Repaying Your Student Loan
University education is expensive and the majority of people are forced to take out a Government Issue loan in order to pay for the three to four years of tuition fees and maintenance. With each year and each different government, the rules change with regard to how and when a student loan should be repaid; so it’s no surprise that many students, past and present, feel confused. Hopefully this article will help to make things clearer, so that you can take control of your student loan and personal finances.
In the majority of cases, student loan repayments will start to be automatically taken off your pay cheque, alongside taxes, when you earn over a certain amount. This is known as Income Contingent Loan Repayment. The Student Loan Company is usually linked to or in touch with the tax office, which means that they keep track of your income so you are not fully responsible for keeping them up to date with the status of your earnings. The percentage of your pay cheque that goes towards repayments is dependent on your total earnings and works on a threshold scale, just as taxes do, so that as you earn more you will pay back more.
The other option for paying back your student loan is to make Voluntary Repayments. If you are gifted some money or decide you want to pay back more than the percentage being taken from your paycheques, you can make loan repayments directly to the Student Loan Company. This is the most advisable scenario, wherever possible, as it prevents interest from building on your total loan amount; even though student loans are not commercial loans, which means that the rate of interest is usually low in comparison to if you had taken out a bank loan or run up a credit card debt.
The Student Loan Company will be in regular contact with you regarding the status of your loan repayment; it is important that you do not shy away from or ignore these letters. These companies do not react well to being ignored and will usually issue fines and penalties on individuals whom they believe to be trying to avoid making repayments. It is vital that you keep up correspondence with the Student Loan Company so that they are aware of your financial circumstances and collect only the correct amount from you in the way of repayments. This includes letting them know if you plan to leave the country for an extended period of time, as when this happens you will disappear from the tax office radar of your own country and you will become completely responsible for informing the Student Loan Company of your earnings status; because it is still possible to make repayments while overseas.
It is imperative that you keep all of your student loan documentation together in an organized file; this includes copies of your pay slips and tax forms. You need to be responsible for your own financial situation and fully understand it; organization is key to this comprehension. For the majority of students student loan repayments are made on a long term scale, which means the weekly/monthly/yearly deductions will ultimately affect other areas of personal financial planning in an individual?s life, so they need to get to grips with understanding how their student loan impacts their overall financial state. Investigate ways to make money in the future too. Places like US Money Reserve offer one of the many ways to have your money make money in the future. Another good incentive for keeping an organized track on your repayments is to ensure that you do over pay your loan. If this happens, you should write to the Student Loan Company informing them of the overpayment and provide evidence of the deductions on your pay slips; you will get this money back.
While having your hard earned income lessened with repayment deductions, years after you have graduated, is not exactly something to smile about, it is best to remind yourself that your University education was an investment in yourself and your future.