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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 repaying depend on how much you end up earning…

Your loan repayments are calculated based on what you earn, not what you borrowed (the total student ‘debt’). We explain more in this guide.

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

1. Yes, student loans do add up... 

Your tuition fee loan and your maintenance loan are added together to give the total amount of debt. The variations mean it's difficult to say the exact level you’ll graduate with. However, a typical student on a three-year course outside of London might expect to graduate with around £35,000-£40,000 of student loans.

You’ll accrue 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 circumstances. RPI is a measure of inflation, published each month.

While studying and until the April after you leave your course, this would be RPI plus 3%.

If you come into repayment from April 2016, this will vary according to your income once you graduate ranging from RPI (0.9%) if you're earning £21,000 or less to RPI + 3% if your income is £41,000 or more.

Your student debt won’t affect your credit rating, because student loans are not included on your credit reference file.

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 £21,000. If, after leaving university, in any one year you’re not working or earn less than £21,000, then you don’t have to pay anything back on your student loan.

After you graduate, you’ll repay 9% per year of whatever you earn above £21,000 – regardless of whether your total loan is £22K or £50K. This means if you’re earning:

  • below £21,000: you won’t have to pay back anything
  • £25,000 a year: you will repay £360 per year, £30 per month or £6.92 per week. This is the same however much you borrowed.
  • £30,000 a year: you will repay £804 per year, £67 per month or £15.46 per week. Again, this is the same however much you borrowed in loan.

If you earn a lot, you’ll repay a lot of your debt -  but you could end up paying back less than those earning a bit less and repaying over a longer period, as you’ll pay less in 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 £21,000).

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 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.

Welsh students have the same repayment terms and conditions as English students, but it's different in Scotland and Northern Ireland - see our tailored advice for more.

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.  

Is all this likely to change in the future?

There are no guarantees that these will remain the rules and terms for the next 30 years of repayment, 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.

4. Keeping your student debts down

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 reduce your reliance on debt by thinking about options to earn cash elsewhere. 

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 (though not only) for students from lower income families. There are also hundreds of private charities and trusts that might be able to help. 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, so start applying while you wait - the earlier you apply, the better and you can sleep soundly that you'll get your loan in, in time for the start of term.

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