TYPES OF DEBT

Student Loan Debt Help & Advice

Types of Debt

Student Loan Debt Help & Advice

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In Scotland, students don’t pay fees for going to college or university but for many getting a student loan is the difference between being able to financially make it through a degree course or not.

Worries about student loan debt often gets pushed to the back of the mind during studies and you only have to start repaying it when you have graduated and are earning £18,330 or higher. However, failure to keep up with your repayments once you are over that threshold can have some significant consequences and cause you major financial stress.

 

Paying back

Repayments are normally taken directly from your wages if you’re employed or through your self-assessment if you’re self-employed. The payments are typically nine per cent of the income you earn above the threshold – which does not change if your income increases.

If your annual income is below this, repayments will generally not be taken from you. However, if you earn over the threshold within a given week/month, you may notice an unexpected payment being taken from your wages.

It’s important to note, that although for it’s a normal part of life for many of those studying, when you take out a student loan, you have made a legal agreement with the Student Loans Company (SLC) to repay this depending on your circumstances. The SCL has the right to accelerate your debt, which means that they have the right to obtain a court order that forces you to repay your full loan amount in one go.

 

How student loan debt can be avoided

Student loans are unavoidable for some people. The loan can be used to fund their accommodation, school supplies and general living costs, however, there are ways to avoid falling into a deep hole with your student loans.

Part time work

Getting a part time job whilst you are higher education can help with this as student loans are means-tested. Having additional cash you’re able to set aside from your wages as you go through your degree may mean that you won’t even need to apply for the loan further down the line. It can also prevent you from turning to other types of credit to cover the cost of day-to-day living such as credit cards of payday loans.

Check what grants you qualify for

If you are in the fortunate position that you’re able to avoid taking out a student loan, it’s important not to forget the importance of keeping a close eye on your finances. Just because you aren’t struggling now it doesn’t mean that it won’t be a possibility in the future. With that in mind, it’s always worth checking if you qualify for any grants or bursaries before going to university or college as these do not have to be paid back. Examples of funds available include childcare funds, discretionary funds and the disabled students’ allowance. Speak to your student union to find out more about support you could access during your course.

Keep track

Once the excitement of graduation is over and you settle into your first real job it can be all too easy to lose track of student loan payments every month. It might just be something that happens each month but when it comes to paying the loan back it is important to continue to keep an eye on your payslip to ensure the payments are being deducted. If you notice that a deduction hasn’t been made, contact your payroll immediately to rectify this.

Check how much you should pay

If you’re self-employed, it is your responsibility to check the box on your self-assessment that you have student loans. If you’re unsure about how much you should be repaying, it’s important to do your research to save you defaulting on what you owe. There are multiple calculators online or accountancy firms that can help you work out how much you should be paying to the loan depending on what you have earned.

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