Student Loans

Graduating from university is a significant achievement, but the accomplishment can be overshadowed by the financial burden of student debt which can often take decades to repay. The rising cost of being a student also means that, for some, a university degree simply wouldn’t be possible without a loan.

In this guide, we’ll explore student loans in greater detail, from when you need to start making repayments to how to avoid racking up debt while you’re at university.



Heading off to college or university is often one of life’s most exciting adventures.

However, no matter whether you attend higher education as a young person or a mature student there is no escaping the fact that for many a student loan is the only way to cover the cost of study.

Student loans are the main method of direct government support for higher education costs, with money loaned at a subsided rate to help towards their maintenance costs and to help students in England, Wales and Northern Ireland. Tuition fees are paid for Scottish students studying in Scotland.

According to statistics from the House of Commons Library more than £16 million is loaned to students every year and the cost of outstanding loans was £121 billion at the end of March 2019.

Although taking on a student loan may not seem like a big deal, it’s important never to lose sight that a student loan is required to be repaid and falling behind on payments can have serious consequences.

When do I start repaying my student loan?

If your course began before September 1, 2012, or if you have a loan from student finance agencies in Scotland or Northern Ireland you will be required to repay the debt once you earn more than £18,935 which equates to £1,533 each month or £354 a week.

If you began studies after September 1, 2012, in England or Wales you will not begin to repay your student loan until you earn more than £25,725 which is £2,144 per month or £495 a week.

You will pay back 9% of the income you earn over the payment thresholds. Payments are deducted straight from your salary through the PAYE system or by self-assessment if you’re self-employed.

If you earn below the income threshold you won’t be expected to pay, however, you should be aware that if you earn over the threshold within any week or month you may notice an unexpected payment from your wages.

Committing to a student loan is no different to any other type of loan and is a legal agreement between yourself and the Student Loans Company. If you fail to make payments towards your student loan, the Student Loans Company can take action to accelerate your debts as well as obtain a court order that forces you to repay your entire loan in one payment.

How does the Student Loans Company know how much I earn?

The Student Loans Company keeps track of your annual salary through your National Insurance Number.

They will instruct HMRC to notify your employer when you start working and deductions will then be made from your taxable salary.

What happens if I can’t make a student loan payment?

It’s important to always stay on top of your student loan payments.

As mentioned above, by accepting a student loan you enter into a legally binding agreement with the Student Loans Company and failing to honour payments could result in serious consequences.

The company has the right to accelerate your debt which means you could face a court order and be required to repay your debt in its entirety – including interest.

If you’re struggling to cover the cost of your student loan, this can be a sign that you have deeper financial struggles and should consider seeking support with the debts that you owe.

Can I repay my student loan quicker?

You are allowed to make payments of £5 or more directly to the Student Loans Company should you wish to try and clear your student loan debt quicker – even if your salary doesn’t yet reach the repayment threshold.

You are also able to pay off your entire student loan in one go ahead of your repayment schedule should you wish to.

However, it’s important to note that any extra payments will be considered as exactly that. You will still be charged your regular monthly payments, so it is important to take this into consideration when planning to pay a little more.

How can I avoid student loan debt?

As student loans payments are taken before you even see your wage slip, it can be hard to keep track of how much you have actually paid.

You should always check that the correct amount is being taken via PAYE each month. If you believe you are overpaying, be sure to speak to your payroll department or contact the Student Loans Company directly to discuss this further.

For those who are self-employed it’s important to check the box on your self-assessment that you have student loans. Make the most of the range of online tools and calculators to ensure you are aware of how much you should pay. Alternatively, speak to an accountant to help determine how much you should be paying.

Of course, the best way to avoid student loan debt is to not take out a student loan at all if possible. Getting a part-time job is often the simplest way to stay on top of your finances whilst studying. It is also advised to check what grants you qualify for -including childcare and discretionary funds – to offer financial aid.

If you’re looking for help about student loan debt or for advice about managing your debt, speak to TAD our resident debt expert.

Key Takeaways

You will be required to start making student loan repayments once you start earning over a certain amount

Student loans are no different from other loans and the student loan company can obtain a court order to force you to repay your outstanding balance in one payment if you don't pay

The student loan company will know how much you earn through your National Insurance number and instruct HMRC to notify your employer who will start making monthly deductions

You can make extra payments of £5 or more towards your student loan to repay the balance quicker

You can avoid student loan debt by getting a part-time job and checking what grants you qualify for