Know how much you need to earn before repaying your student loan? You're probably wrong
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How much do you have to earn before you start repaying your student loan? I was sure it was £21,000. This was the general consensus, since our final year (2010/11), of all those I knew at Lancaster University. It was like this: for 2011 graduates, the lower earning threshold was £21,000. Before our year it had been £15,000. So, we were lucky. It turns out, though, that we weren’t lucky – and neither were we correct. The actual amount is £16,365, but this seems to have fallen under the radar of almost everyone I’ve spoken to. Maybe this was just a bit of misinformation that had spread at Lancaster? I asked a couple of people who recently graduated from Southampton, and they thought it was £15,000. Others, from various different universities, guessed at between £16,000 and £18,000. From this it transpired that we’re woefully confused about the amount we’re supposed to be paying back, and when. And after a few minutes of digging, it’s not really surprising that we’re unclear about the terms of our debt. Which, let’s not forget, is a very, very big one. As financially responsible (dare we say it - independent?) adults, we should know exactly what is going on with the debt we racked up through those three/four years of library books and rubbish clubbing and Virginia Woolf lectures. In July 2013 I started paying an automatic £27 per month to the Student Loans Company (I’d previously been paying £4 a month, but let’s ignore that because, well, it was £4 and I just didn’t notice.) After a quick chat with payroll and an explanatory Google search, I was informed that the lower threshold was in fact £16,365 – not £21,000 as I had previously thought (and as gov.uk had previously made me believe with their admission that “Each month you pay back 9% of any income over £21,000.”) I accepted this on the grounds that whichever official sounding finance site I visited last July (clearly, I can’t remember which it was) said so, although I did feel a bit confused about why we’d all thought it was £21,000 and why gov.uk also believed this. Where had we plucked this now seemingly arbitrary number from? The issue came up again this week whilst I was reading the newly published Money Manual, a finance guide for students published by The Money Charity. According to the Manual, £16,365 is lower limit in Scotland and Northern Ireland, whilst in England it’s still £21,000. Intrigued, I took my queries back to payroll, and the internet, and this is what it had to say. According to the NUS, everyone who started university after 1st September 1998 (which presumably is everyone reading this article) has an Income Contingent Loan.
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