Finance
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Leaving university / after graduation
When you leave university, your finances will change significantly. See our information below which gives an outline of banking, tax, student loan repayments and other issues that you might need to know about.
We can offer graduates and leavers advice on matters relating to their time as a student. We are open all summer.
For advice on non-student matters you can contact a local advice agency in your area. For example Citizens Advice or use their Advice Guide
Repaying Student Loans
Loan repayments normally start in the April after graduation or leaving your course i.e. April 2023 for those finishing in June 2022.
If you are working, repayments are collected from your salary through the PAYE (Pay As You Earn) scheme. This should happen automatically but check your pay slips.
If you are abroad, self-employed, or have significant unearned income then you will have to arrange payment to Student Loans Company (SLC) by direct debit. For self-employment the amount you pay will be calculated based on your HMRC self-assessment form. You will need to inform HMRC that you are self-employed.
If you are in a position to repay part or your entire loan early the (SLC) will accept ‘one-off’ payments to your loan account. It is wise to consider whether this is worthwhile. If you have other debts with higher interest rates, then it makes sense to repay those first. Once paid, it is not possible to request a ‘one-off’ payment is refunded to you.
There is no penalty or additional charge for repaying early. The MoneySavingExpert website offers advice on whether it is worth repaying early.
There are 2 different repayment thresholds depending on when you started your course and whether you were funded as an English, Welsh, Northern Irish or Scottish resident. There is more information at SLC repayments
How much will you pay back?
Plan1
Students funded by Student Finance England and Student Finance Wales who started prior to 2012 can use the SLC repayments web page to see how their monthly payments work out.
Students funded by Student Finance Northern Ireland (and Student Awards Agency Scotland for repayments prior to 2021) repay under Plan 1 regardless of start date.
The repayment threshold for Plan 1 loans is £20,195/year from April 2022.
Plan 2
Students funded by Student Finance England and Student Finance Wales who started in 2012 or later will repay at a rate of 9% of any income over £27,295 The repayment threshold has been frozen and will not be subject to annual increases for the next few years.
No repayments are due if your gross income is less than £27,295 per year. Certain disability benefits and any unearned income of less than £2,000 are disregarded for these purposes. Unearned income includes income from investments, renting out property, interest on savings. Your salary or wages are earned income.
More details about Plan 2 Income Contingent Student Loans here
|
ANNUAL INCOME BEFORE TAX |
MONTHLY SALARY |
MONTHLY REPAYMENT |
|
Up to £27,295 |
£2,274 |
£0 |
|
£28,295 |
£2,358 |
£7.50 |
|
£31,295 |
£2,608 |
£30.00 |
|
£36,295 |
£3,024 |
£67.50 |
|
£41,295 |
£3,441 |
£105.00 |
Plan 4
These are new from April 2021 and replace Plan 1 loans for Scottish undergraduates only. More detailed information on repaying Plan 4 loans can be found on the LITRG website.
What if you move abroad?
If you are abroad and outside the UK tax system, any repayments would have to be made direct to SLC. They require you to notify them immediately if you are planning to live abroad for 3 months or more. If you move overseas and fail to provide the information required by SLC can charge a default monthly repayment figure and may apply a penalty rate of interest, significantly above the normal amount. The repayment threshold varies according to which country you are living in. For plan 2 overseas thresholds, see gov.uk
What if you default on repayments?
If you are in arrears with loan repayments the Student Loans Company will not allow you to borrow any further loans – for example: if you go on to postgraduate study and apply for a postgraduate loan.
Interest rates
Student loan interest rates are normally set for 12 months each September based on Retail Price Index (RPI) of the previous March (RPI = 1.5% in March 2021).
Plan 1 Loans have a single rate of interest. The current rate from September 2021 is set at 1.5%. The rate is currently set using the bank base rate rather than the RPI due to the unusually low bank base rate.
Plan 2 Loans (English and Welsh funded students with 2012 and later entry)
The interest rates are set out below varies according to circumstances, based on RPI. (RPI of 1.5% applies for period September 2021 to September 2022).
