The Basics of Repaying Student Loans

When it comes to paying your way through four years of college or more, student loans are there to help you balance the budget and cover tuition without breaking the bank. Sooner or later, though, you graduate. Then it's time to start paying them back. The basic process for doing so is very simple.

Repayment of government student loans will generally start in the month of April the first year after your graduation, provided you are making the minimum income of 1250 pounds a month or more. If you began your college career on or after September of 1998, your student loan repayment requirements will be factored on an income contingent basis, which means that your monthly payment amount will be based upon how much you can reasonably afford according to your income. There are a few different options for how to go about repaying your loans.

One option is Pay as You Earn. If you are employed, making more than the monthly minimum wage required, and pay taxes under the PAYE system, then your student loan repayments can be deducted from your paycheck each month. In this system of repayment, the SLC and HM Revenue and Customs will share information regarding your loans and current employment. They will notify your employer that you have a student loan in repayment status, and set up a system to deduct your payment from your cheque each month. It's important to note that the Student Loan Corporation only updates their accounts at the end of each tax year, so they will not have information on the current standing of your loan until that time. If you want to verify the amount you have paid towards your loan through PAYE, you'll need to contact HM Revenue and Customs.

You can also make voluntary repayments if you wish, regardless of whether or not you are paying via the PAYE deductions. Voluntary repayments should be sent directly to the Student Loan Corporation. Call and speak to the customer service department to verify the payment address and the information you are required to enclose with your payment. You may make voluntary repayments through cheque, postal order, standing order or debit card. It's important to note that if you are paying through automatic deduction as well as voluntary payments, your voluntary payments will not reduce your automatic payment amount; but they will assist you in paying off your loan more quickly.

Keep good records of both automatic payments and voluntary payments, so you know where your student loans stand. Student loans in general have low interest rates and are kind to the borrower, provided you're making a good faith effort to get them paid on time. Remaining employed and keeping your loan payments up to date will most likely make paying for your education a much simpler process than getting it was.