Loughborough University
Leicestershire, UK
LE11 3TU
+44 (0)1509 263171
Loughborough University

Student Advice and Support Service

Finance

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 2022 for those finishing in June 2021

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. 

From 6 April 2021, the repayment threshold for Plan1 loans is £19,895.

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 is expected to increase each April in line with inflation.

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 the Student Loans Company. 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. There is more information here

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 each September based on Retail Price Index (RPI) of the previous March (RPI = 2.6% in March 2020). 

Plan 1 Loans have a single rate of interest. The current rate from September 2020 is set at 1.10%. 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 rate varies according to circumstances and is based on RPI.

 

YOUR CIRCUMSTANCES

INTEREST RATE

Whilst studying and until the April after leaving the course

RPI 2.6% plus 3%

Actual interest rate 5.6%

From the date you become due to repay (after April 2021) 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 2.6% and 5.6% depending on annual income -

  • £26,575 or less interest = RPI
  • Between £27,296 to £49,130 RPI plus up to 3%,
  • over £49,130 interest = RPI + 3%
  •  

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

Also see latest government update on changes to interest rates during Summer and Autumn 2021 aimed at ensuring SLC interest rates do not exceed prevailing market interest rates available on loan products from banks and other lenders.

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 2021 the years will start to count from April 2022

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.

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 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

Benefits and tax credits are undergoing major changes over recent years with the introduction of Universal Credit to replace a number of older benefits. 

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 2021 you may be entitled to benefits from 26th 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 to 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 –

http://www.lboro.ac.uk/study/postgraduate/

http://www.lboro.ac.uk/services/doctoral-college/

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. Speak to your bank's student adviser 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 a student living away from Loughborough, please contact Student Advice and Support Service.

To book a face to face or telephone appointment:

Phone 01509 222058

Call into the Bridgeman Building on campus (no. 53)

We can also offer you 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.