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How much debt will you actually get into by going to university?

While the amount of debt you come out with is based on how much you borrow, what you actually end up paying back depends on how much you earn.

Student debt is rarely out of the news. A typical student on a three-year course outside of London might expect to graduate with around £35,000 - £40,000 of student loans. But even though these headline figures look frightening, you shouldn’t let this put you off going to uni – you won't be expected to tackle this all at once.

In fact, your loan repayments are calculated based on what you earn, not on what you borrowed (the total student ‘debt’). You also need to be earning a certain amount before you start to pay it back. 

Here are four things to remember about university debt. This advice is for students who are on Plan 2 repayment plans, which means you’re from England or Wales, and started your degree on or after 1 September 2012.

 If you’re from Scotland or Northern Ireland; or you started your degree before 1 September 2012, you’re on a Plan 1 repayment plan. Find out more about Plan 1 repayments on the Student Loans Company website.

We've also got advice if you're applying for student finance right now.  

1. Yes, student loans do add up, and you shouldn't forget about interest... 

Your tuition fee loan and your maintenance loan are added together to give the total amount of debt. The variations in how much you might have borrowed means it's difficult to say the exact level of debt you’ll graduate with.

You’ll build up interest on your student loans, too. How much this interest is depends on the current UK Retail Price Index (RPI) at that moment and your employment circumstances. RPI is a measure of inflation, published each month by the Office of National Statistics. 

For undergraduate students, while studying and until the April after you leave your course, your interest will be RPI plus 3%.

If you come into repayment from April 2016, the interest will vary according to your income since you graduated. Your interest will be:

  • RPI only – if you earn up to £21,000 
  • RPI plus 3% if your income is £41,000 or more
  • a sliding scale for income in between £21,000 and £41,000

You won’t pay anything back until you earn £21,000 (or £25,000 from October 2018), but the interest will continue to tick over in the background.

Will this affect my credit rating?

Your student debt won’t affect your credit rating, because student loans are not included on your credit reference file.This is often something people wonder about when getting a mortgage – but your student loans won’t affect your likelihood of getting one.

I’m a postgraduate student, what will I owe?

According to the Student Loans Company, from 1 September 2017 until 31 August 2018, the interest rate for borrowers in England and Wales taking out a postgraduate loan for a Master's degree will be 6.3% (RPI + 3%).

What about if I’m a part-time student?

The same requirements and repayment thresholds apply if you’re a part-time student. Read more about part-time students and finance in our guide.

To learn more about tuition fees, maintenance loans, repayments and more, read our full guides to student finance in England, Scotland, Wales and Northern Ireland.

To learn more about tuition fees, maintenance loans, repayments and more, read our full guides to student finance in England, Scotland, Wales and Northern Ireland

2. ...But repayments depend on how much you earn 

Your repayments are calculated on how much you earn, not on how much you borrowed.

If you're funded via Student Finance England and studying full-time, you only start paying back your loan when you are earning above the repayment threshold. This is currently £21,000 but is set to rise to £25,000 in October 2018. If, after leaving university, in any one year you’re not working or earn less than the threshold, then you don’t have to pay back anything on your student loan.

This works the same if you study in Wales, Scotland or Northern Ireland, except the salary thresholds for repaying your loan are different. Read our guides to student finance in Wales, Scotland and Northern Ireland to learn how repayments work for students here.  

If you earn a lot, you’ll repay a lot of your debt. However, you could end up paying back less than those earning a bit less and repaying over a longer period, as you won't pay as much interest. 

3. You might not repay the entire student loan 

Any outstanding debt you owe after 30 years is written off, even if you haven’t paid anything back during that time (because you weren’t working or you were earning below the repayment threshold).

A major 2014 study by the Institute of Fiscal Studies into university funding (entitled 'Payback Time?') estimated that around 73% of graduates won’t have paid back their full loan back after 30 years. So either you’ll be lucky enough to be in the top group of graduate earners, or you’ll never pay everything back. For this reason, paying your loan back early isn’t always worth doing, either.

You can calculate how different scenarios will affect how much you owe and pay back using the student loan repayment calculator at MoneySavingExpert or The Complete University Guide.  

Are repayments likely to change in the future? 

There are no guarantees that these repayment rules will remain the same for the next 30 years, but major overhauls to how the system works are usually more likely to affect new students rather than students already in the system.

That said, it's worth keeping an eye on changes or new rules as they're announced, so you can work out if these will affect you and how much you're paying.

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    4. Explore other options to keep your student debts down while you're studying

    An interest-free overdraft offered as part of a student bank account can offer a short-term cash injection if your maintenance loan doesn't stretch far enough. You should use this sensibly and sparingly – remember, you'll have to pay it back. You can also help to reduce your reliance on debt by thinking about options to earn cash elsewhere. See our Which? Money guide on the best student accounts.

    Apply for a bursary, fee waiver or scholarship

    Most unis and colleges now offer some form of financial assistance that you won’t need to pay back, particularly (although not only) for students from lower-income families. There are also hundreds of private charities and trusts that might be able to help, but this is more likely to be a smaller one-off payment, rather than paying your whole loan. See our section on bursaries, scholarships and fee waivers to find out which option is best, and how to apply.

    Work part-time

    Many full-time students take up part-time work around their studies, or during holidays, for extra spending money and all-important work experience for the CV. Most universities and colleges run 'jobshops', which help students find work, so check these out.

    Apply for student finance now  

    There's no need to wait for all your university offers to come through, you can start applying while you wait.

    The earlier you apply, the better you can sleep soundly  knowing that you'll get your loan in time for the start of term and you'll be less likely to run into one of these five funding delays.

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