|
YOUR CIRCUMSTANCES |
INTEREST RATE (at time of writing (April 2022)) |
|
|
|
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From the date you become due to repay (after April 2023 if you finish in June 2022)) until the loan is paid in full. Note that interest rates change annually in September based on RPI in the preceding March |
Actual interest rate between 1.5% and 4.5% depending on annual income -
It rises gradually from RPI to RPI + 3%. For example, earn midway – that’s £38,211 and your rate will be RPI + 1.5% |
|
If you don’t keep in touch with SLC or fail to advise them of changes to any of your personal details. |
RPI + 3% will be applied to your loan whatever your income until you contact SLC |
SLC updates on thresholds and interest rates can be found online
Write off of Student Loans
|
AWARDING AUTHORITY |
DATE LOAN FIRST TAKEN OUT |
UNPAID AMOUNT WRITTEN OFF AFTER |
|
Student Finance England/ Student Finance Wales |
Between 01/09/2006 and 31/08/2012 |
25 years |
|
Student Finance England Student Finance Wales |
01/09/2012 or later |
30 years |
|
Student Awards Agency Scotland |
01/09/2007 or later |
30 years (before April 2021 the write off period was 35 years) |
|
Student Finance Northern Ireland |
01/09/2006 or later |
25 Years |
|
The number of years is calculated from when you first become eligible to repay your loan. For students graduating in Summer 2022 the years will start to count from April 2023 |
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If you took out a Maintenance Loan from Student Finance Wales anytime between the academic year 2010/11 and 2014/15 the Welsh Government could cancel up to £1,500 from your student loan balance when you start repaying. |
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Outstanding loans are also cancelled if the borrower becomes permanently disabled or dies.
National Insurance when you start work
If you are starting work remember that employers quote salaries as gross income and do not account for tax, national insurance and Student Loan deductions. Use this calculator to see how much you are likely to take home once these deductions are made.
When starting a new job make sure you take your P45 from any previous job whether full- or part-time or ask the new employer for a ‘Starter Checklist’ from HMRC, otherwise you could be put onto an emergency tax code and have too much money deducted from your monthly salary.
If you have paid too much tax during the tax year (which runs from 6th April to 5th April each year), then you may be able to claim back tax you paid in that year. This is not automatic so check your pay slips. For straightforward tax refunds visit gov.uk..For more detailed help visit Tax Guide for Students
Council Tax
While you have been a student, if you live in a hall of residence or a dwelling solely occupied by students, there should not be a Council Tax bill.
If you live off campus, Council Tax is calculated on a daily basis. Any relevant change in your circumstances, such as when you move, or cease to be a student, can affect your liability. If you stay on in your student house from the end of the academic year until graduation, you will be liable to pay council tax for the period between the end of term and the date you leave the property. Also, council tax could be chargeable on your house if you live with continuing students after you have left your course.
It is also important to remember that you will be a non-student in between courses. If you complete your undergraduate degree and start a postgraduate course you will not be treated as a student over the intervening period, normally the summer vacation and will probably have to pay Council Tax.
If you are the only person liable for council tax in your home you should be eligible for a 25% discount. If you are on a low income and not a full time student you might be eligible for help with your Council Tax through the benefits system.
Benefits
Over recent years the Government has replaced a number of older benefits with Universal Credit.
If you are not immediately starting paid work you may wish to apply for Universal Credit.
Universal credit can be claimed from the day after your course finishes. So for 2022 you may be entitled to benefits from 23rd June. You can start to make an application a week or two before, as it takes some time to complete the process.
As a general rule, do not delay in making any claim for benefits. There are strict rules on how much can be backdated and in what circumstances.
For more information please see the Citizens Advice website.
Postgraduate Study
If you are planning to take a Masters course or a PhD, you need to be aware that these courses do not qualify for the same student loans and grants that are available to undergraduates
Postgraduate Student Loans are available to students who normally live in England, Wales, Scotland and Northern Ireland for taught Postgraduate courses. The amount of loan, eligibility criteria and repayment terms vary according to the awarding body. EU students starting a course on or after 1 August 2021,must have settled or pre-settled status under the EU Settlement Scheme to get student finance.
Postgraduate loans provide a contribution towards the costs of tuition and living but are rarely enough to cover the full costs of undertaking postgraduate study.
If you are a Loughborough student continuing on to a postgraduate programme here the following resources might be helpful –
Masters - http://www.lboro.ac.uk/study/postgraduate/
PhD - Loughborough Doctoral College | Loughborough University (lboro.ac.uk)
If you are starting a PhD your academic department will be able to inform you of any scholarships that are available.
Banks and Building Societies
The special banking terms available to students (e.g. interest free overdrafts) will eventually cease after leaving university. Nevertheless, many banks have financial packages aimed at graduates offering services on preferential terms. Several banks allow you to retain a partial interest free overdraft with the interest free element of the overdraft reducing over a period of a few years. Contact your bank to find out how they can help after you have left your course. Always remember to compare interest rates and charges on graduate accounts, loans and overdrafts.
Further Help
For further information/advice on this or any associated issue, even if you are living away from Loughborough, please contact Student Advice and Support Service.
Booking Appointments | Student Advice and Support Service | Loughborough University (lboro.ac.uk)
We can also offer advice by email Advice@lboro.ac.uk
Even if you have left your course we will still help if your query relates to your time at Loughborough University, and we remain open throughout the summer vacation. However, if you have left Loughborough and have a problem with a non-student issue, you will need to contact a local advice agency such as a Citizen's Advice.