With student debt at a record high (average £50k), the Government has promised a major funding review. We flesh out the facts about student loans and explain why piling on the pounds may not be a reason to panic after all.
The lowdown on student loans, and why not to worry…
Your student loan is not real debt.
A £50k debt might seem daunting, but actually the amount you borrow is not too important, it’s how much you repay that counts.
You may never pay a penny back, or you may clear the total debt… but your annual repayment will never amount to more than 9% of your income, and for a maximum of 30 years.
Basically, the psychological connotations of ‘being in debt’ are worse than the financial reality. So if you can get your head around the fact that your student loan is not real debt, you should start feeling better about it. As Martin Lewis (Money Saving Expert) explains, it is more like a graduate tax or ‘contribution’.
It’s always nice to earn a little money along the way, of course… Next time, we’ll be looking at some of the ways to boost your income during your student years, and get some valuable experience on your CV at the same time.
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