Student Loans Interest and Repayment Methods

From 1 September 2009 to 31 August 2010, a zero per cent interest rate will apply to income contingent Student Loans.

Finally, some good news about student loan interest rates for once!

Many students have no idea how they pay back their student loans after finishing University.

So I made this short guide to summarise the key facts on how to repay student loans.

If you are employed in the UK, your student loan repayments will be collected for the PAYE system (Pay As You Earn).

This means that you don’t start paying back your student loan until you go over a certain payment threshold.

Currently that threshold is £1250 a month, or £288 a week, depending on how you get paid, with an annual threshold of £15000.

Your Student Loan repayments will be nine per cent of anything you earn over the relevant threshold. Remember that this isn’t the same as nine per cent of your total income – you only make repayments on what you earn above the threshold.

For example if you make £2250 a month, you will pay back 9% of £1000 every month (£90), because you earn £1000 over the threshold.

How do I know how much I have to pay back?

 If you are in work and pay tax and National Insurance, your employer will calculate and deduct Student Loan repayments due each pay period, based on your earnings for that period and the current student interest rate.

The student loans company will be informed of your total student loan repayments at the end of the financial year, so it is important to keep your records in case your results differ. Double check your payment is inline with the student interest which is currently being charged. You don’t want to pay more then you should do!

You can check your balance online, or contact the Student Loans Company by letter or telephone and they will carry out these calculations on your behalf.

I hope this guide provided you with the information you needed about student loans interest and repayment methods!