So I finally completed my degree and am soon going to start my first Job after graduation, so all should be well right? No! This is unfortunately not the case.
So when I started my degree I was unfortunately misinformed of a very important fact about student loans. Interest. Yes, I was told that student loans are interest free and never questioned it. I spent 4 years thinking that and never thought about checking for actual facts. Now my dear readers I want to inform you properly so that you wont get the same shock I did.
In the UK student loans are practically unavoidable and as an EU student it is a very novel idea to take a loan for education. When I started my degree the loan was about 3500£ per year which is now around 9000£ per year. Either way the one thing you should know about is that you won’t just have to pay back this value * years of study. You also have to pay interest from the day your first loan is paid.
The current interest rate is 1.5% for students pre 2012 (Source), and RPI, plus 3% for the later students (Source). This interest rate is applied annually from the first instalment of your loan.
What I am trying to covey is that if you don’t pay back your loan it is actually increasing every year! But not all hope is lost: If you are ok with living in debt for a while there is a write off condition for the student loan. As stated here, for pre 2012 students the loan is written off 25 years after Graduation and for post 2012 30 years later.
As for the repayment process:
Pre 2012 EU students should look at this table to check if they exceed the payment threshold and post 2012 students at this table. Either way you only need to pay back some amount if your income, without tax deductions, exceeds the value listed in the table.
If your income does exceed that value then you have to pay back 9% of the amount exceeding the threshold. E.g. If I was earning 25000£ per year I’d be exceeding my threshold by 7665£. Of this 9% are 689.85£, which is the amount I would have to pay back per year.
Honestly the whole process seems to be very manual and requires oneself to be responsible.
- The overseas income assessment form has to be completed yearly.
- The money has to be transferred appropriately via english bank account.
- One has to keep track of the payments made and the amount left to keep from overpaying.
It certainly makes sense why there are so many news articles stating that EU students in the UK don’t pay back their loans. It’s because the system just makes it really hard.
I hope this introduction to student loan repayments made sense and will be of help to any of you EU students. I got very confused when I started to research on the topic.
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