you actually start to repay your loan. Tuition fees increased significantly in the academic year starting 2012, causing political uproar at the time, and students starting university after that time usually have much higher student debts.This can be a tricky one to get your head around, but it’s the most important one to remember amidst the panic about rocketing interest rates. For most people, with current rules in place, their student loans will never be repaid in full.
Because of the way things work, the more you earn, the more of your student loan you will repay, and those on lower incomes will pay little or nothing towards their loans over their working lives. Like income tax, your student loan repayments are only made on the income that you earn above and beyond the repayment threshold - so if you earn £28,000 on Plan 2, for example, your repayments will be 9% of £705.
There is, of course, much to be discussed about student loans, the planned reforms and the impact of climbing interest rates. For many, the idea of owing so much will cause anxiety and unease. However, it’s important not to panic about the immediate, real-life consequences of these hikes, because the interest change does not currently impact the amount you repay each year, nor does the debt impact your credit rating.
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