by 12). This is over the Plan 2 monthly threshold of £2,083. Your income is £317 over the threshold (£2,400 minus £2,083). You will pay back £28 (9% of £317) each month.
How You’ll Pay Back Your Student Loan
This is the easy part. You do nothing. It will come out of your salary automatically, without you having to go through countless online applications, phone calls, signatures, and contracts. So, to put it frankly, just put your feet up and wait for the money to start slowly dripping out of your account.
How Much Have I Paid?
Honestly, you’ll laugh. I’ve had a look through some of my old paychecks, and the highest payment I’ve had to make so far was £8. That was for a 60 hour week, when I was earning £9.50 an hour. As you can tell, it’s not a significant amount of money when looking at it as a whole. That week I earned £570, and the student loan company didn’t even take an hours worth of my salary away. If you want to see a more in depth post on my income and loan repayments visit my latest income report.
See, Student Loan Isn’t Scary
I completely understand why that massive lump sum I talked about at the beginning of this article would frighten you. It frightened me, and I didn’t even mention the further £10,500 I took out to cover my Masters Degree. But hopefully, reading this and understanding how small of an affect your student loan debt will have on your life will calm your nerves a bit. And your mums. My mum was sh*tting herself.
If you have any questions about student loan, then me and Emma have both been there. The tedious application process. The lengthy wait for the first payment. How easy it is to spend. We know. Feel free to ask us anything you want!
You can check out Natalka’s blog for similarly long and chatty posts about all things budget and lifestyle. And if you are planning on going to university, remember that there are tons of student discounts you can get too!