If beginning a higher education course were not daunting enough, you’ll more than likely find you’ll need to take out a student loan that you will be paying back over many years.
Student debt is not really like other debt, however – the chances are that you won’t have to pay it all back because a proportion of it will be written off. Exactly when this happens depends on which part of the UK your loan came from, when you took it out and your personal circumstances.
Buckle up, this is a tad complicated…but we’ll try to demystify things as best we can!
What is a student loan for?
If you take out a tuition fee loan (to cover your course fees) and/or a maintenance loan (to cover your everyday living costs), then the total amount of borrowing is known as your student loan. Student loan repayments are automatically deducted from your salary before you receive it, so you can never miss a payment.
Do I have to pay my student loan back?
No. In fact, you won’t pay any of it until you earn over a certain threshold. When you do start paying, at some point the loan is written off (wiped out) and you don’t have to make any more repayments. For this reason, many people argue that the term ‘student loan’ is misleading and the UK’s student finance scheme should be renamed along the lines of a ‘graduate tax’ or – as the recent Augar Review of university fees suggested – a ‘student contribution system’.
…you won’t pay any of it until you earn over a certain threshold.
When will my student loan get written off?
Just when your student loan gets written off depends on which of three types of repayment plan you’re on: Plan 1, Plan 2 or the Postgraduate Loan. You don’t get to choose the plan – it’s determined for you and depends on when you started studying and which country you were living in before you went to uni.
Plan 1 student loans
You will be on Plan 1 if:
- You’re an English or Welsh student who started an undergraduate course anywhere in the UK before 1 September 2012
- You’re a Scottish or Northern Irish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998
- You’re an EU student who started an undergraduate course in England or Wales on or after 1 September 1998, but before 1 September 2012
- You’re an EU student who started an undergraduate or postgraduate course in Scotland or Northern Ireland on or after 1 September 1998
Plan 2 student loans
You will be on Plan 2 if:
- You’re an English or Welsh student who started an undergraduate course anywhere in the UK on or after 1 September 2012
- You’re an EU student who started an undergraduate course in England or Wales on or after 1 September 2012
- You took out anAdvanced Learner Loan on or after 1 August 2013
Postgraduate loans
You will be on a Postgraduate loan plan if:
- You’re an English or Welsh student who took out a Postgraduate Master’s Loan on or after 1 August 2016
- You’re an English or Welsh student who took out a Postgraduate Doctoral Loan on or after 1 August 2018
- You’re an EU student who started a postgraduate course on or after 1 August 2016
When your student loan is written off
| Academic year in which your loan was taken out | Plan 1 loan from England, Northern Ireland or Wales | Plan 1 loan from Scotland | Plan 2 loan from England or Wales* | Postgraduate loan from England or Wales* |
| 2005-2006 or earlier | When you reach 65 | When you reach 65 or after 30 years** (whichever comes first) | n/a | After 30 years** |
| 2006-2007 | After 25 years** | When you reach 65 or after 30 years** (whichever comes first) | n/a | After 30 years** |
| 2007-2008 or later | After 25 years** | After 30 years** | After 30 years** | After 30 years** |
*Students with loans from Northern Ireland or Scotland are on Plan 1
**From the April in which your first repayment was due
Other circumstances in which a student loan is written off
If you’re no longer able to work due to illness or disability, your loan may be written off. You will need to provide evidence that you meet the relevant criteria, such as a letter stating that you are in receipt of disability benefits. The only other situation in which a student loan would be canceled is if the student dies. Again, evidence would need to be provided to the Student Loans Company (SLC).
Are student loan repayments fair?
Many people think that students should contribute towards the cost of their higher education because they will be able to earn more in the labour market. Research published by the Department for Education last year shows that graduates typically earn £10,000 a year more than those who don’t go to university. You will only begin making your repayments in the April after graduation, and even then only if you’re earning over a certain threshold.
…graduates typically earn £10,000 a year more than those who don’t go to university
On the face of it, students taking out loans after 2012 in England and Wales seem to get a poorer deal – they pay more in fees and can be charged much more in interest. However, the higher repayment threshold means lower monthly payments and, with the debt being written off after 30 years, it’s not a given that having a larger amount of debt means that you’ll repay more at the end of the day.
Should I repay my student loan early?
It may be tempting to overpay in order to get rid of the monthly burden of student loan repayments, but you might be worse off if you do. At some point in the future, you may no longer be liable to pay – because you don’t earn over the threshold, you can’t work through becoming disabled etc.– in these scenarios, you’ll have shelled out unnecessarily. Even if you are still liable to make repayments, the interest you could earn on savings may exceed the cost of your student loan. It’s certainly worth doing the maths!
