Repaying your student loan
3 steps to handle your student loan company debt
Ah university, a time in your life full of new experiences! A new chapter, with new friends, often in a new location, with a little bit of learning in between of course. The last thing on your mind is paying back the student loan that just landed in your bank account. Then the day comes that you step back out into the real world, and the harsh reality of student loan repayments hits. Ouch.
If you have recently reached the threshold to make repayments, or your repayments are adding to your debt problems, there are things you could consider to help your situation.
First and foremost, if you’re struggling financially and your debt with The Student Loan Company is causing you stress, it’s important that you don’t panic. The best thing you can do now is get back into university mode and educate yourself on your student loan and how the repayment process works.
Not in the mood to read? We got you covered. Listen to the rest with the YouTube link at the bottom of the page.
The Student Loan Company
Understand that the Student Loan Company is generally reliant on you to update them on your employment status. They are not very proactive when it comes to establishing your employment status. Which means they may not know if you are due to be making them payments or not. Also note that the HM Revenue and Customs are in partnership with the Student Loan Company in order to facilitate collection repayments, so if you are paying tax, there is a record of your earnings.
If you're struggling to make your payments. We're here to help, so let's get straight to it...
Here’s three easy to follow steps to get a handle on your student loan debt, including a repayment option you may not have considered.
How to handle your Student Loan Company debt repayments
Step 1 – The payment plan
The first thing you need to do is determine which payment plan you are on. If you don't know, before you go any further, head over to ‘Student loan repayment - Everything you need to know’, to determine which plan you are on, then come straight back!
Step 2 – Repayment threshold
Next, you need to understand whether or not you meet the threshold to make repayments on your student loan. If The Student Loan Company is already taking payments from you, it means you’ve reached one of the thresholds and you’ve likely informed your employer or HMRC that you have a student loan that you need to make repayments towards. You can read more about student loan repayments here but let’s take a look at a recap of the repayment thresholds:
- PLAN 1 – You are only required to make loan repayments once your income is over £388 per week or £1682 per month. If your circumstances change during the year, and your total annual income ends up being less than £20,195. You can ask for a refund of the payments you have made.
- PLAN 2 – You are only required to make loan repayments once your income is over £524 per week or £2274 per month. If your circumstances change during the year, and your total annual income ends up being less than £27,295. You can ask for a refund of the payments you have made.
- PLAN 4 – You are only required to make loan repayments once your income is over £487 per week or £2114 per month. If your circumstances change during the year, and your total annual income ends up being less than £25,375. You can ask for a refund of the payments you have made.
- POSTGRADUATE LOAN PLAN - If you have taken out a Master's Loan or a Doctoral Loan, you only have to make loan repayments when once your income is over £403 per week or £1750 per month. If your circumstances change during the year, and your total annual income ends up being less than £21,000. You can ask for a refund of the payments you have made.
However, do note each of the above are calculated before tax and other deductions like National Insurance. It’s also important to note that every year on April 6th, the threshold amount may change. Tax, there’s another thing you never had to worry about!
The good news is, if you don’t meet any of the above repayment thresholds, you will not need to make any student loan repayments, which could be a big helping hand towards taking control of your debt.
If you are struggling financially and your student loan repayments are making it even harder, the next step is to understand your options.
Step 3 – Making your repayments
If you’re already in debt, the last thing we want to do is encourage borrowing, but if things are really tough, there is another option to consider when it comes to your Student Loan Company repayments. By taking out an unsecured personal loan with a bank, you can clear your student loan debt. You’re probably thinking, “how does that help? I’ll just have another loan to pay off!”
Well, with an unsecured personal loan you may find that the monthly repayments are lower, and possibly the interest too. This isn’t a decision to take lightly, as it does involve further borrowing but it is an option that could relieve some of the stress, if you are in real need. If you find yourself struggling with your personal loan, again, don’t panic as there we have options that can ease the strain in our unsecured debt section.
Don't forget to read The Real Debt Guy's final thoughts below!
The information in this article is considered to be true and correct at the date of publication.