November 27, 2020
HOW CAN YOU MANAGE TO PAY OFF YOUR STUDENT LOANS IN THE FASTEST WAY POSSIBLE?
By : Ellie Brown
It no denies the fact that student education is costly. If you are one of the students who did not have any financial support beforehand, you might have taken a student loan to complete your education. An average tuition fee is above 9000 pounds and then adds interest to it. You need to repay a whopping amount, and it is not a comfortable ride. No matter how much you are making every month or might not be doing any job due to a job crisis. We can still help you out in planning the repayment in the fastest way possible.
Currently, the UK government is assisting in decreasing the repayment of the loan or stopping it until you start earning enough to afford the repayment.
Make sure which student loan plan you have
Well, there are two types of student loan plans – Plan 1 and Plan 2. It depends on which university you studied in and in which part of the country. Here is how you can get to knoww which plan you have:
England or Wales: If you have got your loan after September 2012, you have plan 2. If you have taken a student loan before September 2012, then you are under Plan 1.
Scotland or Northern Ireland: You will have to make your repayment under Plan 1.
How you repay after you complete your studies
You need to know that your repayment is made on an automatic basis over the tax system. Your pay period will be decided based on how you receive your salary. If you receive it every week, then you will have your pay period based on that. The loan payment will automatically stop if your pay decreases. If you receive a bonus or payment for overtime besides your salary, then an automatic deduction will be made to pay the loan.
If you earn under the repayment threshold, then you can ask for a refund. However, if the case is the opposite, then you will not get any funds back.
Types of student loans and repayments
Well, there are two types of loans: Income Contingent Loans and Mortgage Style Loans. A loan is taken before September 1998, and then it is Income Contingent loans. If a loan is taken before September 1998, then it is Mortgage style loans. The repaying date generally starts from April 6. The repayment can also begin to when you start earning above a particular salary bar.
While with Plan 1, loans can be repaid with a threshold of 19,390 pounds a year and 1615 pounds a month. With plan 2, repayment is made based on 26,575 pounds a year and 2214 pounds a month. The student loans company uses the National Insurance number to keep track of income.
Well talking about repayments, you have the right to pay off your full student loan at one time. If your salary doesn’t reach the level it should for repayment, then you can start by paying 5 pounds.
If you decide to make voluntary payments, then your employer will still deduct your repayment every month or week according to the decided period. But before deciding to make a voluntary payment, you must take care of your budget and make sure you don’t go into debt.
Things you must take care of about student loans
Think about your loan being written off before you end your repayment period. As you cannot predict your future, it is sometimes unnecessary to make extra payments which can become useless in the future. Instead, use the extra money for increasing your savings for any emergency. Student loans are manageable, and you must make sure where you are borrowing the loans. On the other hand, many lenders provide loans without guarantor and no hidden fees. You must take care of how you will manage everything.
What else you can do is build your savings account with finances and invest it somewhere to let it grow. The interest that you will get with that money is what you can use to pay your student loans. It should also be noted that your student loans don’t affect your credit score. Well, this is good news!
While we hope you got everything you were looking for. Always take care of your statement and make sure you are not overcharged. Take care of tax and know that only taxable income counts towards the loan threshold. Prioritise your expensive debts first to save money in the longer run. Don’t worry as you will successfully repay every pound that you have borrowed.