Understanding Student Loans
Understanding Student Loans
Student loans in the UK work differently from normal debt. Understanding the basics can take a lot of the worry away.
How repayments work
You only repay once you earn above the threshold — currently £25,000 for Plan 5 loans. Repayments are taken automatically from your salary at 9% of everything above the threshold, so you will never miss a payment.
It is not like a mortgage
Outstanding balances are written off after 40 years. Think of it more like a graduate tax than a traditional loan. Most people never repay the full amount, and it does not affect your credit score.